Saab Weighs Return to Regional-Plane Market After 13-Year Hiatus

Saab AB (SAABB) said it’s exploring a return to the market for regional aircraft after abandoning the segment more than a decade ago, as higher fuel prices increase demand for turboprops.

Saab would pursue a risk-sharing partnership with a yet-to- be-selected company from India, Chief Executive Officer Haakan Buskhe said in an interview at the Farnborough air show outside London. Saab ceased production of turboprops in 1999 because of weak demand for its Saab 2000 airliners.

“We started the investigation nearly two years ago,” Buskhe said. “It will not be a totally new aircraft and not totally like the Saab 2000.”

The market for propeller-driven regional airliners has rebounded in recent years, and ATR, a joint venture between Finmeccanica SpA (FNC) and European Aeronautic, Defence & Space Co., booked record order intake in 2011. Embraer SA (EMBR3) has also been studying the merits of the turboprop market after it canceled the EMB 120 Brasilia in 2001. Turboprops use a jet turbine to turn a propeller, and most of their power comes from the airscrew, not the engine’s thrust.

The Indian government has expressed interest in a nationally developed regional aircraft. Saab’s best-known product is the Gripen fighter jet, which the company has sold to its Swedish home as well as to South Africa and Thailand. Switzerland has said it wants to buy the aircraft, which is on flying display at the air show.

Buskhe said the Indian market alone isn’t large enough to sustain such a program, and that the aircraft would need international interest to succeed. Saab would also want a so- called launch customer before moving ahead, the executive said. Saab, based in Linkoeping, Sweden, would only pursue a new project if the financial situation in Europe stabilizes, he said.

“We have a fairly strong net cash position and we will not jeopardize that,” Buskhe said. “So if we should do that we will do it with a strong partner.”

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

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

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