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Italian government throws Piaggio €700 million lifeline

Italy's government has approved over €700 million ($800 million)-worth of orders and commitments for Piaggio Aerospace, as it seeks to make the business more attractive to any potential buyer.

Announced on 21 June, the series of commitments came as Piaggio's state-appointed administrator, Vincenzo Nicastro, prepares to begin a tender process later this year for the struggling developer of the P180 Avanti Evo, which entered extraordinary receivership in December 2018.

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Piaggio Aerospace

Chief among the agreements is an order from the defence ministry for nine new Avanti Evos, plus an upgrade of 19 earlier-generation examples of the twin-pusher type operated by all three branches of the country's armed forces. Valued at €260 million, the contract is expected to be signed by year-end.

A further €96 million deal to provide logistics support to the military should be sealed by the end of September, on top of €200 million worth of engine maintenance contracts, which are scheduled for approval by the end of June, Piaggio says.

The Italian parliament is also expected to give its approval by late July to completing certification of the P1HH HammerHead – an unmanned surveillance variant of the Avanti – and the acquisition of at least one system, comprising two aircraft and one ground station, for €160 million.

HammerHead development has been on hold since the company entered receivership. Piaggio says its long-term objective is to maintain "company know-how" and participate in future Europe-wide unmanned air vehicle programmes.

Piaggio says it is also "heavily committed" to the business aircraft market and recently expanded its sales team to help drive up demand for the Avanti Evo. Two aircraft have been delivered so far this year – both in May – and two more examples remain in the backlog.

Nicastro says: "The timetable announced, which foresees the signing of the first new contracts as early as the end of this month, will support the company's commitment to regaining market share in all the sectors in which it operates." He adds: "There is still a lot to do," but believes the company is "moving in the right direction".

"Our goal is to be in a good position after the summer, when the official tender for the sale of Piaggio Aerospace will hopefully start, with a company able to attract a number of qualified potential buyers," says Nicastro.

He invited non-binding expressions of interest on 30 April to acquire part or all of the Italian firm, headquartered in Villanova D'Albenga, near Genoa. By the 15 May deadline, Nicastro had received 26 expressions to acquire the whole company, three to buy the aircraft business and 10 for the engine business.

Italian firm Leonardo has expressed an interest in the engine and aircraft maintenance activities, but Nicastro intends to sell the company as a single entity, rather than breaking it up.

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