Thielert Woes Create Headaches for Diamond, Cessna

Thielert Aircraft Engines is currently being overseen by a government administrator after the company filed for insolvency earlier this year amid a financial crisis and criminal investigation into the company's record keeping. Company founder Frank Thielert and a chief financial officer were both fired by the board, and a criminal investigation of the company's accounting practices is under way. While operating under interim government funding, Thielert is continuing to produce engines, albeit at a slower rate, and spare parts are hard to come by and exorbitantly expensive.

The result is that owners of Thielert-powered Diamond DA42 Twin Stars and DA40 tdi singles are left in the lurch, with an increasing number of them grounded for lack of available parts.

In a lengthy letter to its customers, Diamond outlined the steps it has taken to try to minimize the pain to its customers, including trying to obtain a stockpile of parts and spare engines. The moves have been futile, however, as spare parts remain either unavailable or prohibitively expensive, a result, Diamond implies in the letter, of the administrator getting top dollar. As a result, says Diamond, the direct operating costs of the engine have more than tripled, and Diamond estimates that the increased labor and parts charges, along with dishonored core deposits, will add approximately $65,000 to the cost of ownership per 1,000 hours of operation.

To make matters worse for Thielert operators (if that's possible), the administrator has also informed Diamond that all existing warranties are invalid. And, for a variety of compelling reasons, Diamond will not, it says, be able to take over Thielert's obligations in that department.

In fact, Diamond's conclusion is that it will not likely be able to work with Thielert until after the insolvency period, which was expected to end in July, and that many customers will be stuck with grounded aircraft for the foreseeable future. Moreover, it expressed doubts about the future of its relationship with Thielert going forward from there.

For its part, Cessna has advised customers that it will not be delivering Thielert-powered 172s by this summer, as it had planned, and that it was watching the situation carefully.

Even after the insolvency period, Thielert's future appears cloudy. Its best customer, Diamond, is working closely with a new diesel engine manufacturer, Austro Engines, on a 170 hp model that will be new equipment on its diesel-powered airplanes. It will also be retrofittable to existing Thielert-powered DA42s. While the pot is sweetened by the fact that the new engine will likely boost the Twin Star's performance substantially, Thielert owners who decide to or who are forced to upgrade will likely have to bear the brunt of the costs involved, as they stand in line with other creditors for their small piece of the bankruptcy judgment. All things considered, it seems unlikely that Thielerts will find a home on Diamonds in the future.

Diamond expects the Austro engine to earn European certification shortly.