FAIRCHILD DORNIER SEEKING AN INVESTOR
Boeing and Bombardier possible candidates
Munich – In the search for an urgently needed investor from the aerospace industry, the aircraft producer Fairchild Dornier is not assuming that the success will be quick. "We are no longer expecting a solution in the short-term," said a company representative on Mon-day in Oberpfaffenhofen near Munich.
The initial talks with possible investors began last week. The US aircraft producer Boeing, which was named as the favorite by media reports, is one candidate on the list of concei-vable partners according to the representative. "But it would not be clever to concentrate on only one," he added. According to observers' estimates Boeing, as the largest producer of aircraft in the world, would be able to provide financial power and the necessary assi-stance in production, engineering and marketing. The Canadian competitor Bombardier was also mentioned as a possible partner. Bombardier, the Brazilian Embraer and Fairchild Dornier share the market for regional aircraft with up to 110 passengers.
Fairchild Dornier is looking for a new investor as a consequence of the crisis in the ae-rospace industry following 11 September. Instead of the 40 machines ordered of the type 328JET, it will only be possible to sell 20 to 30 this year according to the representative. But most of the airlines have postponed their purchases by six months to a year. "We are seeing the gap in our business plan," he said. The development of the 70 to 110 seat DO728JET is costing more than budgeted. According to media sources the company needs an additional $ 900 million.
75 % of the shares of Fairchild Dornier are held by the US investment company Clayton, Dubilier & Rice, the remainder by the Allianz venture capital subsidiary, Allianz Capital Part-ners. Together the two companies invested 400 million euros in capital, plus 800 million euros in credit from a consortium led by Hypo-Vereinsbank. In financial year 2000/01 Fairchild Dornier remained below budget with sales of 595 million dollars. The company previously had planned to turn a profit in 2004.
Handelsblatt 12 March 2002
Bombardier CEO Shows No Interest in German Regional Jet Producer
BUY-IN OF US GIANT BOEING OF FAIRCHILD DOR-NIER COMES CLOSER
Carsten Herz, Matthias Eberle
Frankfurt/M. The buy-in of the world's largest US aerospace group Boeing at the regional aircraft producer Fairchild Dornier, which is threatened with bankruptcy, are becoming more concrete. As sources from the branch explained yesterday, Boeing will probably sign a letter of intent to takeover a controlling interest in Fairchild Dornier. The US company did not want to confirm or deny this step when questioned yesterday. To date Allianz Capital Partners and Clayton, Dubilier & Rice, two venture capital companies, hold more than 95 % of the shares.
A takeover of the regional jet producer is considered by industrial experts to be a clever move by the market leader; with the 728 family (55 to 110 seats) Boeing would be able to round out its pallet on the bottom end and collect points over its rival Airbus. Its high de-velopment costs for the new developments A380 and A400M do not allow for financial adventures at the current time.
Despite the acute financial problems at Fairchild Dornier, the newly developed 728 jet, which will be presented to the public for the first time on 21 March, is considered to have good sales chances. At the moment there are 118 orders, 60 of which alone are for the Lufthansa subsidiary CItyLIne.
The Canadian aircraft and railroad-vehicle producer Bombardier does not feel that its posi-tion is endangered by the apparent Boeing buy-in at the competitor Fairchild Dornier. "We are not afraid of Boeing," said Bombardier CEO Robert Brown during an economic confe-rence in Frankfurt. The Canadians are the world's leader in the regional aircraft market. Brown clearly stated that the competition will not become involved in a bidding war, " We are not interested in buying into Fairchild Dornier," he said. There has been some contact between the two companies but no formal talks.
In Germany, Bombardier, which recently reversed its decision to close the rail plant in Sa-xony's Ammendorf as a result of political pressure, wants to expand its presence. Brown says the group will cut jobs at Ammendorf, but continue to expand the number of em-ployees in Germany which is currently at 9,300. Bombardier will, however, get rid of its fac-tory in Vetschau in Brandenburg. There are currently three parties interested in purchasing it. The Bombardier CEO did not mention any names.
In the discussion with DaimlerChrysler about the valuation of their former rail subsidiary Adtranz Brown continues to hold his hard line. The group will pursue its planned suit in the International Chamber of Trade to the bitter end if DaimlerChrysler does not relent, threa-tens Brown. The mediation process cannot last four years in Brown's opinion. He sees good chances of winning the complaint. Along with a court decision Bombardier does not exclude the possibility of an out of court settlement.
Bombardier accuses Daimler that the net assets of Adtranz deviated significantly from the guaranteed volume on the cutoff date and therefore is demanding1 billion euros in da-mages from the Stuttgart group. Bombardier took over Adtranz for 725 million dollars. DiamlerChrysler rejected the damages as unfounded when they were announced in mid-February.
Bombardier had sales of 11.2 billion euros in financial year 2000 (31 January) and had a net profit of 680 million euros.
FAZ 12 March 2002
BOMBARDIER CAUTIOUS ABOUT FAIRCHILD DOR-NIER
Only informal talks / Compromise signal for the railroad
Bombardier Inc. Montreal. The relations to the aircraft producer Fairchild Dornier have not advanced past informal talks. There can be no mention of formal talks let alone negotia-tions, said Bombardier Chairman Robert Brown in Frankfurt. Brown cannot get excited about the partnership that Fairchild Dornier wishes to have with his regional aircrafts (FAZ 11 March). There is no question of a buy-in at the moment, stated Brown. Besides that Bombardier, world leader in building regional and business aircraft is traditionally interested only in complete takeovers. It is only possible to create a single corporate policy when there is complete control.
The Chief Executive Officer (CEO) hopes to advertise for the Bombardier shares during his two-day visit to Germany. The stock price took a couple of blows in the recent past after 11 September and the clash with DiamlerChrysler about the purchase price for the railroad engineering company Adtranz. At an event at the German-Canadian Economic Club and the F.A.Z. Institute Brown attributed this to the fact that Bombardier is only considered to be only an aircraft company, although these are only responsible for about half of sales.
In Germany Bombardier, a company with about 21 billion Canadian dollars (15 billion euros) sales, has come under pressure from a number of directions. In Brown's words, however, this does not change anything in principle about the plans in Germany. Bombardier is de-manding 1 billion euros back for Adtranz. Brown says that DiamlerChrysler had incorrectly listed a large number of loss orders and difficulties with guarantee statements. He there-fore has initiated an international mediation process (FAZ 9 March). He is, however, a long way from suggesting there was intentional manipulation. The Deutsche Bahn is, however, complaining about defective deliveries in a number of types of trains, amongst other in the modern tilting trains which are in great demand. Brown sent signals that there is room for compromise here. "We are very good at solving problems," he said.
In the eastern German factory at Ammendorf has decided against a closure after the inter-vention of the German Chancellor. Here a service department is to be expanded, although the Deutsche Bahn has not yet decided to outsource the maintenance work. At the same time Bombardier hopes that 70 percent of the Bahn orders will come to them. All of this should lead to the Ammendorf factory having more employees in a year than now, despite job cuts. Brown is try to sell the smaller Vetschau factory.
Yahoo! 11 March 2002 4:23 PM
FAIRCHILD DORNIER EXPECTS QUICK SOLUTION
Munich (AP) The aircraft producer Fairchild Dornier wants to present a strategic partner within the next few days. Reports about a threatening insolvency could not be commented upon said speaker Peter Keller on Monday in Oberpfaffenhofen. The regional aircraft pro-ducer is currently speaking with a number of conceivable partners which should invest ca-pital as well as bring competences in aircraft construction to the table.
Fairchild Dornier hopes to be able to say within a few days with whom they have reached a basic agreement and will hold negotiations about details in the coming months. The spea-ker did not say whether there were talks with Boeing and how much money is lacking. Fairchild Dornier got into trouble as a result of postponed orders by the airlines, smaller orders for supplies from Airbus and higher development costs for the two-engine regional jet 728 and according to "Spiegel" needs about another one billion euros. Fairchild Dornier currently belongs to the US investment company Clayton, Dubilier & Rice and the Allianz Capital Partners. The base version of the 728 jet with 70-seats should complete its maiden flight in the spring.
Financial Times Deutschland 12 March 2002
BOMBARDIER HAS ENOUGH OF MAJOR PUR-CHASES FOR THE MEANTIME
Company wants to digest Adtranz takeover first
Klaus Max Smolka, Frankfurt
The Canadian transport engineering company Bombardier is not planning any fur-ther major acquisitions following the takeover of the DaimlerChrysler railroad engi-neering subsidiary Adtranz. "First we have to be certain to digest what we have," said Bombardier CEO Robert Brown to Financial Times Deutschland. For that rea-son he does not see any major acquisitions for the current financial year (end of January 2002).
The current group structure is not to be essentially changed. "That is a well-weighted portfolio," said Brown. Bombardier has three major businesses; about half of the sales are from regional and business aircraft, about forty percent is railroad engineering, which produces railroad trains and streetcars and subways. Bombar-dier obtains less than ten percent of sales with leisure vehicles such as snowmo-biles.
In the aerospace industry it is said that Bombardier is interested in buying into the American-German aircraft producer Fairchild Dornier. To journalists yesterday in Frankfurt said only that there are no formal talks.
The acquisition of Adtranz, which was concluded in May 2001 for $ 725 million, is causing Bombardier some concerns. The company is of the opinion that the engi-neering company is worth considerably less than was represented by Daimler-Chrysler and its auditors KPMG. For that reason Bombardier filed suit to the board of arbitration at the International Chamber of Trade for damages of more than $ 870 million – in other word, more than the purchase price.
Die Welt 12 March 2002
FAIRCHILD DORNIER CONFIRMS THE SEARCH FOR A PARTNER
Talk of buy-in by Boeing – Airbus parent EADS is not planning a participation
Munich – Fairchild Dornier is looking for a partner to safeguard its capital base and its tech-nological competence. The regional aircraft producer headquartered in Oberpfaffenhofen confirmed this. From the company's perspective a strategic partner could contribute to the long-term and stable success of the 728 aircraft program announced the company. An ap-propriate solution could be arranged in the next few days or weeks; talks are being held with various candidates.
According to industry experts the buy-in of the US aircraft producer Boeing is a possible option, even if the company is not commenting on this. The Boeing solution would be re-markable on the one hand because Dornier belonged to the EADS predecessor Dasa prior to the buy-in by Fairchild in 1996. a return to Fairchild Dornier under the wing of the Airbus parent EADS is not planned according to EADS.
"We are in the initial phase of identifying an appropriate strategic partner," Fairchild Dornier CEO is quoted as saying in a press release. "To that end we are holding initial talks with the conceivable partners, which should contribute both funding as well as competences in the fields of products, engineering and marketing to the market success." Fairchild Dornier sees itself as a leading producer of regional and business aircraft.
In recent times significant progress has been made, says Harrington justifying the search for a partner. But the overall all global economic situation has slumped ad the impact of 11 September has made many airlines postpone decisions about purchases.
"The prospects in the regional aircraft market continues to be promising," says Harrington. "With a strategic partnership with the right partner we can fine-tune our financial needs and safeguard the company for its success in the next few years."
Two years after the US aircraft producer Fairchild bought into Dornier the Allianz subsidiary Capital Partners and the US investment company Clayton, Dubilier & Rice invested a total of 400 million dollars in Fairchild Dornier. According to former figures Fairchild Dornier wants to expand its sales to four to five billion dollars by 2008. In 2000/2001 the company had sales of 595 million dollars.
Die Welt 12 March 2002-03-12
BOMBARDIER WANTS TO CREATE MORE JOBS IN GERMANY
Frankfurt/Main – The Canadian Bombardier Group is not interested in participating in the regional aircraft producer Fairchild Dornier. "We are not interested in a buy-in," said Chair-man Robert Brown and therefore denied corresponding rumors from industry experts. Bombardier is the world's largest producer of regional and business aircraft. Amongst others the US aircraft producer Boeing is said to be interested in buying into Fairchild Dor-nier. To date Boeing has offered primarily large passenger jets; in the market for jets with less than 100 seats Bombardier has dominated. " I am not afraid of Boeing," said Brown.
Brown is also not afraid of the dispute with DaimlerChrysler. The acquisition of Daimler-Chrysler's railroad engineering division Adtranz by Bombardier has been a matter of dispute since February. The Canadians paid about 820 million euros for Adtranz last year and are now demanding a billion euros back from DaimlerChrysler – more than the purchase price. The accounts payable were more than the goodwill so that a demand of this amount is ju-stified, says Brown. Who is right is now the subject of mediation at the International Chamber of Trade. "We are ready to follow this through to the end," emphasizes the Bom-bardier CEO. He is expecting that the process will take two to four years, if there is not an out of court settlement.
In the meantime the merging of Adtranz into the organization is on schedule, says Brown. However, he is at least indirectly criticizing that DaimlerChrysler missed the boat at Adtranz in the development of the world-wide railroad engineering business. Adtranz had, for in-stance, a "local production mentality". The purchase of the company was, however, deci-sive for the world's leading producer of rail cars and engines. In the future more than 25 percent of the locomotives and cars produced in Germany are to be exported.
Bombardier wants to keep the factories at Ammendorf and Vetschau for the moment. Chancellor Gerhard Schröder worked to saved the two plants in January. However, job cuts threaten the plant in Ammendorf after the restructuring; the site in Vetschau is to be sold in the long run. Brown did not say anything about the number of jobs to be cut in Ammendorf or with which three companies the sale of Vetschau is being negotiated. He did, however, promise that there will be more people working for Bombardier in Germany in one year than today. Currently the group employs 80,000 persons world-wide, 9,300 of which are in Germany.
The largest customer in the company's railroad business is Deutsche Bahn which up to now has given 70 percent of its orders to Bombardier. "We want to keep this share," said Brown. The reliability of the Bombardier vehicles which has been criticized by the Bahn is therefore taken very seriously. "We will find a solution." Bombardier will present the busi-ness figures for 2001 in the coming week. Brown confirmed that the budgeted sales in-crease of 30 percent to 15 billion euros was achieved. Bombardier accredits this growth for the most part to the takeover of Adtranz.
These are recent articles for your review, your input into this topic are highly appreciated. I believe Bombardier is out Boeing in.