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Fri, Oct 24, 2003

Layoffs At Aero Vodochody

10% of Workforce Going Home, as L-159 Backlog Dries Up in Wake of Indian Decision

Aero Vodochody's L-159 subsonic trainer (below) hasn't won a lot of friends in the five or so years it's been flying. Designed as a logical successor to the popular but old-tech L-39 Albatros, the subsonic machine has gained a reputation as either too complicated, or too expensive for its level of sophistication, or just 'not a good trainer' (whatever that means). At any rate, it has garnered no orders, except from the Czech Republic homeland, which ordered 72 of the machines since the 1997 introduction.

Now, 200 of the company's 2100 workers are being given pink ships. Boeing, which owns 35.3% of the company (and holds second place to the state's LETKA, which owns 35.7%) reportedly wanted to axe a lot more; but the majority management is said to want to keep the highest-skilled people around, in hope of getting a decent order, from... somewhere. With last year's introduction of the two-place L-159B, the training market could still turn to the Czech firm, which is offering the matched-pair set of single- and two-place birds.

Last month, after years of negotiating, India, long a primary target market for the -159, decided instead to order some five dozen BAe Hawks (below), instead of the L-159s. That nearly-$2 billion order had kept hopes for a third straight profitable year at the company alive. Now, with debt a bit higher than cash, the company's future will hinge on some other country's acceptance and need. Soon. Aero is now looking at the end of production, hoping its sales force can shake the order trees in Poland, or perhaps in an African or Asian state, before the workers run altogether out of work.

'Helpful outsiders' are offering all kinds of advice, including resurrecting the sweet-flying L-39, with a 21st-Century electronics, avionics, and systems training package. It was simple to build, flew like a dream... and the tooling is still available. With upgrades -- perhaps even a modern Western engine, the "Albatros II" might be the price-point leader; but the development of a nearly-new airplane, when no orders are on the table, might be an investment that Boeing won't want to make, and the Czech Republic simply can't.

Another road Aero Vodochody may take is as a supplier of parts and subassemblies, not only to Boeing, but also in the spares business, for the L-39s (above) and other machines, where its manufacturing expertise and distribution channels are well-established.

FMI: www.aero.cz/eng/default.htm

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