Daimler Cuts Fokker in Restructuring Plan

German industrial conglomerate Daimler-Benz, disclosing an expected $4.05-billion loss for 1995, said Monday it can no longer afford to prop up its troubled Dutch aircraft unit Fokker.

Daimler said after hacking off unprofitable businesses in an aggressive restructuring effort, the company was set to return to profit this year.

“Profitability in all business sectors is the first goal of the company,” Daimler Chairman Juergen Schrempp said in a statement.

“More than 80% of our business is running satisfactorily. In the interest of our shareholders as well we can no longer allow the other 20% to hurt the group.”

The 1995 losses come after one-time charges of $1.55 billion related to Fokker, and $1.01 billion from the reorganization of industrial group AEG.

Analysts, who had seen the Fokker decision coming, said the loss was larger than expected and that Daimler seemed to be squeezing all its bad news into the 1995 financial statement.

Last week, Daimler announced it would absorb the remainder of its troubled AEG group. The decision followed months of wrangling over the future of AEG, which had been stripped to its core activities amid concern over losses.

“Daimler is financially healthy. It can absorb such a loss, but I’m not sure if the turnaround will be this year,” said Peter Schmidt, analyst at Automotive Industry Data.

Daimler posted a $1.05-billion net loss in the first half of the year, mostly because of red ink at its Daimler-Benz Aerospace unit.

The company may take a 1995 loss of $2.7 billion because of problems at Fokker, but that it could return to profit in 1997. It lost about $297 million in 1994.

Daimler, which bought Fokker only three years ago, has pumped billions into the illustrious Dutch company, only to see it post mounting losses.

Fokker Chairman Ben Van Schaik said late Monday that no conclusion had been reached on the company’s immediate future.

“The talks held because of this have at this moment not led yet to a conclusion, while [Tuesday] morning talks will take place with parties directly involved,” Van Schaik said in brief statement, declining to answer any questions.

“I can at this moment sadly make no further announcements,” he said.

Van Schaik made his announcement after a meeting of Fokker’s management and supervisory boards.

Analysts said Fokker will probably seek protection from creditors and help from the Dutch government while it attempts to save parts of its business that can operate without Daimler’s support.

Fokker’s problems came to a head last August when it disclosed a record loss of $277.3 million, which was brought on by sluggish demand, unfavorable exchange rates and maybe more importantly, high production costs.

Daimler’s decision to cut off support for Fokker follows three months of talks with Fokker’s other major shareholder, the Dutch government, on how to save the company and thousands of jobs.

Government officials were meeting Monday to decide whether to bail out the aviation group once again.

Analysts said Daimler’s decision could spell the death of Fokker, which over its 76-year history has forged a leading role in aviation.