The encyclopedia · Finance & Accounting · Financial decision · 1990–1996
Fokker built the planes that defined early aviation — then went bankrupt twice
Fokker built the triplane that made the Red Baron famous. The company went bankrupt in 1996 after Daimler-Benz pulled funding, leaving 3,500 jobs lost.
Fokker · Daimler-Benz · 1996-01
What happened
Fokker, founded by Anthony Fokker in 1912, was one of aviation's pioneering companies. Its triplanes and biplanes defined World War I aerial combat. In the interwar period, Fokker was the world's largest aircraft manufacturer. After WWII, the company rebuilt as a regional aircraft maker, producing the F27 Friendship and F28 Fellowship turboprops.
In the 1990s, Fokker developed the Fokker 70 and Fokker 100 jetliners to compete with Bombardier and Embraer in the regional jet market. Development costs were enormous, and the company needed a deep-pocketed parent. In 1993, Daimler-Benz (then the parent of Mercedes-Benz) acquired a majority stake.
Daimler-Benz lost patience quickly. The Fokker 100 was selling slowly, and the regional jet market was smaller than projected. In January 1996, Daimler-Benz announced it would stop funding Fokker. Fokker filed for bankruptcy on 15 March 1996, with 3,500 employees losing their jobs. The Fokker 70 and 100 programs were cancelled. A company that had built the Red Baron's triplane was liquidated by a car company's accountant.
Why it happened
- The Fokker 70/100 development costs exceeded the company's capacity to fund them; Fokker needed a parent with patience, and Daimler-Benz had none.
- The regional jet market was smaller than projected in the early 1990s; Fokker built capacity for demand that did not materialize.
- Daimler-Benz treated Fokker as a financial investment, not a strategic asset — when the numbers were bad, the funding stopped.
- Fokker's 84-year history and aviation heritage carried no weight in a Daimler-Benz boardroom; the decision was purely financial.
The lesson
A strategic acquisition managed as a financial investment will be killed when the numbers are bad. Daimler-Benz bought Fokker for its tech, then shut it down over quarterly results.
Aftermath
Fokker's assets were acquired by Stork N.V., which continued Fokker Services (maintenance and parts) under the Fokker name. The Fokker 70 and 100 remain in service with some airlines. A new Fokker Next Gen program has been proposed but not funded. The original Fokker company, which built aircraft for 84 years, is gone.
Sources
- Fokker — Wikipedia (founded 1912; WWI triplanes; F27/F28 postwar; Fokker 70/100 development 1990s; Daimler-Benz majority stake 1993; funding pulled January 1996; bankruptcy 15 March 1996; 3,500 jobs lost)
- UPI Archives — Daimler ends funding of Dutch Fokker (22 January 1996; Daimler-Benz withdrew financial support and closed credit lines; 7,900 employees at Dutch facilities; Dutch government crisis meeting; Netherlands refused 2.5B DM demanded by Daimler)
spotted an error? The club wants to know.
More like this
Klarna was worth $46B in June 2021 — thirteen months later, $6.7B
Alitalia lost money for 20 years and cost taxpayers €13B
Air Berlin was Germany's second-largest airline — and it lost money for 10 straight years
Somewhere, someone solved the problem this company failed at. 2nd Opinion →
Comments · 0
Sign in to join the comments.