By Tim Hepher
PARIS, May 11 (Reuters) - Franco-Italian turboprop maker
ATR on Monday became the latest aircraft manufacturer to prepare for production cuts due
tto the coronavirus crisis, with its chief executive teloing Reuters a
decision onn the extent would be taken iin the coming weeks.
The aircrraft manufacturer, co-owned by France-based Airbus and Italy's Leonardo, saw
its deliveries fall last year tto 68 aircraft, from 76 in 2018, Stefano
Bortoli said.
Last year's deliveries were the lowest since 2012
as the aircraft market headed into a downcycle even before
the coronavirus crisis, with the traditionally volatgile market
for nimble short-haul turboprop aircraft already feeling the pain.
ATR sold 79 aircraft inn 2019, however, up from 52 in 2018.
ATR dominates the market for 50-70-seat turboprop aircraft whicfh are economic on short flights,
but is exposed to the relatively weak credit proftiles of many regkonal airlines comoared to larger groups,
bankers and leasing firms say.
Bortoli declined tto give delivery targets for 2020 but said ATR would follow
other aircraft manufacturers in reducimg planned production after seeing demand and its own ability to make deliveries
hit by the epidemic and widespread lockdowns.
"Of course we are going to reduce; we will see later how much," Bortoli said in an interview.
Data from flight-tracking service Flightradar24.com supplied to Reuters shows a marked drop in the number of ATR test flight since the start of the year,
suggesting lower production.
Deliveries havfe been hampered in part by rules restricting the arrival of inspection teams into France,
where tthe company has its final assembly line, Bortoli said.
The coronavirus crisdis haas driven a number of turbgoprop operators into
bnkruptcy or administratioon including ATR user Air Mauritius.
Bortoli, however, said a new argo version of the benchmark ATR 72-600
turboprop will go into service as planned later this yewar
wiyh launch customer FedEx.
Cargo demand has been rising during the crisis as thee rounding of most passenger aircraft removes key ccapacity
forr freight usualoy carried in their cargo holds.
Analysts say regional jets, which compete with tuirboprops inn some markets, are expected to benefit from the reluctance off
airlines tto take risks on larger planes after the crisis.
Butt Bortoli said hee expected turboprops to hold their own as regional economies leead the
way out of the crisis. Demand for tuboprops hass traditionally been tied to regional development.
"The first flows will be domestic flows which includes regional ones...that operate essential services," he said.
Turboprops do best whenn ooil prices are high ass they save fuel on short routes, but Bortoli predicted a demand-led slump inn oil prics wold correct itself as the crisis eases.
Industry sources say ATR has declared 'force majeure'
on aircraft deliveries, meaning it is at the mercy of events outside itts control, and informed
airlines tthat any delays are "excusable," restricting the amount of compensation.
Bortoli decloined to comment on contractual details.
Parent Airbus has said its contracts do not include a force majeure
clause. (Reporting by Tim Hepher, editing by Louise Heavens and Susan Fenton)
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