July 08, 2013
Turboprop manufacturer ATR has rebounded remarkably after its near-demise more than a decade ago. Now it is keen to take the next step and build a 90-seat turboprop aircraft, but one of its shareholders is balking.
Launching the proposed 90-seater is of “fundamental importance” to ATR, CEO Filippo Bagnato says. “We have been able to sell more than 300 aircraft since the launch of the [upgraded ATR 42 and 72] -600 versions. The market pays attention to manufacturers that renew their aircraft.”
Technical details and a business plan for the 90-seat turboprop were developed and submitted to ATR shareholders Finmeccanica and EADS (50/50 stakeholders in the joint venture) at the end of last year. Now ATR is waiting for approval of what it estimates to be a $2 billion project. Finmeccanica is in favor of ATR's plans, in spite of its own woes. “If EADS is not interested in developing the aircraft with us, we will find alternatives,” Guiseppe Giordo, CEO of Finmeccanica's civil aircraft subsidiary Alenia Aermacchi, says. “There is a huge market potential for a turboprop larger than the ATR 72.”
It is not that EADS doubts the market potential for such an aircraft or has reservations about it competing against existing aircraft in its portfolio. But even if the financing seems feasible, engineering resources could cause a problem. Airbus CEO Fabrice Bregier has made clear internally that he cannot devote hundreds of aerospace engineers to the regional affiliate at this time.
Because it has not developed a totally new aircraft in almost 30 years, ATR would have to rely on external engineering resources to a large extent for what would likely be a multi-year development cycle. External in this case means drawing on Airbus and Alenia engineering know-how.
And that is where things become difficult: Airbus does not want to be distracted from its higher-strategic-value projects, namely the stretched A350-1000 and the A320NEO. These aircraft are arguably derivatives of platforms that already exist. But in light of a painful experience, Bregier has followed a culture of caution at Airbus that emphasizes fully clearing one set of milestones before tackling the next. This was the approach of his predecessor, Tom Enders, who postponed the launch of the NEO until he was sure Airbus would have enough engineers to deal with the work. He agreed to launch the aircraft only after he was convinced this was so.
However, EADS's official position does not sound totally negative. “Airbus is, together with its partners, studying the developments in the regional market,” says Kiran Rao, ATR chairman and Airbus executive vice president of strategy and marketing. “The most likely outcome will be a new generation of turboprops with increased size, greater comfort and significant improvement in efficiency.”
However, Giordo has made clear that Alenia and Finmeccanica do not want to waste too much time waiting for Airbus and EADS to move. He is pushing for a decision to go ahead with the project by the end of the year.