AvCraft scraps plans to outsource 328Jet wings

 - October 4, 2007, 9:50 AM

AvCraft Aviation, the Leesburg, Va.-based parent company of Germany’s Fairchild Dornier, has decided to build the wings for the Dornier 328Jet at its plant outside Munich after signing a deal with EAG Engineering + Design to supply the airfoils’ production tooling. The April 13 announcement came after a standoff with San Antonio’s M7 Aerospace over the value of the only existing tooling ended months of failed negotiation. The deal with EAG frees AvCraft to start building 328Jets from scratch by year-end

Although new tooling will undoubtedly cost more than M7’s asking price, AvCraft CEO Ben Bartel emphasized other benefits. “After studying a number of options, we determined there was insufficient life left in the former tooling in San Antonio, Texas,” he said. “The new tooling will save us time and cost in the long run, and we can be assured of a very high-quality wing structure.”

The contract with Fulda, Germany-based EAG also ended AvCraft’s search for a wing supplier after plans to announce a contract at February’s Asian Aerospace exhibition fizzled with a failure to reach terms on the existing tooling with M7, the new proprietor of Fairchild Aircraft and Dornier Aviation North America. Four European companies and a single U.S. bidder contended for the wing contract, but until AvCraft knew the cost of the tooling, it couldn’t consummate a deal. After calculating the cost benefits based on EAG’s bid, AvCraft found that building the wings in-house presented the best option.

“We have the technical experience and expertise, and this decision will help us
to lower the cost of the aircraft,” said AvCraft managing director Wolfgang Walter.

AvCraft said it hopes to announce new customers “in the next few months.”
The deal with EAG spells bad news for M7, which needs to secure parts from AvCraft to perform a heavy-maintenance job on a 328 coming off lease. Late last year M7 sold its entire inventory of parts to AvCraft, which subsequently shipped 17 truckloads of the components to BAE Systems’ warehouse in Herndon, Va. In December AvCraft inked a six-year deal that gave BAE’s asset management arm responsibility for parts warehousing and distribution in the Americas. BAE will also offer its guaranteed-cost maintenance program to 328 operators.

Pratt Readies Engine Upgrade
Meanwhile, AvCraft expects an engine upgrade program instituted by Pratt & Whitney Canada for its PW306B turbofans will help solve the regional jet’s reliability problems. Originally rated for a time between overhauls (TBO) of 3,000 hours, the engines in some cases have needed overhauls after just 1,500 hours, said Walter. P&WC found that a design flaw in the engines’ cooling system allowed their fan blades to overheat, causing premature wear. AvCraft expected the engine builder to finish the redesign this month and retrofit the upgrades as the airplanes arrive for scheduled heavy maintenance.

Notwithstanding the airplanes’ reliability shortcomings, Bartel attributes the program’s previous lack of commercial success to the last owners’ reputation for poor customer support, a deficiency the company believes it has addressed with the arrangement with BAE Systems. In January Bartel announced plans to restart full series production of the 32-seat jets, 18 of which it inherited from Fairchild Dornier’s former owners. AvCraft claims to have sold all 18 airplanes, eight of which went to China’s Hainan Airlines and three to Aero-Dienst of Nuremburg, Germany. More recently, it said it bought the marketing rights to four more jets and eight Dornier 328 turboprops from the Fairchild Dornier bankruptcy administrator and claims to have sold those as well. In all, it counts orders or options for a total of 45 airplanes, but won’t reveal customer identities other than Hainan and Aero-Dienst. According to AvCraft, nearly half the orders are for the executive transport version of the 328Jet known as the Envoy 3.