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Monday, January 23, 2012

ATR Plans 2012 Production Boost

Bolstered by record orders, turboprop-maker ATR plans to step up production quickly to keep pace with demand. ATR this year expects revenue to jump to $1.6-1.65 billion, and rise to $1.75 billion in 2013 and $2 billion “in the near future.”
In 2011, revenue topped $1.3 billion, and the company expects an earnings margin for 2011 of 8-8.5%, with cash flow of $150-160 million. The goal is to keep margins at similar levels, although a planned increase in output will put that under pressure.
With 157 aircraft, ATR almost doubled its firm order intake last year from 2010 levels, which were twice as high as those recorded during the crisis years of 2008 and 2009. The sales activity last year far outpaced the level of activity the company was projecting. The aircraft maker also booked options for 79 more turboprops. With demand strong, list prices are increasing to $23.4 million for the ATR 72-600 and $19.5 million for the ATR 42-600.
Deliveries in 2011 increased slightly to 54 aircraft from 51 the previous year, but now are expected to grow markedly. At the end of 2011, ATR had a backlog of 224 aircraft valued at roughly $5 billion, including the 38 aircraft Kingfisher canceled during the year.
Bagnato held off on ramping up production in 2011 to avoid a conflict between an output increase and completion of the certification process for the -600 family, which was certified in May. Now, the focus will shift to output, with 72 aircraft expected to be delivered in 2012, at least 80 in 2013, and at least 85 in 2014.
Ramping up output is not easy, but the process has been under way since June and, Bagnato notes, the industrial challenges are far less than what Airbus, for instance, is doing in boosting narrowbody output.
Bagnato sees last year as an important one for turboprops, which secured 85% of the orders in the 50- to 90-seat segment over regional jets. ATR won 80% of the market of orders at 90 seats and below. Moreover, Bagnato notes that the backlog of turboprops is growing, compared with regional jets. “There is a migration away from the jet,” he argues. Turboprops hold 77% of the backlog in the segment, with ATR representing 70% of the total. Firm orders for ATR in 2011 were dominated by ATR 72-600s, with 128 firm orders, followed by 16 72-500s, 10 42-600s and three 42-500s. The last -500 will be delivered this year.
ATR deliveries last year were dominated by 72-500s, with 38 units, followed by 10 72-600s and six 42-500s. First deliveries of ATR 42-600s are due in August; the aircraft is to receive European Aviation Safety Agency certification in mid-spring.
The aircraft maker also plans to open its new training center in Johannesburg at the end of the month, helping to support the 39 operators and 105 aircraft in Africa and the Middle East. In Brazil, the company is working with airline partners but is considering its own training center.

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