Air Transport World

Losses prompt Fairchild to rethink Saab partnership.

Continuing financial distress has moved Fairchild Industries to discuss divesting its part of the risk-sharing SF-340 program with partner Saab-Scania. This follows two consecutive quarters of red ink, sales of three profitable subsidiaries, and threats to its contract to build the T46A jet trainer for the U.S. Air Force.

Problems began in August after Fairchild revealed second-quarter 1985 losses of $82.3 million on top of $11.1 million lost in the first quarter. The losses were initially attributed to high start-up and marketing costs for the SF-340.

As a result of the two quarterly reports, Fairchild first established cash reserves of $50 million, then added another $85 million to cover shortfalls in the commuter aircraft program. The company also banked reserves to cover similar losses in the Fairchild Republic T46A project, setting aside $28 million after the first quarter figures were in and adding $21 million following the second report. …

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