Sales updraft should help Canada spin off an aircraft company
Selling a government-owned aircraft company just became a lot easier for Ottawa. The reason is a big order from Seattle. De Havilland Aircraft has made the biggest sale in its history. Horizon Air, a commuter airline in Seattle, bought 10 Dash-8 aircraft worth $94.5 million (all figures in Canadian money). Horizon took an option on 10 more for a deal that could finally be worth $200 million.Skip to next paragraph
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The first Dash 8 planes, which are to replace the aging fleet at Horizon Air, will be delivered by the end of 1986, meaning a big cash injection for troubled de Havilland -- one of two aircraft manufacturing companies owned by the Canadian government, the other being Canadair of Montreal.
The government has put both on the auction block, and so far the most interested suitors look like two American giants, Boeing and McDonnell Douglas. Other possibilities include Gulfstream, Fokker of the Netherlands, Messerschmitt of West Germany, and British Aerospace.
Until this deal with Horizon Air, Canadair looked like the more salable property. It manufactures the Challenger corporate jet and has sold 124 of those so far. It also produces a water bomber and sold two more of those to Italy for $15 million just last month.
Canadair had a profit of $9.5 million on sales of $184 million in the first half of this year. That compares with a small profit of $961,000 for the same period in 1984, but on sales of $232 million.
De Havilland has been a consistent money loser. On sales of $125.8 million in the first half of this year it lost $39.2 million. It lost $41.6 million for the same period last year on sales of $96 million.
The government bought de Havillland from its British parent company in 1974 for $40 million to help preserve the ailing Canadian aviation industry. Since then Ottawa has poured $650 million into the company, leaving it with a modern, high-tech plant and preserving 4,100 jobs.
De Havilland has spent a lot of that money developing short-takeoff-and-landing planes.
These were originally special planes for bush pilots to land on lakes or makeshift strips on ice or tundra; the Beaver single-engine aircraft became the workhorse of the bush.
Taking off from a short runway was essential in the bush and is now a decided asset when flying to isolated communities or small towns with short runways.
The company's stable consists mainly of three aircraft, ranging from the Twin Otter, a two-engine, 19-passenger aircraft with more than 900 sales, to the Dash 7, a four-engine airliner carrying 50 passengers which has sold 105 models so far.
The Dash 8 is the latest aircraft developed by de Havilland. It is a twin-engine aircraft and carries 36 passengers.
Both the Dashes use quiet turboprop engines, which makes them ideal for landing at city airports. At Toronto Island Airport, in the center of the city, a Dash 8 taking off or landing makes less noise than a twin-engine private plane. De Havilland has not had a rosy financial decade. Its losses have embarrassed the government, but its latest sales success may make it easier to get it back into private hands.