Dubai firm in $1bn turboprop deal

February 13, 2014 - 9:56:46 am

Visitors walk past an Airbus A350 on display at the Singapore Airshow yesterday.

SINGAPORE: Dubai Aerospace Enterprise (DAE) is to spend up to $1bn on new turboprop planes, the aircraft leasing company said yesterday, betting on growth in Asia’s crowded regional and domestic markets.

Having had to cancel big orders for commercial jetliners during Dubai’s debt crisis, government-owned DAE has turned to turboprops used for short-haul trips for fewer than 100 passengers. Such aircraft can be operated more efficiently than many jets, particularly in an era of high oil prices.

DAE, the largest aircraft leasing company in the Middle East, said it had ordered 20 turboprop commercial aircraft from French-Italian manufacturer ATR, with an option for a further 20 taking the deal’s total potential value to $988m.

“We aim to diversify our portfolio and expand into regional aircraft, to meet an increasing demand from airlines that are developing regional air connectivity,” DAE Managing Director Khalifa Al Daboos said at the Singapore Airshow.

After ordering more than 200 aircraft during an industry boom in 2007, DAE was forced to cancel orders as funds dried up in Dubai’s debt crisis. 

In 2011, it canceled outstanding Airbus orders worth $5.8bn, as well as orders for 35 Boeing 737s.

DAE, which specialises in aircraft maintenance and leasing, ended talks with British aircraft services company BBA Aviation last year to merge parts of its business. 

The company has been trying to sell US-based engine repair and maintenance firm StandardAero since 2010, Reuters has reported. 

ATR, jointly owned by Airbus Group and Italy’s Finmeccanica, is working on proposals for an all-new 90-seat aircraft rather than its best-selling 72-seat model. But so far it has failed to win shareholder approval as Airbus preserves engineering resources for other projects.

Yesterday’s order by DAE is for ATR 72-600s, with delivery expected between 2015 and 2018.

The Dubai company has lined up customers for the first 20 aircraft and will decide on the options this year, Khalifa said.

“ATRs are today operated by some 190 carriers all over the world, clearly providing us with potential opportunities to place this new fleet,” he added.

Also at the air show, Bangkok Airways said it is spending $200m to buy six ATR 72-600s, with an option for two more. The planes will replace the company’s eight existing turboprops over the next three years. It has a total fleet of 25 aircraft.

Bangkok Airways President Puttipong Prasarttong-Osoth said the company has yet to finalise its long-term fleet expansion plan. 

Meanwhile, Airbus yesterday received its first order of the year for its flagship A380 when leasing firm Amedeo signed an $8.3bn deal for 20 of the superjumbos.

The purchase agreement, signed at the Singapore Airshow, put the European manufacturer on track to meet its target of 30 orders for the world’s largest passenger plane in 2014.

Airbus had suffered some setbacks last year with the discovery of cracks on some of the giant jetliners’ wings.

But John Leahy, its chief operating officer for customers, said: “This firm order from Amedeo is a clear recognition of the A380’s long-term market appeal. 

“The A380 is the best tool for airlines to capture growth and increase profits.”

Amedeo, formerly Doric Lease Corp, is the world’s biggest manager of leased A380s.

“As world air traffic continues to double every 15 years and airport infrastructure and slots do not, the A380 is the best solution for airlines to capture that growth,” said Amedeo chief executive Mark Lapidus.

The orders will be delivered from 2016 to 2020. Amedeo will announce its engine selection later. “Put it in the right routes at peak traffic times and it is an unbeatable profit-generating machine for airlines,” Lapidus said.

Airbus said more than 120 A380s are now in operation worldwide following its launch in 2007. Leahy said the company wants about 30 orders for the A380 this year.

Despite the lift for Airbus from the Amedeo deal, one analyst said it should look beyond the A380.

“It’s more an exception than the rule because we don’t see a huge demand for this aircraft,” said Shukor Yusof, with Standard and Poor’s Equity Research.

“This is a niche aircraft meant for a small market. Airbus would do much better to focus on the A350,” he said, referring to a new generation of long-range aircraft.

Agencies

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