Tough Times For Civil Aviation Know Few Boundaries
Following several months of concern over delayed shipments and orders from the parent company responsible for the Flight Design LSA and Sport Aircraft line, word has come confirming that the company is facing serious financial difficulties.
Completely separate from the US operation (Flight Design USA), the German parent company (with operations in both Germany and Ukraine, utilizing over 100 people) is not out of business but will reportedly attempt to reorganize with the help of legal authorities in ways supposedly similar to a Chapter 11 filing in the USA.
Nearly 30 years old, Flight Design has built north of 1500 airframes and is steadily at work on the C4, a four place next-generation airframe expected to be available next year. At the same time, there have been reports that issues with the German entity have been long going. Published reports by persons claiming to have made significant payments and deposits for several airplanes suggest that some airplane deliveries may be years in arrears.
In keeping with the way such matters are handled overseas, an 'interim receiver' has been appointed by a court in Cottbus, Germany. The appointed attorney, Knut Rebholz of Mönning & Partner, claims that, “The order situation of the company is good and the products have a very good international reputation in the market...” while noting that the "most urgent task to enable intensive negotiations to fund operations."
Numerous sources suggest that the present maladies were hastened by a cash flow problem brought on when an order of considerable value was not paid for in a timely manner, leaving Flight Design with a significant problem in maintaining the proper flow of business.
A public statement (translated from the original German account) adds that, "According to the management of the insolvency application has become necessary after an international customer to date has not paid a debt in seven figures. This has led the company to a liquidity squeeze. The management had therefore sought alternative financing to bridge the time until receipt of outstanding payments. This has not succeeded."
In the coming weeks, Rebholz sees as one of (his) most urgent tasks to enable intensive negotiations to fund operations, "Only then is it possible to complete the remaining work and to hand over the remaining aircraft to the waiting customers."
It is not yet known whether or not that the aforementioned overdue orders, here in the USA, will be further adversely affected by this state of affairs and we have inquires out now to seek some insight into those purchaser's fortunes.
Recently; Flight Design USA told ANN that it had secured an alternative manufacturing partner for the Flight Design CT series of Light Sport Aircraft, a partner that also has a role in the C4 program. The Chinese entity, AeroJones Aviation, is a significant player in the Asian aerospace community is part of a larger concern that employs in excess of 20,000 people. As noted earlier in the month, AeroJones Aviation has been producing the CTLS series for (primarily) the Southeast Asian market and has been working with Flight Design for more than two years during the technology transfer process. The program included production-worker training, quality-management training and the gradual build up to finished airplanes, which occurred in summer of 2015. AeroJones has been licensed by Flight Design GmbH to do all fabrication and assembly work needed to serially build CTLS aircraft to ASTM standards.
It seems apropos to note that the issues thus far disclosed are not directly associated with the US distribution company (though it is obviously affected by the problems so far uncovered)... and that the general rep of Flight Design USA and its principal, Tom Peghiny, has been a good one that has been largely free of complaint or scandal.
Peghiny's confidence in the AeroJones solution was expressed when the arrangement was first announced, "Our focus has been on airworthiness, sales, and support and this goal matches perfectly with AeroJones' approved production ability. I have several times visited their facility located in Xiamen, across the Strait of Taiwan from their corporate headquarters, and it is a highly professional operation." Peghiny has reported that he observed that all production processes are done under one roof and in-house production equipment includes 5-axis CNC machinery, water and laser cutters, welding, and composite layup.
ANN will be interviewing Peghiny and others shortly... we look froward to bringing some clarity to this matter as those discussions take place.
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