Taiwan to Build Airplanes With British

TAIPEI, Taiwan — British Aerospace said Wednesday that it will build passenger airliners with Taiwan Aerospace in a $500-million deal that follows the unraveling of an earlier agreement between Taiwan and McDonnell Douglas.

A Taiwan government official said the British Aerospace joint venture was a more appropriate one for Taiwan, which has been seeking a partner to help develop its fledgling aerospace industry.

Separately Tuesday, British Aerospace reported a loss of $220 million for the first six months of 1992 and said it will cut 3,000 jobs as part of a company reorganization.

According to a memorandum of understanding, British Aerospace and Taiwan Aerospace will manufacture airliners ranging from 70 seats to 115 seats and will also study the possibility of producing a slightly larger aircraft. The planes will be assembled in Britain and Taiwan, with the first aircraft due for delivery in December, 1993, officials from the two companies said at a press conference in Taipei.

Taiwan Aerospace, which is 30%-owned by the Taiwan government, signed an agreement last November with McDonnell calling for the Taiwan company to purchase up to 40% of Long Beach-based Douglas Aircraft Co. for $2 billion. But that deal appeared to fizzle this summer after Taiwan Aerospace Chairman Earle J. S. Ho announced that the company wanted to renegotiate terms with Douglas.

Douglas has said it needed to find a foreign partner to help finance development of the MD-12 jumbo jet.

The company has slowed down development of the aircraft and now does not expect to launch it until some time next year.

The new deal with British Aerospace is better than the McDonnell proposal, said Ho, adding that “the size of this venture is more suitable for the development of Taiwan’s aerospace development.”

A government official with close ties to Taiwan Aerospace also praised the new proposal, saying it was more realistic than the McDonnell deal. The McDonnell agreement had called for joint production of the MD-12.

“This isn’t a paper airplane; there are orders for it already,” the official said. “This is much closer in scale to what we can do.”

British Aerospace has received 32 orders for the RS series planes, said Charles B. G. Mansfield, president of British Aerospace’s regional aircraft division.

While the British deal appears to be the final blow to any hope of McDonnell saving its Taiwanese partnership, Ho held out the possibility of working with the U.S. company in the future.

“This is not to say that we don’t have any relations with McDonnell Douglas,” he said. “Actually, there are many possible programs that can be discussed.”

Claiming that the partnership with Taiwan Aerospace would be like a marriage of equals, Mansfield said Taiwan would receive access to all of British Aerospace’s technology.

McDonnell’s reluctance to share vital technology was used by critics here to attack Taiwan Aerospace’s proposed partnership with the Long Beach company.

“Unlike our competitors, we have zero reluctance to share technology,” Mansfield said. “Every bit of technology we have, Taiwan Aerospace will also have--no holds barred.”