Bloomberg News

ATR to Seek Approval for 90-Seat Plane From EADS, Finmeccanica

January 23, 2013

ATR Chief Executive Officer Filippo Bagnato

ATR Chief Executive Officer Filippo Bagnato gestures during a news conference to announce the company's results in Colomiers, France. Photographer: Balint Porneczi/Bloomberg

European Aerospace, Defence & Space Co. (EAD) and Finmeccanica SpA (FNC) will consider starting to develop a 90- seat turbopropeller airplane this year through Avions de Transport Regional, said Filippo Bagnato, chief executive officer of the joint venture.

“We will have some discussions with our shareholders,” Bagnato told reporters today in Toulouse. The aircraft would enter service about five years after the program gets the go- ahead, he said.

Airlines’ growing interest in larger and more fuel- efficient aircraft has driven Toulouse-based ATR, the world’s largest maker of turboprops, to explore expanding its product range, which currently includes 50- to 70-seaters. Bagnato expects 90-seat models to capture about 39 percent of a market for 3,400 turboprops over the next 20 years. Southeast Asia is among the strongest markets, he said.

“In 2012, we were able to give a little more solidity to the project,” Bagnato said. Discussions were held with potential buyers and suppliers to refine the concept, he said.

ATR is continuing talks with engine providers, including General Electric Co. (GE:US) and United Technologies Corp. (UTX:US)’s Pratt & Whitney Canada, to power the new aircraft. Safran SA (SAF)’s Snecma engine unit has also expressed general interest without having real hardware to offer, Bagnato said.

Fuel burn rather than higher speed is the priority, although the 90-seater could fly slightly faster at about 300 knots, Bagnato said. Engine makers would also have to provide powerplants for the existing types, the ATR 72 and ATR 42.

Fuel Burn

Approval to proceed with the $2 billion effort from the two companies’ boards is not a foregone conclusion. EADS is in the midst of a strategy review and heavily focused on completing development of the Airbus SAS A350, which is due to enter service before 2015. Finmeccanica is concentrating on asset sales as the Rome-based business tries to cut debt.

Although supplier concerns last year hobbled ATR efforts to boost output, Bagnato said by the time the new aircraft reaches that stage such issues should be resolved. ATR reported record profit for 2012 today, even as it fell short of its shipment target amid production delays.

ATR delivered 64 aircraft in 2012, short of a target of 72 units. Sales rose 11 percent to $1.44 billion, also missing the $1.6 billion target. ATR is targeting 80 deliveries this year and 90 in 2014 when sales should reach $2 billion.

Bloody Step

“The first step in any ramp-up is the bloodiest one,” Bagnato said. “The initial problem of getting up to speed with the supply chain is now overcome.”

The 50-seat ATR 42-600 began commercial operations last year. ATR expects to book about 80 orders this year after securing 74 firm orders in 2012. That was down from 157 a year earlier, although ahead of a target of 70 bookings. It also secured options for 41 further aircraft bringing 2012 bookings to $2.6 billion. The backlog in 2012 reached a record 221 aircraft valued at $5.1 billion.

ATR increased list prices for the existing types an average of 3 percent, with the ATR 72-600 now priced at $24.1 million and the ATR 42-600 at $20.1 million

To contact the reporter on this story: Robert Wall in Toulouse at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


Cash Is for Losers
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • GE
    (General Electric Co)
    • $26.86 USD
    • -0.14
    • -0.52%
  • UTX
    (United Technologies Corp)
    • $111.71 USD
    • 2.92
    • 2.61%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus