January 23, 1996 in Nation/World

Daimler-Benz Puts Fokker In Limbo Dutch Government Refuses To Meet Subsidy Request

From Staff And Wire Reports

Fokker, which made the planes flown by the legendary World War I “Red Baron,” is in a financial tailspin.

Daimler-Benz, the German industrial giant that owns controlling interest in Amsterdam-based Fokker, said Monday it is not willing to finance losses at the company. And the Dutch government, which has subsidized Fokker, isn’t offering enough money to keep Fokker in the air.

If the company closes, it would mean the loss of 7,800 jobs - the largest single layoff in Dutch history.

Fokker’s troubles contrast with the company’s glory days, when engineer-turned-test pilot Anthony Fokker’s name was synonymous with aviation pioneering.

Fokker took his test for a pilot’s license in the Spider biplane, which he had built himself in 1910.

In 1912 he started manufacturing in Germany, and German World War I pilots - including “Red Baron” Manfred von Richthofen - flew thousands of his triplanes and biplanes. The Fokker factory in the Netherlands was destroyed in World War II, but rose from the ashes to reenter the civil airliner market in the early ‘50s.

But hit by the weak dollar, an overcrowded and slack market for the passenger airliners it builds and high labor and restructuring costs, Fokker seems to have run out of fuel.

The company targeted the F-100 to take advantage of increased demand for jets on shorter-range flights. But stiff competition, chiefly from Boeing, Airbus and McDonnell Douglas, brought on fierce price-cutting to win orders and led to mounting losses at Fokker.

Although U.S. aircraft builders have to contend with the same market conditions, their labor costs, paid in weak dollars, are comparatively lower.

Daimler-Benz said Monday that although more than 80 percent of its businesses were running satisfactorily, Daimler would record losses of $4.1 billion for 1995, more than twice as much as analysts had predicted.

Industry analysts said if Fokker were to collapse, its customers would see the resales value of their planes plummet. The planes are popular with commuter airlines in the United States, including Seattle-based Horizon Air and AMR Corp.’s American Eagle.

Airlines with planes on order from Fokker also could have their plans affected.

Whenever an aircraft maker ceases to build planes, even if it continues providing spare parts, the fact it is no longer making planes hurts their value, said David Treitel, president of global aviation consultant SH&E;, which is based in New York.

Horizon, which operates more flights than any other single carrier out of Spokane International airport, has 12 Fokker-F 28 jets in its 65-aircraft fleet.

Dan Russo, Horizon’s director of sales and marketing, said Horizon acquires the 65-seat Fokkers on the used aircraft market, so the company will not be directly affected by the Fokker closure.

“We’re not in the new aircraft market for that airplane,” Russo said, “and there are plenty of the models around that we fly.”

, DataTimes ILLUSTRATION: Photo

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