D'Long looks to place 728 back in fray

 - August 4, 2008, 12:32 PM

Shanghai-based investment group D’Long in late June confirmed it has signed a contract for the rights to the suspended Fairchild Dornier 728 program, but an eventual relaunch of the 76-seat jet remains far from certain. According to J. Chu, manager in charge of Europe for D’Long, the investors would like to launch the 728 as a German project with Chinese participation, a strategy in line with the group’s policy to invest in partner companies around the world and to foster Chinese industry. However, Werner von Anhalt, D’Long’s newly appointed 728 program manager, said the company had no concrete plans to restart production within a given time frame.

Negotiations with various suppliers, now in their initial stages, would show if and how the project could proceed, said Von Anhalt. He declined to comment on a possible merger with the AVIC I ARJ21 project–a regional twinjet that occupies virtually the same capacity category as the 728–but said the company would entertain all options.

The step ostensibly completes the takeover of all of Fairchild Dornier’s divisions after the company filed for insolvency on April 2 last year. Leesburg, Va.-based AvCraft Aviation acquired the German assets associated with the Fairchild Dornier 328 line, Switzerland’s Ruag Aerospace assumed control of Airbus components manufacturing and third-party maintenance and newly formed M7 Aerospace in San Antonio took control of Fairchild Dornier’s U.S. assets. After absorbing all the capital available to the company’s previous owners, forcing the company into bankruptcy, the 728 program will likely need another $1 billion to gain Western certification and reach production status.

D’Long, an investment company involved in various industrial activities, including electrical equipment, heavy machinery, automotive components, building materials, agriculture and food production, was founded in 1986 and maintains six facilities in mainland China and plus one each in Hong Kong, Detroit and Munich.

The first 728 prototype, equipped with General Electric CF34-8D turbofans, rolled out in March last year, but has yet to fly. Before its bankruptcy Fairchild had published a list of some 45 subcontractors, including about 15 from the U.S. The largest subcontractor was EADS/CASA, which supplied the entire wing and empennage.

The new investors plan to conduct negotiations with existing and prospective subcontractors and suppliers, including AVIC I subsidiary Xian Aircraft (XAC), over the next few months. The lead designer and head contractor for the proposed ARJ21, AVIC I has already signed General Electric to supply CF34-10A turbofans and Rockwell Collins to provide the avionics for the indigenous regional jet. Whether D’Long hopes to offer the 728 as an alternative platform for the ARJ21 program, state funding for which the Chinese government has conditionally pledged, will remain a matter of speculation until D’Long discloses further details of its plan.

The Chinese remain adamant, however, about controlling the intellectual rights for the ARJ21, regardless of the extent of international cooperation. D’Long, meanwhile, has proposed reestablishing the 728 production line in Oberpfaffenhofen, Germany, raising further questions about the nature of any participation by AVIC I, particularly if the ARJ21 remains a separate, competing project.