Consolidation in market as BAE Systems exits and Fairchild Dornier files for bankruptcy

Regional jet orders are still depressed despite a healthy turnaround in US regional airline business following the 11 September US terrorist attacks. The market has also seen a consolidation in the number of suppliers after the withdrawal of BAE Systems from the sector and the bankruptcy of Fairchild Dornier.

Following the recent shake-out, Bombardier and Embraer are now the only two competitors in the regional jet sector, booking 54 orders between them in the first six months of 2002, with a net total of 48. In the same period last year, the regional jet sector took 204 orders.

The overall order backlog fell by more than a quarter over the past 12 months to 952 regional jets due to reduced demand and cancellations. These have primarily been of Fairchild Dornier 728 orders, including those of Lufthansa and GE Capital Aviation Services for 110 aircraft. The US-German regional manufacturer is believed to hold around 30 orders for the 328JET, but the status of these deals is now unclear following the collapse of the US-German company.

"Growth in demand for regional aircraft will trough in 2002," predicts a new report from Merrill Lynch. "In essence, recovery in the regional market has been delayed at least 12 to 18 months. In many ways the regional airlines are tied to the fate of the major carriers through operating arrangements and codesharing. We expect demand to recover in 2003."

Bombardier's net order intake totalled 31 units, well down on the 159 booked in the first half of last year. The new orders were all for 50-seat CRJs, apart from one undisclosed CRJ700 order to be announced at the Farnborough air show this week. The Canadian manufacturer's turboprop sales were even bleaker, with just two Dash 8 Q300s sold, to Air Nippon.

Embraer again trailed in second place, with 17 net orders, but an improvement on the 10 sold in the period last year. Not included is the recent Alitalia deal for six 170s and the conversion of six ERJ-145 options, yet to be finalised.

Deliveries fell by almost 20% to 139, with Bombardier heading the rankings with 82. Its target for the year is to build 190 CRJs. Embraer, which led the pack in 2001, was knocked into second place, with 57 deliveries. The Brazilian manufacturer says it is on track to deliver 135 aircraft by the end of year.

Source: Flight International