Thielert's Board is Steamed, and Here's Why That's Not Good

  • E-Mail this Article
  • View Printable Article
  • Text size:

    • A
    • A
    • A

Frank Thielert

Developing a new aircraft engine for general aviation is such a daunting undertaking that not many companies attempt it, including Lycoming and Continental. It's not that it's technically difficult—compared to the automotive industry, the engineering is actually relatively rudimentary. The challenge is selling enough of them to make the enterprise profitable after you've jumped the certification hurdles.

So the German-based Thielert Group, with its Mercedes-based Centurion four-cylinder aerodiesel, was an unusual success story. The company seemed to be profitable right out of the box, or so its early financials seem to suggest. But things appear to be rapidly unraveling for Thielert. The company's board, citing financial anomalies and a liquidity crunch, removed founder Frank Thielert as CEO two weeks ago, although it allowed him to remain in place as operating officer while it sought new senior management. But this week, the board entirely removed Thielert and CFO Roswitha Grosser, terminating their service contracts on the spot. The reason, the board said, was "among other things, explanations of the management board and information received by the supervisory board from the Hamburg Office of Criminal Investigation in connection with preliminary investigations against management board members of the company."

Further, said the board, the company's financial statements for 2003 through 2005 "are probably incorrect and possibly void." These are the very same financials the company used as the basis of its IPO filing in 2005, so presumably it has concerns about fraudulent financial claims for the IPO, a big no-no in the world of investing. The board said this week that in light of these developments, a group of investors willing to fund a restructuring of the company has said no thanks. In the meantime, the stock has cratered from a high of 25 Euros at the IPO to .43 Euro this week. Unless the board can find more willing investors, Thielert will apparently be left to rescue itself, which doesn't seem likely, in my view.

These developments have wide ranging implications for the GA market, which is already reeling from escalating fuel prices that aerodiesels were supposed to ameliorate.

It's quite possible that Thielert could find itself in receivership. If it does, this will complicate life for owners of Thielert diesels, for Diamond Aircraft and for Cessna. It's hard to imagine how a bankruptcy won't momentarily interrupt deliveries of new engines and parts—which haven't been all that great to begin with, say Diamond and owners we have interviewed. There's obviously a large enough installed base to constitute a business worth reviving but it's hardly a lead pipe cinch toward profitability, for several reasons.

Diamond has been publically critical and privately livid over weak customer support from Thielert for engines in the field. Many owners we have interviewed have complained about the same thing. Diamond had a similar unhappy experience with Rotax for its Katana trainer and, twice burned, it has started its own aerodiesel company at Diamond's Austrian headquarters, the so-called Austro line. This effort is apparently high priority for Diamond, as well it should be. So short term, Diamond has a problem; long term, it has a plan.

Cessna is midstream with development of its Skyhawk diesel, using the new Thielert 2.0 Centurion. I have to think the caps are being popped off the Rolaid jars in Wichita as Cessna—a company not accustomed to being overtaken by events—waits to see what will happen. If no other investors see Thielert's juice worth the squeeze, maybe Jack Pelton will pull another rabbit out of the hat and buy it himself. I'd give the odds of that as about one in 10 because ...

... Lycoming has something in the works, and I think there's a good chance it's a heavy fuel engine. Continental has already said it will announce an aerodiesel this year for certification in 2009. So if this is beginning to sound like Thielert had the market to lose and is just about to do just that, you get the picture.

And how about Superior Air Parts? Flush with cash after its IPO, Thielert bought Superior in 2006, which made good business sense because the Superior's network could serve as the basis for building up Thielert's then non-existent service network. Furthermore, Thielert's Germany-based factory was already doing finish work on Superior's aftermarket engine cylinders so it was a good fit. But one CEO's good fit is another's ready cash source, so we shouldn't be too surprised to see Superior sold off to raise needed cash, if other investors aren't found. [Late addition: An industry insider phones to tell me that if Lycoming or Cessna did buy Thielert for less than 10 cents on the dollar, they'd get all of Superior's PMAs and could compete head to head against Continental for parts. They could also eliminate a pesky competitor and enjoy less constraint on prices for replacement parts. Good for them, bad for owners.]

What all this means is to simply confirm what we've been saying all along: the aerodiesel revolution looks promising, but even the slightest business misstep—never mind a series of them—could tank the market or set it back several years. And that, as much as anything, explains why we don't see many new engines in GA. And the current developments made bode worse for the industry than is immediately apparent.

Comments (35)

GA might soon be a landscape of gliders with no diesel engines and 100LL on the outs.

Posted by: Phillip Peterson | April 24, 2008 3:17 PM    Report this comment

The current crisis in the airline industry relative to high fuel costs and diminishing revenues, may be a harbinger of things to come for GA. Thielert will undoubtedly have a ripple effect throughout the industry, and maybe time for a clean sheet of paper in engine design, and develop a product that will burn Mogas, and do so efficiently ! I'm surprised that aircraft manufacturer's haven't taken a lead role in developing new powerplant's since they have a vested interest in the outcome ! Perhaps they have, and I'm just not aware of it. GB

Posted by: Gordon Bunker | April 24, 2008 3:20 PM    Report this comment

Diamond has a bigger stake in the success or failure of Thielert than Cessna because of the numbers installed in their product already. If they can buy Thielert for pennies on the dollar, wouldn't that be a wise move on their part? Does Diamond have the financial and management resources to solve Thielerts problems?

Posted by: Daryl Medd | April 24, 2008 4:58 PM    Report this comment

Aerodiesels have certainly seemed like the next best thing in GA motors, but I keep wondering why someone like Williams doesn't come up with a small, 500HP or less turboprop to pull the rug out from under P&W's super expensive PT6. I know Innodyn has been trying, but it just seems like a no-brainer to adapt some of the technology going into these new really small turbofans for VLJ's to the turboprop market. I'd sure rather fly behind a 300HP turbine than a 300HP piston engine.

Posted by: Charles Seitz | April 24, 2008 5:57 PM    Report this comment

IMAO it makes all the sense in the world for Lycoming (aka Textron, aka Cessna) to buy Thielert if they can get them at a fire sale price. They can use Thielert's existing technology and certifications to jumpstart their existing Jet-A (diesel) development program. If they end up owning Superior as well, that makes it a no-brainer; what a simple way to dramatically expand their engine business at one fell swoop!

Posted by: Bill Vogel | April 24, 2008 6:33 PM    Report this comment

SMA is another player-but seems to be having difficulty stepping up to the plate. IMHO, the vacuum will be filled relatively quickly. Cessna or Continental will have to jump for fear the other will and market domination is the name of the game. If I was Honda, I would look at this carefully. What a way to get market penetration in a market which is expanding quickly-especially outside of North America

Posted by: david wilder | April 24, 2008 7:42 PM    Report this comment

Just checked Thielerts website. It appears that a Carribean company now holds over 22% of Thielert's voting right-and the filing was this week after the storm broke. Perhaps the game is essentially over and the new control person(s) will use the bankruptcy proceedings to take the Company and run with it.

Posted by: david wilder | April 24, 2008 7:56 PM    Report this comment

Just checked Thielerts website. It appears that a Carribean company now holds over 22% of Thielert's voting right-and the filing was this week after the storm broke. Perhaps the game is essentially over and the new control person(s) will use the bankruptcy proceedings to take the Company and run with it.

Posted by: david wilder | April 24, 2008 7:56 PM    Report this comment

While some feel that mogas is "the answer", nothing could be worse for the GA fleet. Most mogas won't store for more than a few weeks at best and there are hundreds of airplanes sitting on ramps and in hangars for months between flights that would have serious problems with today's mogas laced with alchol. Avgas is safe to use after medium term storag as we see every day. Diesel is the best solution to both the low quanity of avgas used in the world and the low quality of mogas. Thielert had a chance but couldn't understand the importance of customer service in the aviation world. The Mercedes engine is a good starting place for a good diesel. It takes very deep pockets to bring an aircraft engine to market. I would love to fit a 300hp diesel into my Bonanza--if only one were available and would fit????????

Posted by: Dennis Lyons | April 24, 2008 10:19 PM    Report this comment

Dennis Look at the SMA Diesel. I don't think that there is an STC for the Bonanza-yet and SMA is proceeding slowly, but its a good engine

Posted by: david wilder | April 24, 2008 10:32 PM    Report this comment

IS Thielert a going concern? Even if purchased at 10 cents to the Euro - is there a viable business there at all? Or were the "cooked books" required to keep things going in the first place? And when people speak of "why doesn't someone certify a mogas engine?" Bombardier basically DID that and never took it to market - makes a person wonder why not. This is not a simple problem, and the GA industry as we know it will certainly perish if reasonable solutions can't be developed.

Posted by: JT McDuffie | April 24, 2008 11:01 PM    Report this comment

I'm goin' with BigC and hope for a very small turbine.

Posted by: Phillip Peterson | April 24, 2008 11:46 PM    Report this comment

well it is time to fly on AVGAS 91/96 UL unleaded. It has engine manufacturers approval covering > 90 % of the world general aviation fleet and it already has a trouble free operating experience of 17 years with thousands of aircraft flown million of hours.

Posted by: Lars Hjelmberg Hjelmco Oil Sweden | April 25, 2008 1:32 AM    Report this comment

As owner of a DA40D I really hope this mess is cleared in some way. I'm quite sure the future in GA engines is in using JET as fuel. Mr. Thielert has shown that it is possible to build a engine that fit our times needs better than the traditional fuel cooled, fuel thirsty engines does. It is ofcourse sad that the economic bit of it is not correctly done but pioneering has never been easy.

Posted by: Erik Rosenlew | April 25, 2008 1:53 AM    Report this comment

I would easily see a new Mercedes Aero Division taking care of this good product/bad management venture.

Posted by: Jean Blanchette | April 25, 2008 5:50 AM    Report this comment

Porsche tried that and eventually had to buy their way out... the liability issue is a show stopper for big non-aero companies. PS: I also fly a DA40 diesel.I like the plane, but the Thielert engine is - and by a margin - more trouble than the AVGAS competition. A friend almost crashed at takeoff due to the Thielert losing power. I only had ECU alerts so far... fingers crossed.

Posted by: Antoine Edde | April 25, 2008 6:32 AM    Report this comment

What will Cessna do now since they have been pushing for the 172TD with their marketing organization? They are actually advertising the TD in their web page.

Posted by: Alfonso Rojas | April 25, 2008 7:52 AM    Report this comment

Cessna (or their sister company Lycoming) might be interested in buying Thielert? The tactical benefit to Cessna (acquiring Diamond's customer base!) is significant, but will that offset the risks?

Posted by: Antoine Edde | April 25, 2008 9:09 AM    Report this comment

It is in everyone's best interest for Thielert to survive this storm. The market need is there and a proven product (although I will never be a supporter of placing electrical circuits between the pilot and the machine) should work in favor of a good resolution. Honeywell's TPE331-10 is an excellent powerplant that suffers only from a lack of promotion by the manufacturer. I'm not sure if other comments I've made about this engine have made it to print. I'm not a salesman. I do have a lot of experience with this engine. At under 400 pounds, 5000 hour TBO right out of the box, 1000 SHP that can easily be derated on-wing, fuel efficient and only one hot section inspection at 2500 hours, this engine is worth a look.

Posted by: Ron Butler | April 25, 2008 10:50 AM    Report this comment

I'm wondering if Jet-A in GA is the answer at all. Back when auto diesel was cheaper than unleaded, car companies began putting diesels in light trucks. Look at the price of auto diesel now. These poor contractors are shelling out more for diesel than ever. Couldn't the same thing happen to Jet-A? What happens if the Chinese decide to fly lots of jets?

Posted by: Jerry Plante | April 25, 2008 12:06 PM    Report this comment

Jet-A/diesel does address future availability for future airplanes, or re-engined older planes ($$$).

Auto gas (without ethanol) or its close relative 91/96/UL, is probably the answer for the existing fleet. It doesn't work for turbocharged planes, and a few others, but many of those (like B60, C414, C421) are fast becoming irrelevant as their fuel consumption puts their operating cost beyond ridiculous - about on par with an Eclipse jet!

Stale autogas is a problem, but stale pilots are a greater problem - so either fly the plane more than twice a year or sell it.

Posted by: Dan MacDonald | April 25, 2008 1:19 PM    Report this comment

The reason the company has had chronic financial reporting issues may be that the product has chronic, unsolved and unsolvable engineering issues. Certification in the States was a very long time coming because of high head temps and constant near redline operational requirements and no one that I have heard of has even approached TBO with these engines. One suspects that if the problems could have been solved Thielert's German engineers would have found a way. Possibly the reality is that the company has been overcome by warranty claims with no end in sight. If the issues are engineering related rather than financial, this would be very bad news indeed for Diamond and anyone who owns a Thielert-powered plane. The odd thing is that this is hardly new news. Anyone who has talked to a flight school that runs TDIs or DA42s has heard that they are always in the shop and the Thielert has had no answers other than an engine swap.

Posted by: nicholas budd | April 25, 2008 1:52 PM    Report this comment

Usually more complexity isn't the best answer. Though a simple engine to start with, the extra turbo-chargers and intercoolers, and the associated monitoring and controls, this engine must be a nightmare to work on...more and more things to go wrong.

Posted by: Terry Lewis | April 25, 2008 7:15 PM    Report this comment

Nicholas Budd comment is quite interesting.

Posted by: Luis Marroquin | April 28, 2008 11:09 PM    Report this comment

Well, if pouring money into Thielert is not the answer, as some have suggested, perhaps pouring money into something like the low parts count Delta Hawk engine could move it along faster to fill the gap.

Posted by: Martin Rey | April 29, 2008 1:21 AM    Report this comment

In August 2005 General Atomics won a US Army contract to develop an unmanned vehicle for the US Army Extended Range Multi-Purpose (ER/MP) UAV system. The aircraft is a variant of the Predator UAV but is powered by a Thielert Centurion Heavy Fuel Engine (HFE). I wonder what the DOD might do, or whether this contract might help convince Textron to salvage the situation.

Posted by: David Looper | April 29, 2008 6:09 PM    Report this comment

either finish the Delta Hawk or look more closely SMA-or both. There was a suggestion about fouir months ago that Diamond was starting its own Diesel programme as it was not completely satisfied with Thielert. I doubt the gap will reamin unfilled for long.

There is an English diesel engine in prototype as a 100 HP competitor for the Rotax that is now in flight testing. The concept will need a lot of work to grow to the larger horsepower. Turbines are not the answer for most GA aircraft as they are quite inefficient at low altitudes The long service life doesn't offset the high fuel consumption for the average GA pilot who generally flies less than 200 hours per year

Posted by: david wilder | April 29, 2008 8:53 PM    Report this comment

either finish the Delta Hawk or look more closely SMA-or both. There was a suggestion about fouir months ago that Diamond was starting its own Diesel programme as it was not completely satisfied with Thielert. I doubt the gap will reamin unfilled for long.

There is an English diesel engine in prototype as a 100 HP competitor for the Rotax that is now in flight testing. The concept will need a lot of work to grow to the larger horsepower. Turbines are not the answer for most GA aircraft as they are quite inefficient at low altitudes The long service life doesn't offset the high fuel consumption for the average GA pilot who generally flies less than 200 hours per year

Posted by: david wilder | April 29, 2008 8:53 PM    Report this comment

either finish the Delta Hawk or look more closely SMA-or both. There was a suggestion about fouir months ago that Diamond was starting its own Diesel programme as it was not completely satisfied with Thielert. I doubt the gap will reamin unfilled for long.

There is an English diesel engine in prototype as a 100 HP competitor for the Rotax that is now in flight testing. The concept will need a lot of work to grow to the larger horsepower. Turbines are not the answer for most GA aircraft as they are quite inefficient at low altitudes The long service life doesn't offset the high fuel consumption for the average GA pilot who generally flies less than 200 hours per year

Posted by: david wilder | April 29, 2008 8:53 PM    Report this comment

AvWeb - this comment section is now being spammed. Please clean it up.

Posted by: Charles Seitz | June 18, 2010 9:50 AM    Report this comment

Thanks for the note, Charles. We've added and made more prominent our links to report abuse on each of the comment boxes, so if you see anything that looks suspicious, please click on that link to drop us a note.

Reports like that are always appreciated. We couldn't do it without you guys!

Scott Simmons webmaster

Posted by: Scott Simmons | June 18, 2010 7:04 PM    Report this comment

junk is creeping onto the site - and the updates aren't

Posted by: david wilder | November 12, 2010 2:02 PM    Report this comment

junk is creeping onto the site - and the updates aren't

Posted by: david wilder | November 12, 2010 2:02 PM    Report this comment

Not much has really changed since my comment's in April 2008, except the outlook for GA is rather bleak given the current trajectory. ADS-B, fuel prices, and the uncertainties with 100LL and of course the never ending TFR's and the cost for new equipment ! I didn't bother to renew my CFI this year due to these issues, and the liabilty factor ...Many of my peers are following the same path. I think many of us were privileged to fly during the ' Good years ' and I'm hopeful that the younger generation will find their way in this convoluted and uncertain era we live in today !

Posted by: Gordon Bunker | November 12, 2010 8:25 PM    Report this comment

another hijack

Posted by: david wilder | November 27, 2010 12:40 AM    Report this comment

Add your comments

Log In

You must be logged in to comment

Forgot password?

Register

Enter your information below to begin your FREE registration