Italy special: Daring to be different - Piaggio looks at its next model

Piaggio's next aircraft will not ditch its reputation for innovative design. But the company says its first business jet will owe as much to pragmatism as passion

With its unmistakable twin-pusher design and sleek lines, the Piaggio P180 Avanti turns heads wherever it goes. But the cost of developing the turboprop and its failure to be an instant success helped cause the collapse of one of Europe's oldest aviation names in the mid-1990s. Now, as they prepare to unveil its first all-new aircraft in more than a quarter century, the new owners of Piaggio Aero are determined not to risk the company's future again by misjudging the market.

Rescued in 1998 by a consortium headed by Italy's famous Ferrari family, today's Piaggio Aero bears little resemblance to the Rinaldo Piaggio company that came up with the P180 as an ambitious departure into corporate aviation from its bread-and-butter business of building parapublic aircraft such as the P166 twin-pusher surveillance aircraft, about 30 of which are still in service with the Italian air force, border patrol and coastguard. The original company was mortally wounded by the end of the Cold War and slow take-up of its idiosyncratic Avanti after it was certificated in 1990.

Now, after replacing the original model with a glass-cockpit version, the Avanti II orderbook stands at just over 100 aircraft, worth $600 million, and final assembly at its Genoa factory is stacked up, with just "three or four" open slots until 2009. About 115 P180s have been delivered, 104 of them the original Avanti, all but a handful of them since the takeover in 1998. North American customers make up more than three-fifths of the backlog. The manufacturer also has an engine and structures subassembly business, mainly for Pratt & Whitney, which makes up about 30% of its revenues.

Cash injection

Earlier this year, an investment group owned by the Abu Dhabi government, Mubadala Development, bought a 35% stake in Piaggio Aero, providing a cash injection for the new aircraft just after the existing shareholders had bought the remaining 21% share belonging the Italian government. A decade after being left for dead, prospects are certainly looking brighter at one of the continent's last privately run aircraft manufacturers .

Speaking at last month's National Business Aviation Association convention in Orlando, chief executive Josè Di Mase - whose family is also a major shareholder in Piaggio Aero - would give little away about the design of the company's first jet ahead of its expected launch next year. Originally, the company said it had narrowed the choice to two concepts: one thought to be a jet version of the P180, the other a more conventional and possibly bigger aircraft. Di Mase now says the jet will be "larger than the P180". Although it would be easier to adapt the original aircraft, the six- to eight-seat sector is "too crowded", he says. But the Italian company's trademark flair will not necessarily be compromised. "It will have the styling of the nice one, with the performance of the ugly one," he remarks with a smile.

Neither will Di Mase say much about likely partners on the new aircraft, although Piaggio does plan to share the cost of development with key suppliers. Pratt & Whitney Canada, which provides the Avanti's PT6A-66B turboprop, is a clear candidate, possibly with a version of its PW300 turbofan. "We have developed a menu of options for financial investors and industrial partners," says Di Mase, "and we are having very interesting discussions with a few of them."

Piaggio's headquarters and final assembly plant in the northern Italian port city of Genoa may not give the impression of a company whose business is growing rapidly. Output stood at just over one aircraft a month last year and this year's total will be 20, rising to 38 a year by 2008. But production bottlenecks are straining capacity at the nearby 100-year-old subassembly works in Finale Ligure, 70km (45 miles) from Genoa towards the French border. Work on a new factory will begin there next year. Once that is fully up and running in 2009, Di Mase expects annual production to rise to up to 50 aircraft.

Transatlantic business

One of the biggest contributors to Piaggio's turnaround has been the success of its transatlantic business, based in West Palm Beach, Florida and headed by president Tom Appleton, formerly with Bombardier. The fractional sector has been key, with all-Avanti outfit Avantair by far its biggest operator and making up about half the manufacturer's North American backlog. The Florida-based operator signed a further order at last year's NBAA for 36 Avanti IIs to be delivered between 2008 and 2010. Avantair's prospects have been bolstered recently by its takeover by an investment firm, which will clear the business's $33 million in debts and take it public (Flight International, 10-16 October).

Appleton is relaxed about Piaggio America's reliance on one customer. "The Avanti is very reliable as a fractional product," he says, "and we expect some fractional owners to migrate to full ownership." Eventually, as the number of private and corporate owners increases, Appleton expects fractionals to represent just 30% of the US business. Owner-flyer entrepreneurs were among the early adopters of the P180 and several remain enthusiastic customers. "It's a pity we can't name some of them," says Appleton. But now, he says, "we are moving more and more into the corporate market". The aircraft appeals not only to those who appreciate its ramp presence its ability to cope with grass and gravel runways as short as 1,000m (3,280ft) makes it almost as fast, but much more versatile than a similarly sized business jet, he says.

Although Piaggio has made little impact outside Europe and North America, the Abu Dhabi investment - which has given Mubadala three of the seven seats on Piaggio's board - may give it an inroad into the burgeoning Middle Eastern market. The oil and natural-gas rich governments and investment houses of the region have identified aircraft manufacturing as a prestigious long-term investment opportunity - companies ranging from the UK's Britten Norman to Cirrus Design and Liberty Aerospace in the USA have all been recent beneficiaries. But these countries are anxious to develop their own high-tech industries and linking with innovative business-aircraft manufacturers could be one way of doing that. Although not a priority at this stage, Di Mase says Piaggio is discussing "some technology involvement" with representatives from the emirate. At the time, Mubadala chief executive Khaldoon Al Mubarak said the deal offered "the opportunity to explore potential synergies that both Piaggio and Mubadala can leverage".

Piaggio's less glamorous subassembly business helped keep it afloat as it ramped up its sales efforts for the P180 and invested in development of the Avanti II after the takeover in 1998. "It gave us the oxygen we needed," says Di Mase.

Rotorcraft move

In October, Piaggio signed an agreement to acquire a quarter of the share capital of P&WC Turbo Engines, which is responsible for producing the PW206/207 helicopter engines. The $60 million investment takes Piaggio into the rotorcraft market for the first time. The company will build components for engines that power helicopters including the AgustaWestland A109, Eurocopter EC135 and Sikorsky S-76D at its new Villanova d'Albenga plant, which will replace Finale Ligure. In addition, at the Farnborough air show in July, Piaggio announced a deal to produce more parts for the Pratt & Whitney F135 engine for the Lockheed Martin F-35 Joint Strike Fighter.

Upgrades are also a major focus for Piaggio. Although it delivered its last P166 in 1991, it has carried out a mid-life update on an aircraft operated by Italy's border patrol, including replacing the Lycoming piston engines with Pratt & Whitney Canada PT6A turboprops and incorporating Rockwell Collins Pro Line 4 avionics. Piaggio is also offering to retrofit original P180s to Avanti II standard, with a higher gross weight and Pro Line 21 integrated flightdeck, and has carried out its first conversion on a 1992-delivered model.

Developing an all-new mid-size business jet will not be easy for Piaggio. But, rapidly accelerating deliveries of the Avanti II mean the company no longer has cash problems, and with the Mubadala investment giving it, as Di Mase says, "solid backing" and risk-sharing agreements with programme partners, Piaggio should be able to get its new aircraft to market without betting the farm. But while the Avanti's unique looks, Ferrari connection and unrivalled speed among turboprops give it instant niche appeal, Piaggio's challenge will be to come up with a larger aircraft that is not seen as a me-too product in a category with strong and established competitors and enormous brand loyalty. Given Piaggio's reputation, however, that seems as likely as Ferrari designing just another sports car.

Source: Flight International