Layoffs Pending Federal Government Decision On External Financing

Diamond Aircraft announced the temporary lay-off of 213 employees at its London, Ontario facility Monday. The job cuts affect mostly D-JET program employees, temporarily suspending D-JET program work pending the arrangement of external financing. There is no direct impact on other Diamond operations.

"We are disappointed and frustrated in the extreme to have to take this action. We had deferred these cost cutting measures as long as possible, while awaiting a positive response to our request for a federal government loan. At this time we are still awaiting a formal response," said Peter Maurer, President of Diamond Aircraft Industries Inc. "We are hopeful that the government will give this matter urgent attention and provide the requested assistance, following which we would immediately recall our furloughed employees and get our program back on track. We will be contacting our D-JET customers individually to further detail the impact of these actions and our plans for the way forward."

Diamond D-Jet

The D-JET program is over 60% complete but increased program costs and delays, coupled with the overall depressed current state of the general aviation industry, have required Diamond to seek external funding to complete the program. Diamond has arranged for all but $ 35 M to complete the program and has turned to the Canadian federal government to support the company with a fully repayable loan. The federal government loan is key, because it not only completes the required funding, but also triggers the other arranged financing commitments.

Diamond has invested very heavily to create the infrastructure and technology that enable D-JET. Diamond intends to leverage the technology developed for the D-JET to develop an entire family of future aircraft, much as the original HK 36 motorglider spawned the company's successful line of piston engine airplanes.

FMI: www.diamondaircraft.com