Free Post Trial Brief - District Court of Federal Claims - federal

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WEIGT - DIRECT 1 2 3 4

863

even remember what they were flying, but were either just starting up or had a caravan operation or something of that sort. We could serve that market. It's high. It's cold. There are relatively short distances that they have to fly and relatively limited passenger loads. I mean, they're pretty sparsely populated. They're just starting up. It was a good fit for us actually. THE COURT: So if you started out with let's say 12,000 feet -- I think LaPaz in Bolivia is 13,000 feet. If you started out at 13,000 feet then you get 3,000 feet above the ground and you're at 16,000. You would need oxygen for that? THE WITNESS: that. We have oxygen. However, in Mongolia I don't think the altitudes were that high. I don't recall them being that high. Don't interpret that to say they weren't, but I don't recall them being that high. I believe that they were in that i0,000 to 12,000 range. At 12,000 technically you would have to have oxygen. Anything over 10,500 for passengers you should have oxygen. At 12,000 feet, if that was your altitude, you'd have to supply oxygen, but we have a Heritage Reporting Corporation (202) 628-4888 Yes, you would need oxygen for

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40 passenger oxygen system so it could be worked out. THE COURT: Okay. BY MS. FLOYD:

Q BT-67? A Q

Is that an option that you have on the

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Yes, it is. I believe you were starting to talk about

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potential sales in the Philippines. A Yes. Warren Basler made a trip to the He did a demonstration there with 96 BF

Philippines. as I recall. Q A

And what happened with that potential? It was a marketing effort that we continued.

It obviously was not successful at the time. Then there were later expressions of interest by the Philippines for long range maritime patro! aircraft in 1993, 1994, 1995. I think certainly in two of those years we did proposals for long range maritime patrol aircraft fleets. We did a demonstration there of one of our aircraft that was on delivery to Thailand which I participated in. We have contact to this day, but they just haven't spent the money. I mean, the Philippines are very poor, and we had to provide financing, for example, for the maritime patrol program. It had to Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT 1 2 3 4 be I00 percent financed. Q

865

What about efforts to sell the BT-67 in the

Taiwan market? Have you had any success? A ,No success. I have written letters. We

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have never visited there. I've written letters there through the U.S. Embassy trying to make a contact there and was unable to do it and so we just haven't made any progress there. Q And at some point the Taiwan market was

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controlled by UTC. Is that correct? A Q A Q Yes. In terms of marketing. There was a marketing agreement, yes. Okay. That would also be true of the

Philippines, right? A Q Yes. Okay. In terms of Bangladesh, have you made

any efforts to sell BT-67 in that market? A Q A Yes. Can you explain what that effort has been? They had a need for a maritime patrol

aircraft and so I went there and made a presentation and a proposal approximately in 1996. Q effort? Heritage Reporting Corporation (202) 628-4888 And did you meet any success with that

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WEIGT - DIRECT 1 2 3 4 A No. Actually that was a case where they

866

bought a smaller airplane, as far as I know. I believe that they bought a small Cessna twin, a 400 series size twin. Q And have you made any efforts in Thailand in

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terms of selling the BT-67? A Yes. And you have been successful in the Thai market? A Q We have been successful, yes. In the Thai market you've been selling

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airplanes as rain making airplanes? Is that right? A Actually, no. Initially they were cloud

seeding aircraft. The program was called the Royal Rain Making Program. And then later they asked us to develop a firebomber for that same wing using the same aircraft, which we did. More recently they're used for general transport cargo and passenger transport. Q And how many planes have you sold in the

Thailand market? A Q Nine. Nine? And were those government financed

sales, U.S. Government financed sales? A No. Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT 1 2 Q In terms of Vietnam, have you made any

867

efforts to sel! planes in Vietnam? A Yes. Warren Basler made a marketing trip

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there, and we actually made a proposal for a passenger service. They were starting up Vietnam Airlines passenger service, although I think it was an arm of the government if I remember correctly. I know we made the proposal. I don't know if it was a government or a commercial organization that we were proposing to. I just don't know. Q Vietnam? A Q No. No. And what about Indonesia? Have you Okay. But did you meet with any success in

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made efforts to sell the BT-67 in that market? A Q A Yes, we did. And what happened with those efforts? I don't remember the specifics other than

the fact that Indonesia was producing -- they were assembling the CN-235 at the time and so we would be a direct competitor to the 235 and so I would assume that that was working against us. MR. T. COBB: I'm sorry. Just for clarification, I understand the answer is that they enjoyed some success, but they had competition. Is Heritage Reporting Corporation (202) 628-4888

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that accurate? MS. FLOYD: witness that. MR. T. COBB: clarify. MS. FLOYD: I'm not making an argument right Exactly. I just wanted to Well, I think you can ask the

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now.
MR. T. COBB:

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I just thought he shifted to

the competition, and I wanted to clarify that that was in the same country. THE WITNESS: MS. FLOYD: THE WITNESS: Do you want me to clarify it? Yes. It is in the same country.

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Indonesia also produced the CN-235. BY MS. FLOYD: Q Do some of these countries require

certification for the local passenger market? A Virtually all countries require

certification if you're going to carry passengers for hire, yes. Q A steps. And what is the certification? Well, it's really a couple of different First of all, you have to have the aircraft

certified on the civil register of that country, whatever that happens to be -- if it's an ICAO Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT 1 2 3 4 certification or if it's in the case of Europe the

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European certification, or in South Africa there's a Director of Civil Aviation that has to certify the aircraft. Any country that you want to carry passengers for hire you have to have your aircraft, the base aircraft, certified in that country, and then you would also have to certify the passenger configuration -- the seats, the liner, the storage bins, like the overhead racks, the lighting, the emergency exit, the cockpit voice recorder if it's required, the flight data recorder. All of these components would have to be certified by that same civil aviation organization for commercial passenger service. Q And have you looked into attempting to meet

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the local certification requirements in any of the countries you've tried to sell the BT-67 to? A Q Only generally. And what's required to meet that

certification requirement? A Q A Is that the question, what is required? Yes. What is required? Yes. It's as I described. You would have to send

all of your data, your design package over, prints, Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT 1 2 3 4 Q

874

Okay. Can you just explain the difference

between a sales agent and distributor in terms of the BT-67 just for foundation? A Yes. A distributor takes ownership of the

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aircraft. He buys it, owns it and sells it to the client. Our customer in that case, our client, is the distributor. We sel! to him, he pays us and then he sells the airplane. A sales agent works on our behalf or a sales representative works on our behalf to arrange a sale with a customer and then we pay him a commission or we put him on a contract as the case may be. (The document referred to was marked for identification as Defendant's Exhibit No. 320.) MS. FLOYD: Okay. I'd like to have you turn to Defendant's Exhibit 320, please. That wil! notbe in the binder that's before you, but we can get you a copy. THE COURT: MS. FLOYD: THE COURT: Was that Exhibit No. 320? Defendant's Exhibit 320. We're coming up on just about an

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hour now. How does it look for continuation of the testimony? What's the timeframe? MS. FLOYD: I would say at least another Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 5 6 7 MS. FLOYD: Thank you. THE COURT: That will be admitted. (The document referred to, previously identified as

877

Defendant's Exhibit No. 320, was received in evidence.) DIRECT EXAMINATION RESUMED BY MS. FLOYD: Q Defendant's Exhibit 320. Now, how did you

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prepare this document? A I just sat down and made a list of all of

the people that I recalled. In some cases there were some countries that I remembered that we had somebody, but I didn't remember the name so I checked the file. of that country if I had it and then put a name down. Q Okay. And so for the period of time from

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1991 through 1998 were these individuals representatives for a portion of this timeframe, 1991 to 1998? A Wel!, there are three classes here. One is

employees that were involved in the marketing activities. One was the UTC people. There's one more man that was working on behalf of UTC, and I just don't remember his name. He's an ex Boeing man, I Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 think. Then the independent representatives are actually the field people. Q Okay. In terms of the independent

878

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representatives, does this list identify the countries in which you made marketing efforts in the period of time from 1991 to 19937 A Q A Q 1993 or 19987 I'm sorry. Yes. Okay. So you made an effort to sell the 1998.

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You're right.

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BT-67 in that market identified by these countries in this period of time? A Q Yes. Okay. And in terms of marketing, who from

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the office was in charge of that in the period of time from 1991 to 1998? A Well, it changed because the organization of

our company changed. Q A Can you explain that? Well, initially I was accountable to both

Warren Basler and Brian Carmichael as president of BTC, and then after we restructured then I was accountable to Warren Basler for the total organization, including the marketing work. However, we did share the marketing Heritage Reporting Corporation (202) 628-4888

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responsibilities. Some of it he did, and some of it I did. Q Okay. Did that change at all, evolve at

al!, in the period of time from 1991 until Mr. Basler's death? A Q A Yes. And just for the record -I mean, I just gradually assumed al! but one

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market basically. Q Okay. And that was from mid 1991 through

1997 when he died?
A

Yes. Okay.

A

And then after that of course then I did it

Q
required? A

Okay. What kind of sales efforts are Does the BT-67 just sell itself? No. What do you need to do in order to

Q
A different.

consummate a sale? Well, first of all, every market is Every client is different, so there isn't

necessarily one formula. However, there are some common denominators that we look at. Getting somebody interested in the Heritage Reporting Corporation (202) 628-4888

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product or at the very least in removing the barriers to someone buying the product. There are three barriers that I look at that have to be taken out of the way. Otherwise you have no chance at a sale. One is you have to have a use for the aircraft, and I don't mean a general use. I mean a specific use where if it's transport, it has to fit the size and the payload and the range and the field capabilities of your area, of your geography. In the case of Thailand it's cloud seeding. In the case of the geophysical people it's a very specific sensor-based mission. In the case of the gunships it's obviously a counterinsurgency type mission, so it has to be a real specific need. Second is you have to have the money. I mean, there are a lot of people who have expressed interest in the aircraft that can't come up with the money and so if the funding source isn't real obvious we know that we're going to have a difficult time making that sale. The third is the client has to accept the DC-3. Q A And what do you mean by that? Well, what I mean by that is that what we're

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proposing to that client is we present the aircraft as Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 a totally remanufactured aircraft, which it is.

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It comes as close to a new rating as can be achieved in our industry because it has a zero accumulated fatigue damage rating by the FAA so it's as close to a new airplane as you can get, and we replace everything in the airplane. We make it all new, but it's still an airframe that originally was produced in the '40s by and large and so the client has to accept the fact that this is a 1940s vintage aircraft that sits on its tail and so especially the ground handling characteristics are different. The pilot training has to address tho~e issues, and the client has to accept that. Those three pieces have to be in place before you can even proceed with a sale. If they are in place there's no guarantee that they're going to make the sale, but you can guarantee that if one of those is missing you're not going to make it. That's the way I look at it. Q Would a prospective customer need to visit

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BTC in order for you to make a sale in your experience? A I believe that all of the people that bought

aircraft visited us before they bought. I believe Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 that that's accurate.

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I only have a question about one, and they visited shortly after. That was the Government of Mali. I can't recall if it was just before or just after. Q I just don't recall. How much lead time do you require to make a

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BT-67 sale say in the commercial area? A In the commercial area it can be as little

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as two years. It's rarely I think less than that, although it's happened, but typically two years for a commercial sale. Q And what are the factors and why do you need

that kind of a lead time? A It's a big acquisition, and most companies

have accountabilities and approval processes that have to be covered before they can agree to the sale. Q How much lead time do you need for a

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government sale? A Generally two to five, three to five years.

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In that range. Q And what are the factors in terms of making

government sales? Why do you need that much lead time? A Well, for one thing there's a budgetary

process that has to be followed for governments that Heritage Reporting Corporation (202) 628-4888

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generally requires at least a year lead time where projects have to be submitted. There's a forma! budgeting process in most governments that has to be followed and so the project has to be submitted and approved and then appropriated. I mean, there's just a !ot more people to satisfy in the process I think than there would be in a commercial enterprise. Q What role does the configuration of the

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airplane have in terms of making a sale? A Q
of.

By configuration, you're referring to? What particular use it's going to be made

A

Well, the configuration has to match the

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use. So a transport aircraft has to have seats and a winch and usually an upper cargo door and side-facing seats as well and maybe cabin ventilation systems, and an Antarctic airplane has to have skis, and a sensor airplane has to have hardpoints and I mean, they are all different. So the configuration matches the mission. Q I mean, it's just the way it has to be. What challenges are played in terms of the

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selling of the airplane by money and financing? What role does that play? A I mean, the financing has to be in place or Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 the sale isn't made. Q Have you had trouble with financing,

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especially in terms of selling the plane in developing countries? A I think the answer is yes, because the

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developing countries tend to be poorer countries, and while that helps us in a way because we are a lower cost alternative to a new aircraft, it's also sometimes very tough for them to get the money together to make the payments. They may ask us to go to outside financing sources to assist them. Q sources? A Q Export-Import Bank is a real good example. And in terms of sales through the ExportWhat do you mean by outside financing

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Import Bank, does that money come from the United States government? A As far as I know, that's a department of the

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U.S. Government. Q Can you list some of the key challenges that

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you face in terms of selling the plane in the international market? A Are you talking about unique to the

international marketplace? Q Right, as opposed to generally. Heritage Reporting Corporation (202) 628-4888

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due to a coup, and I mean, that's just the risk you run. Q coup? A Q A Q That was Mauritania. And that was post-'98. Is that right? Yes. Given that you have to go through these And what country was that that you had the

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factors that we've talked about, what proportion of your sales leads result in actual sales? A It's a real smal! proportion. We get less

than I0 percent I would say. Q A And has this changed over the years? A little bit. It's probably a little better

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today than it was early on because we are a little more careful now to call something a sales lead. We're smarter about it. Q Has the leasing option been helpful in

making BT-67 sales in the period of time, say, '91 to '98? A Q A Q During that period of time, no. Okay, and why was that? We didn't have a lease program. But subsequent to that time, have you

developed a lease program? Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 A

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It's a little bit of a stretch to call it a

program, but we have done two leases since that time. Q A Q And has that been helpful in making sales? Yes. I'd like to talk about sales to individual

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countries. Were you involved in efforts to sell in Turkey, and this is after 1991? A Q Yes. Give me just a second. In what efforts were

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you involved in that? A As far as my personal involvement, I made a

trip to Ankara in about 1994 or 1995, I'm not sure of the exact time, and did a presentation there to the Air Force and visited the Turkish Aerospace factory. Q Turkey? A Q A
NO.

Were you able to consummate a sale in

And do you know why not? Well, I believe that the reason was that

Turkish Aerospace was building CN-235s in their factory while I was there -- I mean, I saw them in production -- for their own use, and I'm sure that they would have seen a program to start up a project like this if it was to be either an acquisition or something that they might, build there, I'm sure they Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 would see it as a competitor to the 235 program. Q

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Have you made efforts to sell in Poland in

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the period of time of 1991 through 1998? A Yes. The program in Poland actually was

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started before my arrival, and I don't know how far back it goes, but the training, for example, of the mechanics from Poland was done before I arrived. The aircraft that they were to convert was already in the fixture when I arrived and I saw it when I went there after the demonstration tour in '91, and so it was a real active program for us for as long as we could keep it going, as long as we thought there was interest. Q And what happened with your effort to sell

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airplanes to Poland? A buy. Q I'd like to have you turn to Defendant's They didn't have any money, so they couldn't

Exhibit 154. A 154? Q Yes, please. MS. FLOYD: Defendant's Exhibit 154 is a Dakota Aircraft International letter. It's dated May I, 1991, and it's copied to Basler Turbo Conversions. Heritage Reporting Corporation (202) 628-4888

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1 2 3 4

they could depend on the deal being concluded. Q Now, did you make any efforts to sel!

airplanes in South Africa in this period of time from 1991 to 1998? A Q A Yes. And can you explain what those efforts were? The South African effort, there are really

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two segments to it. One is that the Spectrum airplane that was in our sales list as being labeled "aerial surveys" ended up being an aircraft that was registered in South Africa, so we count that as South Africa even though it was originally made to a Botswana company, and the second was we made a proposal to upgrade a series of the South African turbine conversions, turbine DC-3 conversions, to the Basler standard, and the reason we did that is that the aircraft had developed a whole series of problems, of vibration and cracks and just things that required excessive amounts of maintenance and there was some concern about the structural integrity of th4 aircraft, and like that. So we made a proposal to actually remanufacture all those aircraft to the Basler standard. Q A And was that proposal accepted? No. Heritage Reporting Corporation (202) 628-4888

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1 2 3 4
5 6 7 8 9 i0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Whitney? before?

THE COURT: Who had manufactured them

THE WITNESS: Well, they produced virtually all of the parts based on the AMI design in South Africa. So they produced the parts for the aircraft in South Africa, did the conversions in South Africa -THE COURT: The engines were Pratt &

THE WITNESS: The engines were Pratt & Whitney. They were a little bit smaller version of the ones that we used. Propellers were shorter. Avionics I don't know, electrical I don't know, but they were having electrical problems, and so basically their whole system was just a different system. THE COURT: So it wasn't as good a job? THE WITNESS: Well, we don't think so. And the evidence says that it wasn't. I mean, -BY MS. FLOYD: Was your configuration, the BT-67, a more

modern configuration than the AMI configuration? A Well, it had -- yes, it was. It had more

powerfu! engines, larger props, a center section reinforcement. We knew the systems and they were all Part 25 compliant systems, and the center section Heritage Reporting Corporation (202) 628-4888

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893

reinforcement that was done allowed us to remove any ballast in the cell areas, and what happens is, when you take off a heavy piston engine and you replace it with a lighter turbine engine, it changes the rotational forces between the outer wings and the center wing of the airplane. So you can compensate for that in one of two ways. You can either put ballast on that firewall or you can reinforce the center section, and we used a reinforced center section that came from, basically from the United States Aircraft Corporation, and they used ballast, and then they often flew without the ballast, and so we think that was the reason that they were having cracking problems. We think. THE COURT: crash? THE WITNESS: They had mishaps, Your Honor, Did several of the airplanes

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but I don't recall any fatal crashes, no. They did have mishaps, but nothing fatal that I am aware of. Might have been. BY MS. FLOYD: Q Have you, in this period of time, '91 to

'98, did you make any efforts to sell BT-67s in the Zimbabwe market? A Yes. Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 Q A And what happened with those efforts?

894

Not successful, obviously. The proposal we

made to Zimbabwe was to remanufacture their airframes. They had order of magnitude 12 airframes, I think, 12 to 14, and they were preserved. They were wellpreserved. I went over and looked at them, as did some other of our people, and so we made a proposal to remanufacture al! those aircraft. We had to provide financing and a fairly extensive training and postdelivery followup period for the aircraft, and it just wasn't accepted. I mean, they made no action, no movement. Q A Okay. That one, I also should say, was competitive

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with the South African DC-3, that sale was. Q I see, so you competed with it, the DC-3

that was coming out of South Africa for that? A Q A Yes. Did Zimbabwe buy either one of the planes? They didn't buy ours, and at the time they

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didn't buy theirs. However, they did at a later time send three of their airframes to Wonderboom Airport in South Africa, apparently for conversion, but I don't believe that the conversion was ever actually done. MR. COBB: Your Honor, in that regard, could Heritage Reporting Corporation (202) 628-4888

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I just respectfully request the time frame for our records? MS. FLOYD: THE WITNESS: Sure. My visit there was 1995. The

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time of moving those airframes, certainly post-1998, but I couldn't get any closer than that. BY MS. FLOYD: Q Okay. What about in India? Did you make

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efforts to sell the BT-67 to India? A Q regard? A We arranged -- we made an agreement with a Yes. And can you explain your efforts in that

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sales representative there, with one sales representative and then we canceled him, added another one. It was a stop on the first demonstration tour. I don't remember the city we stopped at, did a demonstration, and that demonstration was done by Bob Park and Paul Votava and a rep whose name was Gopalakrishnan, and then went on. Q A Q A And what happened with that effort? Nothing. Did you do any followup? -Yes. I mean, periodic followup trying to

25

get responses from the representative, but we did not Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2

896

have a good representative there. It just wasn't a good program. Q India? A Q Yes. Have you made an effort to sell airplanes to You tried a couple of representatives in

3
4

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Air Atlantique? A Q A Yes. And were you involved in those efforts? I didn't start them, but I was involved

8 9 I0
II 12 13 14

later on, yes. Q Were there barriers to selling planes in

England regarding certification? A Q A Yes. Can you explain what those barriers are? Well, an aircraft that would be purchased

15
16 17 18 19 20 21 22 23 24 25

and put on an operating certificate in England would have to be certified by the British CAA at the time, and we saw that, after talking to the Air Atlantique people, we saw that as quite a large process. I can't give you an estimate of expense, but I mean it was a process that would be likely a year-long process, and then in Britain also they have a system where all of their civil aviation engineers have to be paid by the client, so we as the client or Air Atlantique as the Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 client would actually have to pay a rate for these people. They have to hire them just like a

897

consultant. They were all chargeable. So it would have been an expensive and we think a long process. Q Can you turn to Defendant's Exhibit 149? Is

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6

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9 I0 II 12 13 14 15 16 17

that in your binder? A Q Yes. Defendant's Exhibit 149 was, that letter is

written by you to Mr. Bryan Carmichael. It's dated April 25, 1991. (The document referred to was marked for identification as Defendant's Exhibit No. 149.) MS. FLOYD: I'd like to move that document into evidence if I might. THE COURT: MS. FLOYD: THE COURT: MR. COBB: Which one? 149. 149, okay. Any objection? No objection, Your Honor. I know

18
19 20 21 22 23 24 25
II II II

this is a little hard to read, but no objection. THE COURT: Okay, admitted.

Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 (The document referred to, previously identified as

898

3
4

Defendant's Exhibit No. 149, was received in evidence.) BY MS. FLOYD: Q I'd like to have you turn to page 2 of

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Defendant's Exhibit 149. Under Item No. I, it says "Air Atlantique has requested us to operate in aircraft under the Basler Airline 121 certificate as a means of introducing the BT-67 into Europe." Now, what is a 121 certificate? A A 121 certificate is an airline certificate

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9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23. 24 25

that was used by the Basler Airline segment of Basler Flight Service, and 121 is the segment of the certificate that allows large aircraft, and generally, large twin engine turbine-powered aircraft have to be operated under this Part 121 rules. There are really two categories of certificates. One is for smaller aircraft. There's a 135, it's called, and then the larger aircraft is 121. The genera! breaking point between those two is 12,500 pounds maximum takeoff weight, so we clearly are on the top side of that, so we were operating 121 certificate, and the only way, and what happened here is that the only was this could be introduced into Heritage Reporting Corporation (202) 628-4888

A1047

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WEIGT - DIRECT ( RESUMED )

899

1 2 3 4
5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Europe without going through the certification process would be to operate it as a Basler Airlines airplane and then somehow work out a financial arrangement for them to do that. Q I'd like to have you turn to Defendant's

Exhibit 155. Defendant's Exhibit 155 -- is this in evidence yet? I don't know if it is, but if it isn't, I'll move it. It's from Mr. Foden to yourself. It's dated May 2, 1991, and I'd like to move this document into evidence. (The document referred to was marked for identification as Defendant's ~xhibit No. 155.) THE COURT: MR. COBB: THE COURT: Any objection? None, Your Honor. Okay, admitted. (The document referred to, previously identified as Defendant's Exhibit No. 155, was received in evidence.) BY MS. FLOYD: Q that is? A It would be a lease that would -- I don't What is a wet lease? Can you describe what

remember what it was at the time, but today it would Heritage Reporting Corporation (202) 628-4888

A1048

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WEIGT - DIRECT ( RESUMED )

.900

1 2 3 4

be a lease that would include the aircraft, the crew, the maintenance and the insurance. It's called ACMI today. A similar kind of arrangement would be my interpretation. Q Okay, and you mentioned in your last

5
6 7

discussion relating to Defendant's Exhibit 149 it was your understanding that the only way in which you could operated in terms of Air Atlantique was if you were operating as Basler Flight Service in that particular location, is that correct? A Wel!, out of our whole group, Basler Airline

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9 I0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25

had the certificate, so the answer is yes. I mean, that's the only way it could be done. Q Was that the only way in which you could

have any BT-67 presence with respect to Air Atlantique? A No. We had the option of going through the

certification process as well. I mean, that would have been the other option. Q A Okay, and what happened with that option? My recollection is that-it was just seen by

Air Atlantique as being too costly and too timeconsuming, and maybe too risky, and I say that because I think they were studying the economics of the airplane and I don't think they had made a clear-cut Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4

901

economic case for buying a new airplane, a new turbine airplane, and yet they would have to spend all of this front money, what we I guess would cal! front money, to get it certified in Europe, in England, without knowing if it would be economically viable. Q So what happened with respect to your

5
6 7

efforts in terms of Air Atlantique? A They never materialized into a sale. THE COURT: For a while, I thought you were talking about, when you said "wet lease," about some of the paper in my bathroom has flooded. (Laughter.) BY MS. FLOYD: Q I'd like to have you turn to Plaintiff's

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9 i0 II 12 13 14

15
16 17 18 19 20 21 22 23 24 25

Exhibit 274, and I believe that document is in evidence, but I'm not sure. (Pause.) BY MS. FLOYD: Q Okay. Plaintiff's Exhibit 274 is a

memorandum from yourself to Fred Johnson. It's dated September 28, 1992. (The document referred to was marked for identification as Plaintiff's Exhibit No. 274.) MS. FLOYD: Your Honor, as I mentioned Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4

902

earlier, I'm not positive that it's been moved into evidence. THE COURT: MS. FLOYD: like to do so now. MR. COBB: It almost certainly should be in Okay. But indeed, if it hasn't, I'd

5
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evidence, Your Honor, so we have no objection. THE COURT: Okay. It will be admitted once we get it put back into the binder here. (The document referred to, previously identified as Plaintiff's Exhibit No. 274, was received in evidence.) (Pause.) MS. FLOYD: THE COURT: Should I proceed, Your Honor? Yes. We're looking at 274?

8
9 I0 II 12 13 14 15 16 17

MS. FLOYD: Yes. THE COURT: Okay. BY MS. FLOYD: Q Plaintiff's Exhibit 274, you prepared this

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19 20 21 22 23 24 25

document, right, Mr. Weigt? A Q Yes. Did you work with United Techno!ogies

Corporation to try to set up facilities to produce aircraft, BT-67 aircraft in Greece? Heritage Reporting Corporation (202) 628-4888

A1051

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 A Wel!, we proposed it in response to their

903

request, yes. Q A Okay, and what was the proposal? The proposal is spelled out in here that we

5
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would like a quantity of 12 aircraft of which we would build two and the first two would be produced in Oshkosh and would be used to train the local mechanics there, the local technicians, and then move the production from there over to Greece, to Hellenic Aerospace, I think was the organization. Q A Okay, and what happened with that effort? It obviously didn't materialize and I don't

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remember the reason. Q In terms of leasing opportunities in the

period of 1991 to 1998, what efforts did you make to try to use a leasing approach to the funding of the airplane sale? A First of al!, we were not financially strong

enough to offer a leasing program ourselves. We did, however, contact several organizations regarding like captive leasing arrangements. Textron Financial was one. We did go to a very large leasing company I " think in Britain who was involved with -- it was the leading lessor of aircraft and the name escapes me at the moment, but we also made inquiries to them if we Heritage Reporting Corporation (202) 628-4888

A1052

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 could work with them on leasing programs. Numerous contacts with financial organizations to try and get them interested in leasing programs, and so it was kind of an ongoing

904

5
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effort, because financing is such an important part of the sale. Q I'd like to have you turn to Defendant's

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9 I0 Ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Exhibit 321. A Q 321? Yes. Defendant's Exhibit 321 is a document

that is Bates stamped Basler 66A at the bottom. (The document referred to was marked for identification as Defendant's Exhibit No. 321.) BY MS. FLOYD: Q A Q A Did you prepare this document? I had it prepared, yes. Okay, and what does it show? It's a listing of all of our aircraft sales

up to that point in time. Q A And what point in time was that? With one exception, the number 50 aircraft

was actually, that was the Alfred Wegener aircraft and I mean, that's the aircraft but this was copied off another document and we just didn't change the Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 THE COURT: Fine. I'll admit that. (The document referred to, previously identified as

906

3
4

Defendant's Exhibit No. 321, was received in evidence.)

6 7

MS. FLOYD:

Thank you.

BY MS. FLOYD:

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Q

Let's go through the columns here. What

does a "registration" mean?
A Registration is the number that's on the

tail of the aircraft for the country of registry. Each country gives it a unique number and that's the number that's listed there~ Q A aircraft. And what does the "customer name" identify? The final customer, I think, of the

Q
A

And what does the "date delivered" mean? That was the date the final client took the

aircraft from our facility, so it was finished. Q plane? A Right. Okay, and what does the column "notes" mean? That designates whether these were sales to And they took physical possession of the

Q
A

U.S. customers, sales under an FMS program, or in the Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 case of blank it would have been sales in the international market. Q

907

3
4

And by "international market," you mean the

territory that was licensed to Innovair Aviation, Limited? A Q Yes. And did you play any role in negotiating

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these sales? A Q A Q Yes. What role did you play? Well, it depends on the time. What about the period from August of 1991,

starting with number 5, dated 17 December, 1990? Did you play any role with respect to that, the N96BF -no? A No, that was United Technologies, and that

arrangement was signed just prior to my arrival. Q And what about subsequent to that? Can you

describe in general what role you played with respect to the negotiation of these contracts? A Very little until July, until that Bolivian

contract, July of '91. Q A Okay, so -And even that one was partially negotiated

before I arrived. Heritage Reporting Corporation (202) 628-4888

A1055

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WEIGT - DIRECT ( RESUMED )

908

1 2 3 4

Q

Okay, so subsequent to July 1991, can you

explain what role you played? A I met with the clients, I visited the

clients in every case but Thailand, I worked on the contracts, oversaw the production so the configurations were delivered according to contracts, basically all that is required for a successful delivery. Q Okay, now, based upon your involvement in

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7

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the project, each of the sales, did you identify which ones were FMS sales? A Q A Yes. And what do you mean by "FMS sales"? The FMS sale, the term is Foreign Military

Sale and it was a sale that was made to or through the United States Government, and in this case, specifically they were Air Force sales, the Air Force, which was Department of Defense. That would be the way I would distinguish them, and I think it holds true pretty much all the way through here that FMS means Department of the Air Force, Department of Defense as the buyer, not necessarily the final client but the buyer. Q A Okay. And what do you mean by "U.S. sale''o That's to a U.S. client. Heritage Reporting Corporation (202) 628-4888

A1056

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 Q So that would be a domestic sale? Yes. And can you explain what you mean by "U.S./USAF"? That's for No. 35, the N40386. A

909

5 6
7

Yes. That was an aircraft that we sold to

the -- excuse me. We didn't sell, we built it initially as a demonstrator for the fire bombing system, and then when we took that program as far as we could, then we leased that aircraft to the U.S. Air Force down atHurlburt Field. It was Air Force Special Operations Command. THE COURT: or to put out fires? THE WITNESS: Yes, put out fires, right, without a ladder. THE COURT: Domestically there probably

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i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Now this was to drop fire bombs

wouldn't be a lot of use for dropping fire bombs. THE WITNESS: No, no. Dropped fire retardant on fires. BY MS. FLOYD: Q So was it your understanding or is it your

understanding that all of the sales that are identified as U.S./FMS or USAF were within the Basler Turbo Conversion territory? A Yes. Heritage Reporting Corporation (202) 628-4888

A1057

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WEIGT - DIRECT ( RESUMED )

910

1 2 3 4

Q

So in terms of identifying sales that

occurred from July 16, 1991, through July 1998, can you identify what numbers they would be on this chart? In terms of numbers, that's kind of the sale. Which sale in the sequence of sales. Is that correct. A Q I didn't understand that. Sorry. Sure. Which sales occurred after July 1991

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6 7

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9 i0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25.

based on this chart? A Q A Well, this is a chart of deliveries. Okay. So we don't actually know the contract

negotiation points of these sales, and so I really can only accurately talk about deliveries because these are factual. Q Okay. Okay. Well, then let's talk about

deliveries. A Everything after Bolivia. And that's No. 8? Which is a sale to the U.S. government

Q
A actually.

Q
A

That's Item No. 8 on the list? Yes. Okay. That probably should have, I think it should

Q
A

have an FMS designation. Heritage Reporting Corporation (202) 628-4888

A1058

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WEIGT - DIRECT ( RESUMED ) 1 2 Q Okay. What about what's the end point in

911

terms of July 19987 Can you identify which sales occurred before July 1998 based on this chart, the best of your knowledge? A The Molly Air Force No. 2 is designated as

3
4

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the end of July '98. MR. COBB: My objection is, again, the question was sales and the witness is talking deliveries. THE WITNESS: THE COURT: Deliveries, yes.

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So we don't really have an

answer that's responsive to your question. BY MS. FLOYD: Q Let me rephrase the question. In which

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items here were deliveries prior to July 19987 A Q Everything up through Aircraft No. 30. Okay. And were any sales made prior to July

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1998 thah were delivered after July 19987 A Q I'm sorry. Say that again. Sure. I know it's late. Were any sales

made prior to July 1998 were delivered after July 1998? A Well, again, I mean, I can't recal! when the

contracts were actually written, so obviously an October 1998 delivery would have been under contract Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED )

912

1 2 3 4

prior to July of 1998. Q Okay. What is the typica! lead time from

the contract signing date to delivery? MR. COBB: Asked and answered. At one point he said it ranged from two to five years. THE WITNESS: Could I just clarify that? That was the process of getting from the first customer introduction to the contract signing. I think this question pertains to the production time. MS. FLOYD: The contract signing date. THE WITNESS: The time from contract signing to delivery I think is what you're referring to. MR~ COBB: I'll withdraw my objection. BY MS. FLOYD: Q Yes. What is the production time for a BT-

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67 in this timeframe? A Approximately six months. THE COURT: So that would mean that if everything was going smoothly it could go from July to into the next year into January of 1999? THE WITNESS: THE COURT: more than six months? THE WITNESS: Sure. Yes, there were. For Yes.

Were there cases where it took

25

example, a gun ship takes longer because there are so Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED )

913

1 2 3 4

many more modifications to it. There's an infrared system, there's secure communications, there's now a night vision compatibility, onboard oxygen generators, and there's just a lot of extra components that have to go into those airplanes. So now, and even beginning back at this time, the aircraft of that type were taking longer than six months. THE COURT: Kurds may be looking for one of those gun ships now according to the papers. Might want to go back to them with -THE WITNESS: Pretty good, I'll tell you. THE COURT: -- target currents as long as it does that. THE WITNESS: Right. BY MS. FLOYD: Q And which were the gun ship sales that you

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made in this timeframe from 1991 to 19987 A Everything that is for the Colombian Air

Force was gun ships. So I see Colombian Air Force No. 4 there, so it would be four of the Colombian Air Force aircraft, and then E1 Salvador 1 and 2 were gun ship conversions and E1 Salvador 3 and 4 were gun ship conversions. Q Okay. I noticed that some of -Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 A Excuse me. Let me just correct that. E1

914

Salvador 3 was a gun ship. E1 Salvador 4 came just as the war ended in E1 Salvador, and so it went out as a, our term for it was a VIP gun ship, but I can't remember what was in the aircraft. It didn't have al! of the fittings on it. Q Okay. I noticed that some of the Colombia

4
5 6 7

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Air Force sales were FMS sales, and it appears that some of them were not. For example, No. 26, Colombia Air Force No. 3 was not an FMS sale, but Colombia Air Force No. 4, which is No. 29, is listed as an FMS sale. Can you explain that? A No. I think it's just a mistake because

they were all FMS sales. I'll just qualify that. We did a later project with Colombia where we wrote a direct contract, but it was 2000, 2001 maybe. Q Okay. So No. 26 should be listed as an FMS

sale. Is that right? A Q Yeah. Now, in terms of these airplanes, some of

them have options. Is that correct?
A

All of them have options. Okay. And what kinds of options do they

have? A

It depends on the mission for the aircraft. Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25

915

Some of them are standard options, like the long range fuel system or the floor, the upper cargo door, the metal side controls, are pretty much standard configuration options. Then there are some that are specialty options, hard points, plumbing for an APU, or carrying heavy electrical currents, or hard points in the wings, or they really vary depending on the mission for the airplane, skis, for example. Q Tell me about the long range fuel tank. How

long does it take to construct a !ong range fuel tank option for the airplane? A Q A Q For us to build it? Yes. About three months. Okay. And was the STC for the long range

fuel tank owned by either Basler or Basler Flight Service or Basler Turbo Conversions? A Service. I believe it was owned by Basler Flight

Q
A

What proportion of these planes have the

long range fuel tank STC? It would be easier for me to say which ones

don't, if that's all right? Q Sure. Heritage Reporting Corporation 202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 A The ones that don't are the two Forest

916

Service aircraft, No. 6 and 7, do not, and the Royal Thai Air Force aircraft do not have long range fuel, the fire bomber did not when we built it, it does now or did before it was sold, and I think that's it. All the rest are long range. Q Okay. All right. THE COURT: How are we doing? We've gone a little over an hour now, about an hour and I0 minutes. MS. FLOYD: Okay. THE COURT: So what is the estimate now? I think you were saying an hour to an hour and a half. MS. FLOYD: I think I need at least another half an hour, Your Honor. THE COURT: Why don't we keep going and see if we can finish, and then we'll take our dinner break and give Mr. Cobb a chance to come back and do cross for a couple of hours. MS. FLOYD: Sure. Okay. BY MS. FLOYD: Q Now, what is your understanding of a kit in

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21 22 23 24 25

the context of this BT-67 effort? A My understanding of the kit was all of the

parts that are required to build an aircraft that would comply with our base STC, the 4840STC, so that Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 was always the way I thought about the kit. Q Okay. And we've talked about one of the

917

options already to some extent, the long range fuel tank, and you've mentioned a couple of other options, the upper cargo door and the floor support was another option. IN terms of the actual construction of a BT67, are there phases to that construction process? A Well, we can segregate the production into

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phases, but they may not match the calendar if you know what I mean. There are three phases that-I could describe. One phase is the airframe overhaul. For clients we say that's bringing the airframe back to its original factory specification. Second phase is making it into a turbine airplane, and that is installing everything that it takes to make it compliant with the STC4840. The third phase is the options, and there is a long list of options, some we've talked about, some we haven't. Q Okay. In terms of those three phases, can

15
16 17 18 19 20 21 22 23 24 25

you estimate the number of man hours for each of the three phases? A In the first place they're roughly

comparable. The reason I say roughly is that the airframe overhaul piece or the airframe overhaul phase can vary significantly depending on the condition of Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 THE COURT: Like the heated windshield we were told I think came from some other company. THE WITNESS: 4 5 6 7 that? THE WITNESS: STC on that. THE COURT: THE WITNESS: THE COURT: THE WITNESS: Right. But we didn't own it. Okay. Right. We would not. They have an THE COURT: It did. It came from PBG.

922

So you wouldn't have an STC on

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THE COURT: Of the list we had, and we have it in some exhibit, of the options I think the testimony was there are only three that Basler has the full STC on the whole thing. THE WITNESS: Well, I can think of four. The long range fuel, the metal flight controls, the upper cargo door, and the wench and the air conditioner. Five. THE COURT: Those would be the only ones that would be Basler -THE WITNESS: THE COURT: THE WITNESS: That would be STC status. Okay. If those options were part of

a contract they would have to have engineering Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 Thank you. BY MS. FLOYD: Q that the FAA wants. THE WITNESS: Yes. THE COURT: Okay. That's very helpfu!.

924

5 6 7 8 9 i0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25

And how long would it take to generate that

data for the STC for the long range fuel tank? A It's a large project. It's clearly a large

project. If you started today I don't know, but what we actually did with that option is we were required by the FAA to do a complete production update of that system. That means we had to redraw everything, we had to recertify all of the structural engineering, do all of the compliances over, do pressure tests on all of the tanks, and it took us three years to do that. Q Well, does, say a competitor, does a

competitor have an option of going out and buying these long range fuel tanks that have been prefabricated by some other entity? A Yes. Since the system originally came from

Pan Am back in the 1950s I believe, if you were able to find an aircraft that was equipped with a long range fuel system from Pan Am and it was in the records properly you could incorporate that into your airplane. Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 Q Okay. Yes. Were you successful? Yes. And did you ever try to do that?

925

3
4

5 6
7

Why didn't you use that as an option instead of going to that three year effort of recreating the STC for the long range fuel tank? A Well, the reason is that there's an

8
9

unpredictable supply of Pan Am systems out in the marketplace, and so you can't guarantee that if a customer comes in and says I want a long range fuel system that you could find one. So if you have an inventory of them on hand then you could use that approach. All you'd have to do is overhaul and bring it up to current spec and do the center wing and the outer wing reinforcement and you could use it. You would have to have the record of the aircraft that it came from showing that it was signed off properly under that STC to be in compliance with that STC. Q Did you actually go out and try to find

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these prefabricated long range fuel tank wings? A Q You mean as a project? At some point? Yes. I mean, you indicated

that at some point you've used them. How difficult Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 was it for you to find those? A Well, one set, for example, we got from

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Thailand. A set of Thai wings were long range. I would expect, although I don't know for a fact, somebody else in the Court may be able to clarify this, that the 1996 BF airplane came with long range fuel perhaps, one of the two prototype airplanes perhaps. The reason I say that is that the fuel tank design is the old style design. When we started producing our own fuel tanks we went to a different process, and it's visibly different. I mean, you can see the difference in the tanks. So just to clarify, that would be my evidence that was a preexisting system, and so we had to have got it from somewhere. Q In your business how important is it for you

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to have after production service? A Q A It's crucial. And why is that? Well, one reason is that you have, an

airplane is a highly engineered product and a product of that sort, just like your car, cars of course are getting better, but like any mechanical product of that sort needs service. Somebody has to do that. In the case of the third world particularly, they've Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 3 4 5 6 7 8 9 IO II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 tended to look at us as the sole supplier of their service.

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By that I mean components as well as in the case of the African clients components, and inspections, and repairs and that sort of thing. So it's a real significant requirement in my opinion if you're going to be in this business that you have to service your product. You must. As someone who has come from a background of companies that built mechanical products, it's just part of being in business. Q Has it been your experience that the

conversion of the DC-3 to the BT-67 is a kit business? A Q A Q A Q A Is a what? Kit business? A what business? A kit business? In my opinion it's not a kit business. And why is that? And the reason is that it requires more than

a kit to build a complete airplane. You're building a complete product and it's got the bringing the airframe back to its original condition, it has all of the STC components which would be called a kit and then it has the options. Without doing that properly Heritage Reporting Corporation (202) 628-4888

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WEIGT - DIRECT ( RESUMED ) 1 2 I don't think that you have a successful product.

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I also, just based on our experience in the field and with our clients, our clients are looking for a finished airplane. They're not looking for a project. MS. FLOYD: Like to have you turn to Defendant's Exhibit No. 112. THE COURT: MS. FLOYD: THE COURT: It has the 300s on. MR. COBB: THE COURT: Sorry, Judge. That's all right. Actually, I'm D-II2? Yes, Your Honor. Okay. This one doesn't have it.

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amazed that you've been able to balance all of those today. MR. COBB: THE COURT: I'm waiting for it to collapse. I think we need long-range fuel

tanks under those tables. MR. COBB: (Away from microphone.) THE COURT: Thank you. BY MS. FLOYD: Did you prepare this document? Yes. MS. FLOYD: Defendant's Exhibit 112 is dated February 7, 1991, and it's from Thomas Weigt to Ray Heritage Reporting Corporation (202) 628-4888

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