Piaggio signs partner, (maybe) for jet projects

 - September 18, 2006, 6:11 AM

Piaggio Aero Industries is preparing to launch a jet program before year-end. The Italian airframer is debating which of two designs to take into development, but early last month it said it first had to reach agreement with a strategic partner it needs to make the project a reality.

On April 19 that hinge appeared to be secured, with the announcement that Mubadala Development (an investment house wholly owned by the Abu Dhabi government) had acquired 35 percent of the equity in Piaggio Aero.

“The concept is almost frozen. It will not be another entry-level product, and it will be something different, something that you cannot buy elsewhere,” Piaggio director Alberto Galassi told an April 3 press briefing at the company’s Genoa headquarters. He implied that one of the two prospective jet designs is about the same size as the company’s existing P.180 Avanti turboprop, while the other is slightly larger.

Galassi said Piaggio had evaluated several prospective risk-sharing partners and emphasized that the jet development will not progress until it chooses that partner. “We’re not just looking for cash; we need the right strategic partner,” he said.

Piaggio chairman Piero Ferrari confirmed that the company’s plans for a jet have advanced this far. However, he insisted that Piaggio is not committed to launching the program this year at all costs and would be willing to wait until early next year to confirm the details–downplaying expectations that October’s NBAA show in Orlando will necessarily be the venue for the launch.

Galassi told reporters that Piaggio will keep in mind the certification problems it has experienced with the Avanti II as it plans its jet. “If we try to reinvent the wheel then the cost will be too high, and next time we will certainly select suppliers more carefully,” he added, without naming specific problem suppliers.

Pressed for more hints on the likely characteristics of the new product, Galassi ruled out entering the very light jet sector and said that the jet will not overlap with what the Avanti offers the market. He said that the two designs the company is considering are “very different” from each other.

“One is beautiful, giving you a big emotion, and the other makes a lot of sense,” he reflected, making it clear that he favors the former and intends to convince the six other members of the Piaggio Aero board of directors to back this option.

In Galassi’s view, Piaggio should follow the philosophy of its Ferrari sister company by offering products that the customer cannot buy elsewhere. “We can’t beat Cessna [with its broad range of functional jet products], so we have to use guerrilla warfare and do something different,” he commented. “Don’t underestimate the role of ego in aircraft customers; many of them simply want to arrive at the airport with something that gets everyone’s attention.”

Ferrari said that the jet could form the basis for a new Piaggio series of aircraft or join an existing series its new strategic partner already offers. Dassault, for example, has nothing to offer customers by way of a replacement for its aging Falcon 10s and 20s at the lower end of its product range. Ferrari was coy when AIN suggested the French airframer as a prospective partner.

Avanti Production To Increase

Meanwhile Piaggio is accelerating production of its P.180 Avanti II after finally completing FAA certification at the end of March. By early last month, Piaggio had delivered 103 Avantis (mainly the original Avanti I, with 61 going to U.S. customers and 42 to Europe); slightly more than 100 are on order, with the backlog stretching into 2008. Some slots have already been allocated in 2010.

The Italian airframer expects to produce 24 aircraft this year, increasing to 30 next year. Last October it had set a target to produce 26 aircraft this year and 36 next year. Last year, output was 14 aircraft–two fewer than in 2004. The Avanti’s advanced aerodynamic design makes for a complex manufacturing process.

As of last month, two examples of the new Avanti II had been delivered and three more were undergoing completion in the U.S. The aircraft are flown across the Atlantic in basic green configuration for completion at one of three approved centers: Jet Aviation in West Palm Beach, Fla.; Jet Works in Fort Worth, Texas; and Stevens Aviation in Greenville, S.C. Of the undelivered orders, 70 percent are for U.S. customers, with the remaining 30 percent going to Europeans.

The Avanti II received European Aviation Safety Agency (EASA) approval in early November, and the FAA had been expected to endorse this just two weeks later (as it should be able to do under the terms of its bilateral agreement with the EASA). Galassi complained that the U.S. agency inexplicably delayed certification and appears to have insufficient resources to handle business aircraft approvals. He said that the delay had cost Piaggio five or six deliveries that could otherwise have been made to U.S. customers during January.

Meanwhile, Piaggio is continuing certification efforts for the introduction
of the new 850-shp Pratt & Whitney Canada PT6A-66B engines (flat-rated from 1,350 shp), which promise 10 knots faster long-range cruise speed (380 knots) and an increased Mmo from Mach 0.68 to 0.70. Maximum cruise speed at 28,000 feet is 398 ktas.

The company now expects the first Avanti IIs powered by the new -66B turboprops to be delivered early next year, which is later than originally expected. All deliveries this year will feature the original -66A engines, but free retrofit upgrades will be available to operators.

The 2006 price for the Avanti II is $6.195 million for the aircraft powered by the current -66A engines. Piaggio has yet to announce the price for the version equipped with the new -66B engines.

According to Massimo Isidori, Piaggio’s senior vice president of commercial sales, the value of pre-owned Avanti Is is holding up well. A 2003 model with about 1,000 hours recently sold for $5.3 million.

Piaggio is also looking to boost its production capacity by relocating its factory at Finale Ligure to nearby Albenga Airport in 2008. Both locations are about 45 miles from the final assembly line in Genoa. The new purpose-built factory should be much more efficient and is close to the highway network. The Finale Ligure plant is awkwardly situated between the beach and the crowded town center.

By September, the first new level-D full-flight simulator for the Avanti II will be available. It will be installed at FlightSafety International’s West Palm Beach, Fla., learning center, which is handling all training for the aircraft.

Early next year, fractional ownership operator Avantair, Piaggio’s largest Avanti customer, is scheduled to start receiving the 36 Avanti IIs it ordered in November. The Clearwater, Fla.-based company already operates 20 Avanti Is and is due to receive 13 more before the Avanti IIs arrive. According to Isidori, Avantair is selling a lot of shares and is now pushing for more deliveries and at a faster rate.