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Can Europe Keep Fokker Flying? (Int'l Edition)

International -- Intl' Business: THE NETHERLANDS


Fokker is lurching into another crisis. The Dutch aircraft manufacturer recently turned in a record $395 million half-year loss, so it's seeking a $1 billion bailout with its two main shareholders, Germany's Daimler Benz Aerospace (DASA) and the Dutch government. The rescue effort may get so sticky it could end up involving companies and governments all over Europe.

Fokker is a leader in the business of manufacturing planes that carry from 40 to 100 passengers. Now, lower-cost producers from Indonesia and Brazil are posing a threat. In response, Fokker has slashed its workforce in half and cut production time for a plane from 30 months to 9. Since aircraft sales are in dollars and the dollar has plunged against the guilder, Fokker still can't make a profit. Yet with the necessary help, says Fokker chief executive and chairman Ben van Schaik, "we could return to profitability as early as next year."

Majority shareholder DASA still is backing Fokker. "The [Fokker] acquisition was and is a correct decision," says Manfred Bischoff, chairman of DASA's management board. Yet DASA itself is in trouble: It is mainly responsible for parent Daimler Benz' huge $1 billion loss in the first half. Dutch Economics Minister Hans Wijers promises no aid unless DASA and Fokker form an enlarged--and presumably stronger--European alliance with aircraft makers Aerospatiale of France and Alenia of Italy.

The European Union would favor such a "mini-Airbus." Yet considering what a lossmaker Airbus has been, creating another money-munching consortium would probably do little to improve European competitiveness. Fokker's woes have no easy solution.By Linda Bernier in Brussels

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