Fairchild Dornier 328 and 728 get new leases on life

 - March 28, 2007, 6:26 AM

AvCraft CEO Ben Bartel in late January announced the restart of Dornier 328JET production at the company’s plant in Oberpfaffenhofen, Germany, just outside Munich. Headquartered at Leesburg, Va., AvCraft one year ago acquired production rights for the 328/328JET and its corporate version, the Envoy 3, as well as for the stretched 428JET that might be developed later.

The production restart is fueled by the sale of all of the 18 new “white tail” 328s that AvCraft acquired when it bought the division from bankrupt Fairchild Dornier. In addition, AvCraft sold eight repossessed second-hand 328JETs and four 328 turboprops taken over from the insolvency administrator. AvCraft’s sales force has so far secured orders and options for forty-five 328JETs, almost half of which will be the Envoy 3 corporate version. Seven white tails were delivered last year, all in airline configuration, and another six–one airliner and five Envoy 3s–were handed over to customers before last month.

Production will restart with the five aircraft that remained in various states of completion on the Oberpfaffenhofen assembly line since activity ceased there in March 2002. Deliveries of these aircraft are scheduled for the fourth quarter, and staffing levels at the German plant will be increased from the current 250 to 320 by year-end. The company plans to produce 18 aircraft next year with a staff of 420. AvCraft has no current plans to relaunch production of the 328 turboprop.

The $100 million necessary to restart production at the Oberpfaffenhofen plant has been funded by AvCraft shareholders and by the German branch of the Maple Financial Group of Toronto, Ontario, Canada, acting as the company’s house bank. All parts needed for the completion of the aircraft on the assembly line are now in hand, including five wing shipsets. The manufacturer is negotiating with three potential suppliers of new wings, all located in Europe, and hoped to announce the vendor selection at last month’s Asian Aerospace airshow in Singapore. AvCraft has completed the acquisition for an undisclosed sum of 328 parts, tooling, support equipment and STCs from M7Aerospace in San Antonio, the former supplier of wings for the 328.

The German-designed aircraft is offered as a 32-passenger regional airliner or as an executive jet. Price of a standard-equipped airliner is $11.5 million.

A medevac kit is also offered for the Envoy 3. Once installed, it allows a quick switch from executive to medical transports. Other special-mission versions are possible. AvCraft owns and operates a 328 equipped with a water-spraying rig to test de-icing systems on other aircraft.

The company currently supports a fleet of 165 328/328JETs in worldwide service, and it seeks to sell and reactivate a number of used 328/328JETs in storage. According to Bartel, income generated by sales, support and subcontracting already makes the company profitable.

The largest 328JET fleets are operated by Atlantic Coast Airlines (34), followed closely by China’s Hainan Airlines (27), which took delivery of its latest 328 in mid-January. Hainan purchased eight of the 18 white tails from AvCraft. Another three white tails went to Aero-Dienst of Nuremberg, Germany, while the rest were sold in corporate configuration to unidentified owners. The largest 328 turboprop operator is US Airways/PSA, with 24 aircraft.

Income from maintenance is less than 20 percent of AvCraft’s turnover, but the company places high priority on customer confidence in the 328. A reliability enhancement program has identified 19 items that are responsible for 90 percent of the fleet’s technical problems. AvCraft has set up a new service center in Myrtle Beach, S.C., and signed an agreement with BAE Systems’ Herndon, Va. facility to handle parts warehousing and distribution in the U.S. The Myrtle Beach service center will perform scheduled heavy maintenance for the 328 fleet and complete all non-airline interiors.

Support and maintenance for European customers is provided by the Oberpfaffenhofen plant and by sales and service partner Aero-Dienst. The Oberpfaffenhofen plant is managed by Wolfgang Walter, who previously worked with Dornier since 1982.

Fairchild Dornier 728 also Revived

Chinese investment firm D’Long purchased the 728 program from Fairchild Dornier’s insolvency manager late last year, barely preventing the prototypes and tooling from ending up at the wrecking yard. The company has since set up a subsidiary called Fairchild Dornier AeroIndustries and has continued prototype testing and development. The first flight of the 728 prototype is now expected by this November.

D’Long’s new subsidiary remains at Fairchild Dornier’s original facility at Oberpfaffenhofen, and according to its European manager, Jonathan Chu, the program will be revived as a joint German-Chinese project. General Electric is retained as engine supplier and Honeywell will remain the major avionics vendor.

D’Long Turns to Subcontractors

While the airframe will be assembled at the Oberpfaffenhofen plant, major subassemblies will be supplied by Asian subcontractors and risk-sharing partners. D’Long is currently negotiating with a number of partners and hopes to announce a finalized finance and cost-sharing plan in the next few months. The company quotes no figures, but when the original Fairchild Dornier company ceased activities in 2002, it was estimated that a billion dollars was needed to bring the 728 to production.

Fairchild Dornier AeroIndustries aims to offer a family of 70- to 100-seat regional airliners and derived corporate versions, and sees Europe and the Americas as the main markets. Current plans call for certification and first deliveries of the 728 in mid-2006, with development of the stretched 928 starting before that date.

No decision has been taken so far concerning a shorter 50-seat version tentatively called the 528. As the program gains momentum, employment at the Oberpfaffenhofen site will gradually increase from the current 40 to 600 at the start
of production.

Lufthansa, which provided input for the design of the 728/928 regional airliners, is considered a prime marketing target for the relaunched program, but there are no commitments from the German carrier at this time. As the 728’s original launch customer, Lufthansa had placed firm orders for 60 aircraft and options on another 60, all of which were canceled when the manufacturer went into receivership.