ATR cashes in on turboprop revival

 - June 12, 2007, 9:38 AM

Avions de Transport Régional (ATR) is sharing in the booming regional market and the upswing in orders for short-haul turboprop aircraft, with this year already proving fruitful after two record years. Just before this week’s Paris Air Show, the Toulouse, France-based regional turboprop aircraft manufacturer unveiled a contract for six new ATR 72-500s and eight options from leading Philippines low-fare domestic and regional carrier Cebu Pacific, enabling it to enter its domestic market for the first time.

Earlier in May, the equal partnership between Finmeccanica subsidiary Alenia Aeronautica and EADS had delivered the first of 10 ATR 72-500s to Irish regional carrier Aer Arann. Since the beginning of the year, ATR has received orders for 27 aircraft and has delivered 12, including its first of its twin turboprop family to be equipped with the new “Elegance Cabin” and in-flight entertainment system. The new-look cabin features LED lighting throughout; the first example of it was delivered in January to India’s Kingfisher Airlines.

According ATR executives, the new -500 series is completely different from previously delivered versions of the aircraft and the new cabin is central to its strategy of achieving jet-style comfort with the turboprop’s lower fuel consumption. The in-flight entertainment equipment provided by Vision Systems at about $100,000 per aircraft, will also be available on the ATR 42-500s, as well as retrofits for all existing aircraft.

New Cabin, More Power, New Cockpit
Here at Le Bourget this week, ATR is expected to unveil further new cabin developments. It is also preparing to offer a 5-percent thrust increase from the Pratt & Whitney Canada P&W127F engines, with this upgrade expected to be certified next year.

ATR pilots are also set for improvements, with Honeywell, Rockwell Collins and Thales in contention to provide the basis for a cockpit upgrade. As with the improved engines, the new flight deck is expected to be available early next year. ATR realizes it may soon be competing against new-generation single-aisle jetliners promising operating cost reductions of 20 to 25 percent.

Last year, ATR booked orders for 63 aircraft (56 ATR 72-500s and seven ATR 42-500s) plus 25 options. That was the manufacturer’s second highest tally following a record 90 orders the previous year and it was also noteworthy for the addition of 10 new operators to the ATR fold. The marked resurgence in the fortunes of Western Europe’s sole remaining turboprop airliner manufacturer certainly surprised the market because 2004 had seen a lamentable tally of just six orders.

The booming Asia Pacific region accounted for 38 percent of orders for the -500 series (and 43 percent of total ATR orders) last year. A further 37 percent came from Europe, with North America accounting for just 5 percent. ATR also opened new markets in South America and especially Africa, which booked 12 orders.

ATR now claims to have about 60 percent of twin turboprop market share at the expense of its direct rival, the Bombardier Dash 8 Q series. Almost 260 new turboprops have been ordered from ATR and Bombardier in the last two years and delivery of at least 1,000 is predicted in the next decade. Meanwhile, ATR’s pre-owned market remained strong with 29 transactions completed last year.

Annual production rates for new aircraft increased significantly from 26 in 2005 to 44 in 2006. At least 60 are expected to be delivered this year and the total is to rise again in 2009.

ATR attributes its recent resurgence directly to inflated fuel prices, claiming that the fuel consumption of its twin turboprops is “unbeatable against any 70-seat jet on journeys of up to 450 nautical miles.” The manufacturer also insists that its aircraft are easier to maintain and have increased passenger comfort including lower inside noise levels compared to a jet of similar capacity.

The company also claims to have an edge in the wider environmental debate. It has calculated the impact on the environment of 10 ATRs compared to jets of the same size over five years would show a saving of 45,000 metric tons of fuel (and the resulting carbon emissions). This could prove to be a decisive factor with airlines, in Europe at least, facing the prospect of mandatory emissions trading programs starting around 2011 or 2012.

ATR expects the high level of orders to continue this year. Revenues, which jumped 29 percent from $542 million in 2005 to $700 million last year, are expected to reach $1 billion this year, with $1.2 billion predicted in 2008. As of the end of May, the company’s order backlog stood at 139 aircraft–40 percent up on December 2005’s tally of 89 units. Some ATR content is now produced in China, including rear sections of the ATR 42/72 fuselage and the 42’s wings.

Meanwhile, ATR is making more investments in training, customer support and spares provision. In France, the spare parts distribution center has moved from Toulouse to Paris Charles de Gaulle Airport and in the U.S., its distribution center has transferred from Washington, D.C., to Miami. New spares centers are to be unveiled in New Delhi and at its Bangalore customer support unit in India, as well as in Auckland, New Zealand. The number of customers signed up for ATR’s global maintenance agreement grew 20 percent last year and now has 31 operators.