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Fairchild Aircraft (formerly Swearingen Aircraft Corporation)

Fairchild Aerospace Corporation, headquartered in San Antonio, Texas, was a leading manufacturer of jet and turboprop aircraft for the airline, corporate and government markets and provided a wide range of sales, support, production and engineering services for the aviation industry.

The founder of Fairchild Aerial Surveys, Sherman Mills Fairchild (1896-1971), was a pioneer in the field of aerial photography. He was the son of a wealthy congressman from New York, George Winthrop Fairchild, whose time-clock and adding-machine business eventually became the International Business Machines Corporation (IBM). In 1916, the younger Fairchild established himself as a technological leader when he developed the first synchronized camera shutter and flash. During World War I, he became interested in aerial photography and, in March 1919, completed a specialized camera for this purpose with a large, between-the-lens shutter. Shortly afterward he established the Fairchild Aerial Camera Corporation with financing from his father.

By 1924, he had formed Fairchild Aerial Surveys, Inc., and secured a $7,000 contract to photo-map Newark, New Jersey. This was the first aerial mapping of a major city, but was completed at a cost to the Fairchild company of nearly $30,000. During the next few years, Fairchild's aerial survey company saw greater success mapping areas in Canada, New York City and other eastern cities. Originally purchasing airplanes for the business, Sherman Fairchild eventually began manufacturing his own planes.

In 1925, Huff-Daland failed to honor a contract with Sherman Fairchild acting as an independent aircraft salesman prompting the creation of Fairchild Aircraft Manufacturing Corp. He formed Fairchild Aviation Corporation to develop a plane specifically for mapping flights. His first plane, and the U.S. Army's first dedicated photo- reconnaissance aircraft, was the FC-1, a high-wing monoplane with a heated enclosed cockpit to protect the pilot and equipment. The plane provided a steady platform, featured folding wings, and used slots and ailerons for stability. Fairchild also acquired the Caminez Engine Company in 1925 as Fairchild Engine Company, which became the Ranger Engine Division in the early 1930s. In 1927, he incorporated Fairchild Aviation as a holding company. One unit was the Fairchild Airplane Manufacturing Corporation of Farmingdale, New York. Another, acquired in 1928, was the Kreidner-Reisner Aircraft Company of Hagerstown, Maryland. The Fairchild Engine and Airplane Corporation acquired the Fairchild Aircraft Corporation in 1939. In turn, the Fairchild Engine and Airplane Corporation was subsumed by the Fairchild Corporation.

While its Ranger Aircraft Engine subsidiary produced engines for the navy, Fairchild participated in the aviation market largely as a subcontractor during World War II. After the war, Fairchild sought new opportunities in the growing aircraft industry but was hampered by a lack of capital and engineering talent. Nonetheless, the company turned out a successful cargo design called the C-82. It sought to extend its work in this area by developing a second, larger design, the C-119 "Flying Boxcar," but lost the manufacturing competition to the Kaiser-Frazier company. While Fairchild was awarded a subcontract for the C-119 and a subsequent design called the C-123, its employees' resentment for Kaiser was reflected in their work. Furious with Fairchild's performance, the air force virtually shunned the company.

Fairchild turned instead to commercial designs. It established an arrangement with the Dutch airplane builder Fokker to build versions of its popular F-27 airliner. The company also began development of its Goose guided missile system. Unable to sell either design, Fairchild fell into a deep crisis that lasted from 1958 through 1960. Sherman Fairchild returned from retirement to head the company briefly and was successful in repairing damaged relations with the government and returning financial discipline.

When Fairchild began to diversify in the mid-1950s, Fairchild helped create Fairchild Semiconductor in 1957, a spinoff of Shockley Semiconductors by a group of unhappy Shockley employees. Fairchild Semiconductor disappeared in 1987 when it was absorbed by National Semiconductor. It separated from National Semiconductor in 1997 and since grew to a business with almost $2 billion in revenue in 2000.

In 1964 Fairchild acquired Hiller Helicopters, forming Fairchild Hiller, and in 1965 Fairchild acquired Republic Aviation, forming the Republic Division of Fairchild Hiller. In 1966, it introduced the Pilatus Porter turboprop short takeoff and landing (STOL) utility aircraft, which sold primarily as the AU-23 Peacemaker. Fairchild acquired Republic Aviation, a major producer of combat aircraft, in September 1964. Republic became the Republic Aviation Division of Fairchild Hiller. The Republic Aviation Division became Fairchild Republic in 1973, and Fairchild sold Hiller back to its founder Stanley Hiller soon after.

In 1972 Fairchild acquired a 90% stake in Swearingen Aviation, , a maker of light executive and commercial transports. The Swearingen Aviation Corporation was formed by Fairchild to build the Merlin and Metro turboprop commuter series of aircraft. The successful Metro II, based on a Swearingen design, along with the A-10, kept Fairchild active in the aircraft market through the 1970s. In 1981, Fairchild began a partnership with the Swedish firm SAAB-Scania to develop and produce the SAAB 340 airliner, a plane accommodating about twice as many passengers as the Metro.

By 1980 Fairchild was a leading aerospace and electronics company, with major positions also in communications and in commercia! and industrial activities. Fairchild, which once counted heavily on governent contracts for most of its business, was beginning to rely increasingly on commercial and industrial customers. Fairchild's communications and electronics division included operations involved in the design, manufacture and marketing of avionics, electronics and telecommunications products and systems for government and commercial customers. Its space operations involved production of hardware, electronics and systems for space applications and aircraft. The commercial/industrial division produces aerospace fasteners, tooling for plastics computer cabinetry, seamless metal doorknobs, and various typcs of process controls for industry.

In 1981 the company was changed to the Fairchild Swearingen Corporation. After numerous re-acquisition deals the company became part of Fairchild Aircraft. The aerospace business encompassed the design, production and marketing of commcrcial turboprop aircraft subassemblies for military and commercial airplanes and the development and production of the T-46A military jet aircraft trainer. Fairchild faced considerable uncertainty in its aerospace division. Fairchild pursued a strategy of limiting its participation in the aircraft business, choosing to concentrate more of its resources in growth areas such as communications and electronics. As part of that strategy, Fairchild actively pursued buyers for its Fairchild Republic and Fairchild Aircraft units, or partners that would share the costs of those operations.

In 1985, company president Emanual Fthenakis announced that Fairchild would withdraw from civil aircraft production. In 1986, Fairchild sold its rights to the Metro. The Air Force announced that it would not seak funding in fiscal 1987 for the T-46A program, the loss of which placed the parent company s Fairchild Republic Co. in jeopardy. The official end of the T-46 program in March 1987 marked the end of over 60 years of Fairchild aircraft manufacturing. Rising production costs and schedule problems with Fairchild's last aircraft, the T-46, led to the announcement that Fairchild Industries was leaving the aircraft business. Late in 1987, Fairchild dismissed its remaining 3,500 employees at Farmingdale and closed the plant.

The company still retained space, electronics, and subcontracting work. A metals firm, Banner Industries of Ohio, acquired it in August 1989. The new company, which changed its name to The Fairchild Corporation, is diversified firm with only a slight connection to the aerospace industry. The Fairchild Corporation is engaged in the design and sale of protective clothing, helmets and technical accessories for motorcyclists in Europe and the United States; and in aerospace distribution businesses which stock and distribute a wide variety of parts to aircraft operators and aerospace customers providing aircraft parts and services to customers worldwide. Fairchild Sports consists of Hein Gericke, PoloExpress and Fairchild Sports, USA, Inc. ("FSUSA"). Banner Aerospace is a diversified family of companies forming the aerospace distribution division of Fairchild. In 1994, Orbital Sciences Corporation purchased Fairchild Space and Defense Corporation from Matra, a French aerospace company. Orbital sold Fairchild's Defense Unit to the British company, Smiths Industries, in 2000.

In 1991 the Fairchild Corp sold its Metro plant in San Antonio, Texas, at which time the new owners took the name Fairchild Aircraft, and later Fairchild Aerospace. In 1996 Fairchild Aerospace acquired Dornier to form Fairchild Dornier. Fairchild Aerospace then traded as Fairchild Dornier. Daimler Benz sold Dornier to US manufacturer Fairchild, seemingly because Daimler Benz wanted to see the back of an under-performing subsidiary that was proving to be a money hole.

Dornier Aviation (North America) (DANA) was a wholly-owned indirect subsidiary of Fairchild Dornier GMBH (GMBH), a German aircraft manufacturer. Fairchild Dornier GMBH is the sole shareholder of Dornier Aviation Holdings North America (DAHNA), which in turn is DANA's sole shareholder. Fairchild Dornier GMBH was itself a subsidiary of Fairchild Dornier Corporation. The company's main operations, with 3,600 workers, were based at Oberpfaffenhofen, Bavaria, near Munich, reflecting its descent from Dornier Luftfahrt, a German airplane builder bought by Fairchild in 1996. The company had 700 workers in the United States, mainly in San Antonio.

In December 1999 the German insurer Allianz A.G. and the United States investment group Clayton, Dubilier & Rice Inc. bought the Fairchild Aerospace Corporation for $1.2 billion. The deal included a $400 million cash injection into the privately held aircraft manufacturer and $800 million in debt financing from a consortium of German commercial banks and other institutions. Fairchild was expected to use the funds to develop a new generation of aircraft. The company made a 32-seat jet and was developing a 44-seat version and a new generation of 50- to 105-seat jets. Fairchild had been courting potential investors since it scrapped a $300 million bond offering because of weakness in the financial markets.

Fairchild Aerospace Corporation, a US-German partnership, through its subsidiary Fairchild Dornier, was a leading manufacturer of jet and turboprop aircraft for regional markets. Dornier and Republic Aviation, an American predecessor of Fairchild, built warplanes for opposing sides in World War II, planes that met in combat over Europe.

In 2001 Fairchild Dornier GmbH was the world's third-largest manufacturer of regional jets. Its two namesake predecessor companies produced some of aviation's most unique and effective military aircraft. After merging, both Fairchild and Dornier then set their sights on the hotly contested market for small regional airliners. In 2002, however, Fairchild Dornier filed for bankruptcy protection and shuttered its U.S. operations; the future of the company in Germany also remained uncertain.

Manufacturers of regional jets felt the ill effects of the post-September 11 downturn in the airline industry. Bombardier and Embraer cut staffs in fall 2001 and predicted fewer deliveries for 2002. This was part of a long-expected shakeout. Future growth for regional jet makers is tied to airlines' buying larger models. Pilot scope clauses that set limits on the number of regional jets permitted to operate limit potential markets in the US. Also, new security requirements that result in earlier arrivals for passengers at airports make the short-haul market less competitive.

Fairchild ran out of money after becoming grossly over-extended by attempting simultaneously to develop the 428, 728 and 928 regional jets. Fairchild Dornier filed for insolvency under German law, a move similar to entering Chapter 11 bankruptcy in the US, on April 2, 2002. The company, owned by the German insurer Allianz Capital Partners and the American investment firm Clayton Dubilier & Rice, had been trying for months to line up a strategic partner to help it bring to market the 70-seat jet it has been developing since 1998. Fairchild Dornier, whose sales had lagged far behind the two industry leaders, ran into trouble by underestimating the cost of developing the new 728JET. The company had 125 firm orders for the new jet. The prototype was scheduled to make its first flight in August 2002.

An extremely difficult matter with international involvement was the fact that Fairchild Dornier GmbH also had affiliated companies in the USA, in particular DANA (Dornier Aviation North America). Besides DANA, there are eight more US companies. Immediately after filing for insolvency, the administrator dispatched a competent staff member to San Antonio who took care of the US matters. After filing by Fairchild Dornier GmbH in Oberpfaffenhofen, most of the people working for DANA and/or Fairchild Dornier Corporation were laid off. These employees eventually filed for liquidation proceedings under Chapter 7 of the US Bankruptcy Code. These proceedings were not instituted in San Antonio but at the administrative headquarters of Fairchild Dornier Corporation in Virginia. The insolvency administrator of Fairchild Dornier GmbH then filed for changing the proceedings to proceedings under Chapter 11. At the hearing dated 25 May 2002, the local court then ordered this change. Finance was provisionally secured by a Debtor in Possession loan.

The court appointed Fairchild Dornier filed bankruptcy administrator determined that the company would have to be sold in pieces. Fairchild/Dornier entered into bankruptcy and sold the rights to its aircraft. programs to various investors in early 2003. Fairchild Dornier's assets went to AvCraft (Virginia, USA), RUAG Aerospace (Switzerland) and M7 Aerospace (Texas, USA).

The creditors' committee approved administrator Eberhard Braun's plans to sell the 328JET regional jet production line, and customer support for the existing 82-strong fleet, to the US manufacturer Avcraft. AvCraft provides service to its customers at every turn. Avcraft services the premier family of Dornier 328Jets and Turboprops. Avcraft's state-of-the-art facilities in Myrtle Beach, South Carolina offers over 180,000 square feet of newly renovated hangar space, support shops and administrative areas. Reflecting AvCraft's worldwide activities, the Myrtle Beach facility is a certified FAA 145 and JAR 145 approved repair station. For operators of the Dornier 328, AvCraft-Myrtle Beach service center is the only factory-authorized Dornier 328 service center in North America.

Fairchild assets were acquired by M7 Aerospace in late 2002, including 426,000 sq ft factory. M7 now supports Metro and Merlin including M7 Merlin upgrade program. M7 Aerospace LP became the newest name on the San Antonio International Airport on April 1, 2003 when it took over operational control of the combined assets of three functioning former Fairchild subsidiaries, Merlin Express, Metro Support Services, and Gen-Aero, as well as the assets of Dornier Aviation (North America) (DANA). M7 was awarded the Fairchild assets by a Federal bankruptcy court in San Antonio in December 2002. In February of 2003, M7 Aerospace was additionally awarded the assets of Dornier Aviation (North America) (DANA) by a federal bankruptcy court in Alexandria, Virginia. M7 has consolidated the assets of these operating companies into a single organization with four business lines: Parts and Customer Support; a Repair Station; Government Programs; and Manufacturing. The Parts and Customer Support business serves the operators of Dornier 328 turboprop and jet regional airliners, as well as the operators of Fairchild Metro and Merlin turboprop aircraft. M7's Repair Station, which formerly operated under the name Gen-Aero, caters primarily to regional airliners, with an initial focus on Fairchild Metros, Dornier 328s and Embraer 135 series regional jets.



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