What's German For "To The Mattresses"?

Accused of mounting a "misinformation campaign" by Dr. Bruno M. Kuebler, the director overseeing insolvency proceedings at Thielert Aircraft Engines, on Wednesday Diamond Aircraft came back swinging... saying statements Kuebler made at a press conference during this week's Berlin Air Show were, frankly, ridiculous.

As ANN reported, Diamond was initially optimistic an amicable solution would be reached in securing needed engines and spare parts from the foundering enginemaker, following Thielert's April 24 insolvency filing. In a customer letter sent this month, however, Diamond's tone shifted... and the company pinned the blame squarely on Kuebler, whom Diamond accused of acting against not only its best interests, but also Thielert's.

This week at ILA 2008, Kuebler took up the gauntlet -- stating Diamond is conducting a "misinformation campaign" to make customers of its DA40 tdi and DA42 feel "massively insecure." Furthermore, Kuebler said Diamond isn't being entirely truthful in telling customers it tried to secure available engines at fair prices, but was turned down when Kuebler refused to play ball.

"In actual fact, Diamond offered to buy a large quantity of engines and spare parts -- but at a price considerably lower than the price that would be charged to end customers," Kuebler said. "That’s how Diamond tried to negotiate special conditions."

Representatives with the London, Ontario planemaker immediately responded to Kuebler's comments. "Diamond has distributed information to its customers that accurately describe the current situation," they said. "The single information letter that describes the current situation hardly constitutes a 'campaign'. The interests of Diamond and its customers are the same; those of the insolvency administrator and TAE are not.

"Diamond has no possible motive to make its customers feel 'massively insecure'," Diamond added. The planemaker notes the facts speak for themselves in that regard: over 50 TAE-powered Diamond planes are currently AOG (aircraft-on-ground) due to lack of support and parts from Thielert, and 60 percent of Diamond's annual production is stopped due to lack of available engines.

The planemaker also refuted Kuebler's claims that Diamond attempted to negotiate cut-rate prices on engines and parts, "considerably lower than the price that would be charged to end customers. That's how Diamond tried to negotiate special conditions."

Kuebler adds Thielert made a counteroffer to Diamond on May 13, "in which ninety percent of the required spare parts available would be delivered to Diamond. Now that more than one week has passed, we will release the parts for the market."

"This statement is intentionally misleading in that our offer was made prior to publishing of the latest TAE price list and in that there was never any negotiation of more favorable terms after the price list was published," Diamond responds. "Dr. Kuebler knows better, since he personally conducted the meeting with senior Diamond management when our offer to purchase all available parts and engines was made."

Thielert has since resumed delivery of spare parts and engines to its customers, and the company is even seeking new orders to raise badly-needed capital. "However, in accordance with German insolvency law we are forced to demand payment in advance," Kuebler added. "The same provision applies also to maintenance work. At the present these measures are indispensable for maintaining the company’s business operations."

Diamond says Thielert -- and Kuebler -- are being disingenuous in trying to attract new business. "We can’t speculate on the motives, but we question how one would reasonably expect to attract either significant orders or investors with a now financially non-viable product and a policy of bleeding a captive customer base," Diamond said. "This is not fear-mongering -- it is the current factual situation and Diamond is pursuing all possible avenues to provide relief to its customers. As these bear fruit, we will be communicating news to our customers. We attempted constructive cooperation with Kuebler, making explicit sensible offers that would have cost Diamond significant amounts of money and would have not required cash infusion on the part of TAE; however, these offers were bluntly rejected.

"We remain committed to finding the best solution for our customers and we would far prefer constructive cooperation with TAE/Kuebler vs non productive public exchanges."

In the meantime, Diamond is also working closely with Austro Engines (AEG), which is developing its own heavy fuel/diesel engine. That engine has already flown on the DA40, the DA42, and a DA50 prototype, and EASA certification is expected later this summer. Diamond expects to make the engine retrofittable to Thielert-powered aircraft in the future.

FMI: www.diamondaircraft.com, www.thielert.com, www.kuebler-gbr.de/e