Analysis — Avro, ATR & Jetstream Merger

Since its relaunch as the Jetstream 61, the aircraft has had no sales at all, while its chief rival, the Atr 72, picked up a respectable 18 orders in 1994. So it comes as no surprise that the first industrial decision in the Bae-Atr deal, as distinct from mere marketing arrangements, is that the J61 is to get the axe. A glance at the above list tells us that it may not remain alone. The deal will cost Bae £250 million up front, presumably a write-off on J61 development and the cost of shutting down its line. But getting rid of the unloved turboprop will contribute £50 million a year to a bottom line that was robbed of £160 million last year by commercial aircraft production. So joining Atr looks like a pretty good idea.

So far unclear is whether the new arrangement (let’s call it Minibus for the moment) will become a full industrial concern like Airbus or instead remain a mere marketing front for its partners’ products. To put it another way: will the partners contract Minibus to sell their planes, or will Minibus contract the partners to build its planes? This should become clear in the coming month, because the parties said they were only signing a heads of agreement document in January; more details had to be worked out.

Notably, Bae has made the greater, and probably more important contribution to the Minibus range, even though it will own only one third of the new group. The J41 and Rj families have been selling quite well lately and the 146/Rj family could become the basis for a new twin within 10 years. There are no definite plans, but such a move seems logical and such proposals have been around since the mid to late eighties. The shortest of the Bae 146 fuselage lengths, the Avro Rj85, might be in trouble, though: its size is similar to that of the proposed Atr 82. Regardless of that, the scale of Bae’s contribution means there will be no simple consolidation of work into a three-way split. One wonders whether the combined marketing drive will result in yet another round of name changes for Bae’s products. Surely there is a limit to the number of names the 146 can get before people simply go back to calling it the 146.

The next question is: Who else will join? Bae hopes Daimler-Benz Aerospace (formerly Dasa) will commit its subsidiaries, which would mean Fokker and Dornier. That could lead to huge rationalisation. The Dornier 328 competes with the Jetstream 41, so one of them might have to go, probably the slow-selling German. More importantly, the Fokker 100 is locked in mortal combat with the 146. If Minibus had to choose between the two, the 146’s development potential could probably mean the Fokker would go. The short fuselage Fokker 70 does not quite represent such direct competition to other Minibus models, but the Fokker assembly line could never be viable producing it alone. Besides, it is a little close to the Atr 72, 82 and Rj85 in size.

However, both these aircraft have proven excellent sellers with better long-term prospects than the 146/Rj family. The Fokker 50 (developed from the old F27 Friendship) also sits uncomfortably between the Atr 42 and Atr 72. So if Benz decides to put Dasa into Minibus, it might mean curtains for the ancient Fokker name, not to mention Dornier. But then, it is difficult to see why Benz would want to join unless it got a significant cut of the manufacturing action. After all, why join a consortium just to kill of your own stand-alone aircraft programmes? So its involvement would probably mean Bae, Alenia and Aerospatiale sharing their work. Saab is another possible participant. But again there would be duplication with both of its current products.

Hopefully, all of this consolidation would stop before Minibus became a monopoly, which is always theoretically an easy way of ensuring profits for all participants. The world cannot economically have two competing models of superjumbo, but surely two regionals in the 40 to 50 seat category isn’t too big an ask. Minibus does not seem to share that sentiment. According to one estimate, the industry can look forward to building 17,000 airliners in the next 20 years, including 5000 turboprops and 3000 regional jets. Minibus wants to build 8000 aircraft in that time. Work out what that means for the competition.

Restructuring Continues

Mcdonnell Douglas has decided to concentrate production of its slow-selling Md-11 model at the Douglas plant at Long Beach, California. That means dropping its subcontractor, the old General Dynamics subsidiary Convair, which built fuselage barrels at San Diego. General Dynamics, following its two-year policy of selling off or closing down most of its components, said that meant Convair would shut. Gd, which sold its F-16 production line to Lockheed in 1992, is now history so far as the aviation business is concerned. And so is Convair, one-time steward of World War Ii’s massive B-24 programme and post-war builder of the F-102, F-106 and the mighty ten-engine B-36. Mcdonnell Douglas, meanwhile, says it has no plans to discontinue Md-11 production — and one would have to comment that going to the trouble of moving part of the production line is strong evidence that the company is determined to hang on. If it didn’t get some new orders soon, it would have to slow production, the company said in February. But that would be a last resort.

By the way, from our 2026 perspective, that “Minibus” consortium (eventually known as Aero International Regional or Air) only lasted until 1998 before dissolving. Interestingly, Bae eventually exited the commercial regional aircraft market altogether by 2001, while Atr has survived as the dominant player in the turboprop market.