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ATR maintains production outlook despite sales decline

Turboprop manufacturer ATR foresees no change to its production plan even though its order intake fell more than 50% last year.

The Airbus-Leonardo joint venture secured 52 firm commitments in 2018, compared with 113 the previous year.

Speaking at a results briefing in Paris today, chief executive Stefano Bortoli described ATR's sales efforts in 2018 as "solid groundwork" for 2019's production plan.

"I am not negatively impressed by the fact that we had 52 orders, because we had a significant high year [in] 2017," he says.

Bortoli points out that ATR's annual deliveries over the last decade have averaged around 105 and asserts that the 2018 order intake was "relatively aligned" with previous performance.

Citing an order backlog worth "almost" three years of production, he predicts that 2019 deliveries will likewise be "aligned" with last year's output of 76 aircraft.

In 2017, ATR scaled back production to what its then-chief Christian Scherer described as "cruise altitude 80".

The Toulouse-based manufacturer's facilities have capacity to build 110 aircraft per annum.

Bortoli – who joined ATR in September 2018, when Scherer returned to Airbus as chief commercial officer – foresees that 2019 will be a "year of stability" in which, he adds, "a lot of work" will be required to maintain performance in terms of orders and deliveries.

The ending of deliveries to Iran Air – a result of sanctions imposed by US president Donald Trump – has been a main reason that ATR's earnings "softened" in 2018, Leonardo previously said.

For 2018, ATR had planned to deliver 12 ATR 72-600s to Iran's flag carrier, but was only able to hand over five aircraft before the sanctions became effective in August.

In 2017, ATR had delivered an initial batch of eight ATR 72-600s to Iran Air.

Bortoli says the remaining seven aircraft were in production but had yet to have cabin interiors fitted. ATR was able to find other customers for them. The last aircraft of the batch was reallocated to another customer in late 2018.

ATR has been unable to deliver any spares and services to support Iran Air's in-service ATR 72-600s.

Bortoli says the delivery stop was "difficult" for ATR, but declined to specify the financial impact.

ATR's revenue was stable at $1.8 billion in 2018.

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