Airbus Joint Venture Expects Slowdown in Turbopropeller Plane Sales -- Update

By Robert Wall 

PARIS--The ATR plane-making joint venture between Airbus Group NV and Italy's Finmeccanica SpA expects to the pace of orders for its turbopropeller planes to drop this year as airlines slow fleet decisions amid uncertainty over future fuel costs.

Avions de Transport Regional, as ATR is formally called, reached $1.8 billion in sales last year topping the $1.62 billion of the year before, the Toulouse, France-based company said in a statement on Wednesday.

ATR's turboprop planes that seat fewer than 90 passengers are more fuel efficient than regional jets, which has driven a resurgence in demand in recent years amid high fuel costs. Fuel represents about 30% of airline costs. That benefit has eroded after oil costs have fallen by more than 50% since June with some airlines preferring to use less-efficient planes than buying new ones.

"It may impact the industry. It may slow down some orders," Chief Executive Patrick de Castelbajac told reporters.

Boeing Co., the world's largest commercial airplane maker, and No. 2 Airbus have argued that lower fuel costs won't undermine demand for their most fuel-efficient jets. Investors worry, though, that pricing for new models, which have commanded a premium, may weaken.

"I am not overly concerned," Mr. Castelbajac said. Planes are bought for 20 years and fuel prices will likely rebound, he said.

Political turmoil in Russia also has affected business amid sanctions and a slump in travel demand in the region, he said.

Mr. de Castelbajac said order intake this year should roughly match deliveries. Production should reach more than 90 planes, a high for the business, and ramp up further to more than 100 next year.

"That is something we need to do," Mr. de Castelbajac said. Deliveries have already risen by 60% over the past five years.

ATR sales reached $1.8 billion last year topping 2013's figure of $1.62 billion, the Toulouse, France-based company said. The company expects revenue to reach $2 billion this year.

Demand last year was dominated by the larger ATR 72-600, with 133 firm orders last year, with the smaller ATR 42-600 clinching deals for 27 planes.

The company's backlog of planes yet to be delivered grew to 280 turboprops at the end of last year, with a list price value of $6.8 billion. Counting options the backlog exceeded 400 planes, Mr. de Castelbajac said.

ATR continues to study development of a new, 90-seat turboprop, the chief executive said. The program, which has been in progress for years, remains stuck on the drawing board, with Airbus not ready to invest in a new plane. Mr. de Castelbajac said the company will work on improving its current planes, including boosting seat count to 78 passengers on the ATR 72.

Write to Robert Wall at [e-mail]

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