Fokker facing extinction after Daimler pulls out
Aerospace crisis: Collapse of loss-ridden Dutch plane-maker could boost competitor BAe but hit profits at Rolls-Royce
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The loss-making Dutch aircraft manufacturer Fokker was on the verge of extinction yesterday after its largest shareholder, Daimler-Benz of Germany, pulled the plug on further investment.
"Profitability must take precedence over revenues," said Jurgen Schrempp, chairman of Daimler-Benz, after an extraordinary meeting of the company's supervisory board in Stuttgart, which posted unexpectedly high losses for the group.
"With over 80 per cent of our businesses running satisfactorily, we owe it to our shareholders not to allow the other 20 per cent to impede our overall performance." he said.
Day-long talks in Amsterdam involving the management and supervisory boards were adjourned last night without any decision and will resume later today, according to Fokker's chairman, Ben van Schaik.
Daimler-Benz holds a 39.8 per cent stake in Fokker, and the Dutch state holds 11.2 per cent. Over the weekend, the Dutch government refused to put up the 3bn guilders (pounds 1.2bn) emergency cash injection necessary to keep the company afloat.
The regional aircraft manufacturer, employing 7,800 workers in the Netherlands, has debts of 4 billion guilders. Last August it posted a record loss of 460 million guilders. Though the Dutch government may keep its five plants going for a few months, contingency plans were being made yesterday for what would be the biggest redundancy in Dutch history.
Fokker is a direct competitor to British Aerospace, and news of the crisis contributed to the rise in BAe's share price which followed the Orange mobile telephone flotation announcement. BAe shares closed up 12p at 888p.
But Fokker is also a big customer of the aero-engine manufacturer Rolls- Royce, whose shares fell 3.5p to 197.5p. One analyst estimated that Fokker's collapse could hit R-R profits by 5 per cent in 1996.
Shorts, the Belfast aerospace company, makes wings for Fokker. The company, part of the Canadian Bombardier group, has 6,800 employees and plays a key role in the Northern Ireland economy. Some 700 employees make wings for Fokker with 800 more supplying components and services.
BAe declined to comment on the Fokker situation, but repeated calls for European aerospace to tackle the overcapacity in the market. There has been speculation that Daimler may seek to put Fokker into Aero International Regional, a joint venture between BAe, Alenia of Italy, and France's Aerospatiale.
Fokker has continued to expand capacity to some 42-45 a year, against the 18 Avro regional jets BAe builds each year. Fokker aircraft sell at about $25m, about $5m higher than the BAe product, which has doubled its order book to almost 100.
Taking the Fokker write-off into account, Daimler-Benz will have lost DM6bn in 1995.
Hamish McRae, page 18
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