The Reagan administration is asking Congress to eliminate virtually all funds for the T46A jet trainer manufactured by Fairchild Industries Inc. as part of the president's 1987 budget.
If the cutback holds as the budget works its way through Congress, it would block any chances that the company could sell its troubled aircraft division on Long Island.
But Capitol Hill sources said yesterday that Congress is likely to add appropriations for the jet back into the 1987 fiscal budget.
As part of its budget proposal, the Office of Management and Budget said the White House has proposed eliminating production of the airplane beginning Oct. 1. The Defense Department decided to cancel the trainer because of production scheduling problems and cost overruns, the Defense Department budget proposal states.
In September, the Defense Department approved an Air Force proposal to cancel the plane after the Air Force found "numerous management and production deficiencies" at the Long Island plant. At that time, the Air Force cut in half its $8 million-a-month payments to Fairchild for production of the jet.
The Air Force confirmed yesterday that the budget includes no purchases of aircraft and only $10.8 million for research and development. Furthermore, the Air Force may decide not to spend much of the $193 million in T46A funds appropriated for 1986. The funds were slated for the purchase of 33 jets.
"The T46A program is not funded in the fiscal year 1987 president's budget," the Air Force said in a statement. "As for a course of action in fiscal year 1986, Air Force Secretary Russell Rourke currently has this under consideration and will reach a decision in a few weeks."
Fairchild said yesterday it was confident Congress would reinstate the jet, with strong support coming from New York, where the T46A plant is situated.
"The New York delegation is supporting continuation of the program in Congress, and we're optimistic that the program will go forward," said William Fulwider, Fairchild spokesman.
Over the last three years, the Chantilly company has taken losses of $300 million on the jet trainer manufactured by its Farmingdale, N.Y., aircraft division, Fairchild Republic Co., and on other aircraft projects, analysts say. Fairchild has been trying to sell the aircraft division that makes the jet craft.
One New York analyst said, "The opera isn't over until the fat lady sings -- if Congress wants it, they'll appropriate it."
But the analyst said that, if the project is scuttled, Fairchild could not sell the division, which was expected to generate $1.5 billion in sales to the Air Force for 60 of the planes. "If it's impossible to sell, you'll shut it down and liquidate it," the analyst commented.
The analyst estimated the worth of the division at between $50 million and $70 million if sold, and at about $20 million for the land surrounding the plant if it is closed. The company wants to leave the aircraft industry, the analyst said. "Fairchild wants to be an electronics and communications company and stop losing money on aerospace," he said.
The New York delegation has rallied to save the jet for the sake of 1,200 Long Island jobs and because it believes the Air Force needs a new trainer, a Capitol Hill source said.