Work continues in Germany on four Dornier 328Jets at AvCraft Aerospace despite the company's bankruptcy filing.

Now operating independently from its former U.S. parent, AvCraft, the German operation earlier this month cut its payroll from 345 to 190.

The German company filed for bankruptcy on March 10, but had been able to maintain its employment at 345 until just recently.

The German law firm Pluta and one of its attorneys, Martin Prager, are the court-appointed supervisors of the German company. Prager is actively trying to sell the facility in Oberphaffenhofen and the production rights to the Dornier 328Jet. Prager is courting both private equity investors as well as established industrial companies. Prager had earlier expressed confidence a buyer could be found by June 1; however, he is now not as hopeful for a fast sale. "The June 1 date is not etched in stone," said Alison Chambers, a spokeswoman for AvCraft Aerospace.

If Pluta cannot sell the operation as an operating unit, Chambers said the facility may be sold off piecemeal.

Since AvCraft purchased the 328 assets from the bankrupt Fairchild Dornier, it has restarted the production line and completed five airplanes there were in various stages of production when Fairchild closed the factory in 2002. AvCraft built two new planes before filing for bankruptcy.

At the current staffing levels of 190, Chambers said the facility can build 14 planes a year. There are 21 firm orders and options for planes.

"They need to keep the employment at the current level in order to keep their production license current," Chambers told Regional Aviation News. The continued production of the aircraft has been sanctioned by LBA, the German aviation authority.

Wolfgang Walter, the managing director of the German plant, continues to run the plant and supervise sales efforts of the aircraft.

Three of the planes now on the production line are committed to China's Hainan Airlines. The Chinese carrier is the largest operator of the 328Jet fleet with 27 now in operation. However, Hainan has yet to take delivery of three other planes that it agreed to purchase.

In a statement, Prager noted that the delayed payment on four planes led to the AvCraft's bankruptcy. "The financial standing of AvCraft in the United States was simply not strong enough," Prager said, to carry the German operations.

The irony of the situation is that Hainan's slow payments on its earlier orders was a contributing factor in Fairchild's bankruptcy.

The fourth plane currently on the assembly line is to be delivered to Club 328. It is being outfitted as a 30-passengers as a corporate shuttle.

The second newly completed plane "is being eyed by Euromanx," Chambers said. Euromanx is a corporate affiliate of Club 328.

When AvCraft CEO Ben Bartel began marketing the plane last year, he said he was able to discount the price because AvCraft did not have to recoup Fairchild's development costs. Now it may be competing with used 328Jets.

Last week, Delta Air Lines [DAL] decided not to re-introduce its 30 328Jets into the Delta Connection fleet. The fate of these planes is not known.

AvCraft had been based in Leesburg, Va., but those offices are now closed. Bartel is now operating out of the company's servicing and finishing center it built in Myrtle Beach, S.C. Bartel did not return calls placed to the South Carolina facility.

>>Contact: Alison Chambers, 44 (0) 1962 736600.<<