Weak dollar mars regional manufacturer's optimism as it looks to reduce costs
ATR is confident that the recovery of the turboprop market is well under way after a 25% increase in revenues and a strong start to its 2005 sales drive. However, the Franco-Italian regional manufacturer remains concerned over the weakness of the US dollar and is evaluating ways of restructuring its cost base to reduce the impact.
ATR delivered 13 new aircraft last year, took orders for 12, and placed a further 51 secondhand aircraft. Revenues increased from $430 million in 2003 to $543 million, largely due to an improved performance from its spares and services business and the growth in its secondhand aircraft trading. The latter increased by almost a fifth on 2003 in terms of the number of units placed.
Speaking at ATR's annual briefing in Paris last week, chief executive Filippo Bagnato said that, after "a difficult 2003, last year we have seen the beginning of the recovery" in the turboprop market and that the "cost of oil is an element that has helped us a little bit". He added that although the balance sheet will not be finalised for a couple of months, "we anticipate that we will have a positive financial result".
ATR senior vice-president commercial John Moore says that as the "majority" of ATR's revenue is in US dollars, but "two-thirds of costs" are in euros, efforts are under way to limit the impact of the weak dollar: "We're well advanced in an internal efficiency drive to reduce costs, and are also evaluating ways to shift part of the cost-base out of euros or into dollars," he says. The latter could see an increase in the use of repair stations situated outside the "euro zone" as well as a possible increase in sourcing from non-European countries, such as China.
Although ATR fell slightly short of its 2004 order and delivery targets, it made up for this in January when it landed orders for 41 ATR 72-500s - 30 for Air Deccan, one for Air Caraibes and 10 as anti-submarine warfare platforms for the Turkish navy. These deals take the backlog to 55 aircraft - its highest since the middle of the last decade.
Although deliveries of a number of the orders will extend to 2009, and therefore only account for part of ATR's 2005 output, the company believes demand is strong enough for 15 aircraft to be shipped this year - the highest for three years. Deliveries are forecast to increase to 18 each in 2006 and 2007.
"The Air Deccan deliveries run to 2009, which sends a strong message to the market that we are here for the long term," says Moore. The first three new ATR 72s for Air Deccan will be delivered this year.
MAX KINGSLEY-JONES / PARIS
Source: Flight International
