Airbus Reviews Future of ATR Turboprop Venture With Finmeccanica

Airbus Group NV (AIR) and Finmeccanica SpA (FNC) are reviewing their partnership to build turboprop aircraft as the joint venture’s management seeks approval from its owners to build a larger, 90-seat plane.

Streamlining decision-making at Avions de Transport Regional, the world’s top maker of turboprops, is a prerequisite before starting new projects, said Filippo Bagnato, ATR’s chief executive officer. A new structure would support development of a new plane, he told reporters in Paris.

Airbus and Finmeccanica have equal stakes in ATR. A shift could see the consortium become an integrated company mirroring the process Airbus went through in 2000, when the aerospace company was created by unifying disparate European assets.

ATR has seen a resurgence in demand for its 50-seat and 70-seat turboprops that are more fuel efficient than jetliners, sparking interest in introducing a larger model. The Toulouse-based company sees a market for 1,300 planes in the larger segment as it awaits approval for a project that would cost about $2 billion.

“I have a list two pages long of airlines asking us to build this plane,” Bagnato said. Much of the demand comes from south-east Asian carriers, he said.

Giuseppe Giordo, the head of Finmeccanica’s Alenia Aermacchi unit involved in ATR, said in June that the company would consider pursuing a larger plane without Airbus if its partner lacked the will to push through its development.

Fuel burn rather than higher speed is the priority for the new plan even though the new model could fly slightly faster at about 300 knots, Bagnato has said previously.

ATR set a delivery record last year, handing over 74 aircraft as it generated $1.6 billion in sales. Supplier constraints caused ATR to miss its delivery plan for a second year after forecasting 80 shipments for 2013. Handing over 80 planes this year is a minimum requirement, Bagnato said, as he seeks to lift revenue to $1.8 billion in 2014 on the way to a $2 billion target the year after.

The planemaker also booked 89 firm orders last year, 20 percent more than in 2012, while signing options for 106 more turboprops.

To contact the reporters on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net; 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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