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DUBAI: ATR considering new corporate structure for flexibility

ATR's top executive has indicated that the Airbus-Leonardo joint venture could be restructured into a limited-liability company to increase management flexibility and financing options ahead of the potential launch of a larger turboprop that could feature conventional or disruptive technologies such as hybrid-electric propulsion.

The remarks by chief executive Christian Scherer in a meeting with journalists at the Dubai air show today suggest a new phase in the internal debate over how to resolve a strategic impasse between Airbus and Leonardo regarding the joint venture's future.

Instead of proposals to increase Leonardo's share relative to Airbus, the joint venture partners are now considering a complicated legal restructuring aimed at clarifying ATR management's overlapping relationship with its shareholders, which are also primary suppliers for the ATR 72-600 and ATR 42-600. It would also create a legal framework for ATR to accept new investors if a development programme for a larger turboprop moves forward, Scherer notes.

"We do want to run a normal business at the pace of a normal business. That's what I'm proposing to our shareholders should happen with ATR," Scherer says.

The proposal remains in the infancy stage. Airbus and Leonardo approved ATR's proposal to study converting the corporate structure from a French business consortium, or GIE, to an LLC. The study has found several complications to such a restructuring – including tax and accounting issues – that must be overcome, Scherer acknowledges.

"I cannot say this will take six months [or] a year," he adds. "It takes the time it takes for people to agree. It's certainly not overnight."

For the moment, ATR has time on its side. The manufacturer lowered output of the turboprop family to 80 deliveries a year in 2017, although an assembly bottleneck – caused by an undisclosed supplier which is running behind schedule after converting to a new industrial system – threatens to prevent ATR from hitting that target this year, Scherer says. Meanwhile, ATR boasts a nearly three-year backlog of orders after securing a launch order from FedEx for the 72-600F cargo variant.

As the manufacturer works through that backlog, ATR's joint-venture partners have been at odds over what to do about launching a larger turboprop with a target capacity between 90 and 100 seats, with Leonardo showing preference for a new clean-sheet aircraft featuring new propulsion systems, wing designs and cockpit technology available today or in a few years.

But Airbus favours a slower approach, with an eye to medium-term introduction of a regional turboprop featuring several disruptive technologies, Scherer says. The possibilities include integrating a hybrid-electric propulsion system, new structural materials and new levels of automation in systems and the cockpit.

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