ATR shareholder Leonardo intends to break the industry impasse on development of a 100-seat regional turboprop with a new programme to create a "modular and multi-task" aircraft that would also replace the Italian manufacturer's C-27J tactical airlifter.

Speaking in Milan today to detail Leonardo's 2016 financials, chief executive Mauro Moretti said he hoped Airbus – the other 50% partner in joint venture ATR – could be convinced to participate in development of a new aircraft under the ATR banner. Failing that, he is prepared to buy Airbus out of ATR. But, regardless, the dual-use 100-seater will go ahead – under the Leonardo banner and possibly with new investors – and be realised in southern Italy.

ATR's home assembly centre in Toulouse, Moretti notes, is "full". And for a programme that will cost €1.6-1.7 billion ($1.7-1.8 billion), investors could be found, he believes; regional development funds may also be available for such a project in the south of Italy. The market potential, he argues, is "great", and the finances attractive because development costs can be spread across two aircraft.

Moretti's stance represents a potentially dramatic shift in ATR's industrial position and the civil turboprop market generally. For several years now, the former Finmeccanica has been keen to begin a 100-seat project, but Airbus has shown no interest. The 70-plus-seat ATR 72 has been selling well, and a 100-seater would probably mean an all-new airframe, leaving Airbus inclined to adopt a conservative attitude despite the Italians' enthusiasm. Canadian rival Bombardier, manufacturer of the Q400, has shared Airbus's caution about diving into an expensive new programme for an untested market.

But Moretti appears convinced of the market potential for an aircraft with two roles – including replacement of the "not so young" C-27J.

For 2016, Leonardo has posted sales of €12 billion and EBIT of €982 million, compared with nearly €13 billion revenue but just €884 million of EBIT in 2015.

Group debt – long a heavy drag on finances – shrank to just €2.85 billion, from €3.28 billion a year ago. The aeronautics division, which manufactures fuselage barrels for Boeing 787s as well as the M-346 military trainer, saw sales edge up to €3.13 billion and EBITA gain 11% to €347 million. The orderbook surged, from €6.17 billion at the end of 2015 to €13.1 billion.

Despite a torrid market for big rotorcraft, the AgustaWestland helicopter division recorded EBITA of €430 million on sales of €3.64 billion, down from €558 million on €4.48 billion in 2015. The unit's orderbook fell by a billion euros, to €10.6 billion.