A war of words is raging between Thielert Aircraft Engines and its main customer that could cloud prospects for salvaging the insolvent engine maker. Lack of capital, compounded by accusations of accounting irregularities, forced Thielert into insolvency six weeks ago, and have meant turmoil for those using its engines, such as General Atomics, Cessna and Diamond Aircraft, even though the German insolvency process assures that work at the plants continue.

Diamond Aircraft CEO Christian Dries says 72 Thielert-powered aircraft are parked by customers, waiting for parts. Moreover, the aircraft maker itself has around 40 aircraft in production waiting for engines. A livid Dries points out that 80% of Thielert engines are used on Diamond Aircraft and, he contends, the insolvency administrator has not been responsive to concerns. "I've never experienced such a level of arrogance," he charges. Second- and third-quarter output at Diamond is expected to be hit by the engine situation, although company officials will not indicate how many fewer than planned deliveries they anticipate.

Thielert officials concede the insolvency proceedings have had consequences such as the voiding of warranties. Moreover, insolvency administrator Bruno M. Kuebler notes that prices for new engines have increase 20%. Thielert will make parts and engine deliveries, but only on pre-payment.

Not everyone is disgruntled by their dealings with Thielert, however. General Atomics CEO Tom Cassidy says the engine maker has guaranteed it will provide enough powerplants this year for the U.S. Army Sky Warrior unmanned aircraft. The initial batch is still in the 1.7-liter (0.45-gal.) version, although General Atomics will shift to the 2-liter version along with Thielert. Cassidy sees no reason to walk away from Thielert at the moment.

Moreover, Kuebler says there are investors interested in taking over Thielert, although talks will not get started in earnest until later this month and could run several months. What's not clear now is how much investment is needed to improve the reliability of Thielert engines, which are below promised performance levels.

Although Diamond officials have mentioned a 100-million euro ($1.57-million) figure for Thielert, Kuebler insists no takeover price exists at this point. Although Diamond is among those expressing interest in the company, Dries also questions Thielert's long-term prospects if relationships with clients don't improve. In fact, Diamond has set up its own engine affiliate, Austro Engines, to remanufacture Mercedes Benz engines for use on aircraft, just as Thielert does.

Diamond expects to receive certification imminently for production of the Austro Engines AE300 and for parts for other powerplants, such as the Thielert Centurion engines. Setting up the engine capability has cost Diamond more than 40 million euros. As a result, even though Austro Engines is focused mainly on supplying Diamond, Dries says other work may be sought. Spare parts production for Thielert engines could aid other customers, and the AE300 powerplant could fit the Cessna 172 and 182, he notes. Dries suggests that if Austro Engines succeeds, the long-term outlook for Thielert is bleak.

However, Guenther Kappler, a German engine expert brought in to help Thielert, argues that Austro Engines faces a challenging period in which it must learn the lessons of making engines reliable that Thielert has already learned.

Amidst the verbal sparring, Diamond has introduced a series of new aircraft based on the Austro Engines AE300 2-liter engine. The DA50 Magnum took its first flight May 14 and made its first public appearance at the International Aerospace Exhibition and Conferences in Berlin last month. The all-carbon-fiber aircraft has a 1,480-kg. (3,263-lb.) maximum takeoff weight, and has been given priority over the DA50 Super Star powered by a Teledyne engine. The Magnum also is being offered with standard synthetic vision system.

Versions of the DA40 and DA42 with the AE300 are also in flight-testing. Dries concedes that the engine is heavier, but says other performance advantages, such as speed, compensate. For instance, the DA40 Diamond Star AE Turbo's maximum cruise speed should increase to 160 kt. The DA42 is undergoing structural tests to ensure the AE300 can be used in retrofits. The new engine increases the DA42's maximum takeoff weight to 1,900 kg. from 1,785 kg., and the retrofit should see the same results. Diamond also is trying to advance other work: The first unmanned DA42MPP surveillance aircraft should fly soon and the company hopes to deliver the first D-Jets by the middle of next year.

Thielert, for its part, also is looking ahead, despite its precarious situation. Founder Frank Thielert, who is under investigation for manipulating financial statements, says his company hopes to gain market share through new applications, including helicopters.

DA-50 Magnum photo: Diamond Aircraft