ANALYSIS: ATR resurgent as Bombardier problems mount

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ATR’s fortunes continue to ascend after its near-death experience a decade ago, while Bombardier’s headaches with the CSeries are being compounded by sluggish output and orders for its turboprop and regional jet ranges. Embraer, meanwhile, is taking the lion’s share of a regional jet market, which has just enjoyed its best year for orders since 2000.

Latest order and delivery data from the three main regional aircraft manufacturers shows that 2013 was a year of contrasting performances. With 89 net sales, ATR took 74% of 2013’s commercial turboprop orders and has secured a 60% share over the past 10 years. Its Canadian rival, by contrast, notched up just 17 orders for the Q400, way down on the 50 it won in 2012. In terms of deliveries, the Franco-Italian airframer led Bombardier by 74 to 29.

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Chris Seymour, head of market analysis with Flightglobal’s advisory service Ascend, says that a notable feature of ATR’s 2013 orders was that three-quarters were from operating lessors, headed by Nordic Aviation Capital. “This sector has really developed in the past four years as lessors have recognised the good value retention and liquidity of larger turboprops,” he says. Bombardier took just four lessor orders for its Q400 in the same period, all from NAC.

The ATR 72-600 has “clearly become the aircraft of choice in the 70-seat market”, adds Seymour. “It is seeing high demand in emerging markets, being ideally suited for short-haul, lower-yield routes requiring market leading operating economics.” The dramatic fall from grace of thirsty smaller regional jets has been particularly noticeable in these fast-growing territories. Asia-Pacific and Latin America account for almost 80% of the ATR and Q400 market, says Seymour.

Unfortunately for Bombardier, the Q400’s improvements over earlier-generation regional turboprops have not translated into sales in these countries. “Its extra capacity, range and speed have not been deemed necessary by many operators in developing markets, although it has won key orders in North America and Europe, where these factors are more important.”

Seymour sees hope on the horizon for the Canadian turboprop, however, thanks to a plan to assemble the Q400 in Russia and potential orders from two local lessors, as well as a letter of intent from China for 30. Bombardier is also developing an 86-seat, high-density variant for an Asian customer. “All these are needed to help regain market share,” he says.

But there are challenges ahead too for the two turboprop manufacturers. China’s Xian Aircraft plans to add to the competition by launching its own 70-seat MA700 in 2019, with shrink and stretch versions being offered. ATR’s partners, Alenia Aermacchi and Airbus, also appear to be at odds over the benefits of developing a 90-seat stretch model, something that risks a rift in the three-decade old partnership. Seymour believes, however, that bigger turboprops are inevitable. “They have come to dominate the very short-haul markets and a move up to the larger size is seen as a foregone conclusion,” he says.

Regional jets racked up their highest sales for 13 years, with 408 net orders, with relaxation of scope clauses allowing the US majors to replace 50-seat jets with 70-plus-seaters. Embraer’s launch at the Paris air show of its E2 family also gave what will perhaps be a one-off boost to the figures, with 150 of the Brazilian manufacturer’s 334 orders coming from the new variants.