Thielert Aircraft Engines Insolvency = Diamond AOG

Thielert Aircraft Engines filed for insolvency on 25 April as its share price dropped to .35 Euros—the company has traded as high as 25.22 since it went public in 2005. The very existence of the company is now in question as the insolvency process begins. “The going concern of Thielert Aircraft Engines GmbH can only be ensured permanently by restructuring activities with the support of investors, due to the fact that the Holding Thielert AG is not capable to do so anymore,” the company’s supervisory board said in a statement.

Meanwhile, a new executive board must be named, along with an interim insolvency trustee who will present a plan to creditors, and the acceptance of this plan is crucial to the business continuing. On 24 April, the board dismissed company founder Frank Thielert and Chief Financial Officer Roswitha Grosser after receiving results of preliminary criminal investigations into their activities. One investigative report said the criminal investigation revolved around allegations that the company had created false invoices and included them as part of their accounts receivables to enhance the financial position of the company.

Thielert’s insolvency has major implications for Diamond Aircraft, whose aircraft are powered by Thielert diesels (Cessna recently suspended introduction of a Thielert-powered version of its C172 Skyhawk).

Many Diamond aircraft are now grounded because of the lack of spares support. Diamond aircraft has criticised the German bankruptcy firm overseeing Thielert, describing the prices the administrator has set for parts as “abusive”. For example, a new gearbox, which each Thielert engine requires every 300 hours, has been priced at €10,113 (around US$15,700). Other scheduled replacement parts, such as clutches and high-pressure pumps, have been similarly highly priced.

Adding to difficulties and expense for owners of Thielert-powered aircraft (there are about 600 aircraft around the world powered by Thielert engines), they are expected to pay in advance for the parts—with no guarantee of their delivery—and arrange their own shipping.

Diamond aircraft had proposed a deal to the bankruptcy administrator whereby Diamond would pay up front to secure large number of engines and spares in order to get its AOG aircraft flying. However, the administrators would not accept any part of Diamond’s proposal. Diamond said, “We have gained the impression, based on several actions taken, that the goal of the administration is to maximise near-term cash-flow from what they seem to view as a ‘captive’ audience—operators of Diamond aircraft using TAE engines, whose only alternatives are to either park AOG aircraft, or pay whatever price TAE may ask for parts.”

Diamond says its priority is to offer the best possible support to owners in the field, but is unable to give specifics. The company is developing a new diesel engine in conjunction with Austro Engines, which will be retro-fittable to Diamond DA40 and DA42 aircraft. However, even European certification won’t be completed until at least this (European) summer. Production of the engines for the European market is currently planned for later this year. American certification of the Austro engine would probably take at least another year.

As a result, until the new engine has been certified and is being produced in worthwhile numbers, there are likely to be significant numbers of AOG Diamond aircraft around the world in the near future.