Regional airframers suffer orders slump in 2008
After the regional market's strong revival two years ago, the picture changed dramatically in 2008 as orders declined by almost half, to 255 aircraft. However, deliveries were up 10% to almost 330 units.
The havoc wreaked by the 2008 financial crisis affected the jet and turboprop sectors almost equally, with the former seeing a 49% fall in net orders and the latter a 54% drop. The 497 regional orders secured in 2007 represented the high-water mark of the last boom - and the largest tally since the start of the decade - as the turboprop revival combined with strong demand for large regional jets to drive sales upwards.
Bombardier and Embraer were neck and neck in market share last year, but the Canadian airframer took the top spot for the second year running. It was much closer this time as its 114 net orders were just two ahead of its Brazilian rival.
Bombardier suffered a slump across both its commercial product lines, with orders declining over 50%. CRJ regional jets were worse hit, with orders dropping by two-thirds from 141 in 2007 to 47. Although the Q Series was by far 2008's best-selling turboprop, sales slid 30% to 67 units. This meant that Bombardier found itself in the unusual position of selling more turboprops than jets.
Embraer, which had been well beaten into second place by Bombardier in 2007, was much closer last year as its sales held up stronger, only falling 23% to 112 units. The airframer, without any turboprops in its line-up, is focused on the regional jet market and was the clear best-seller in that sector, taking more than two-thirds of all the orders. Demand was fairly evenly spread across all its E-Jet models, although the largest E-195 variant was the most popular and single bestselling regional aircraft in 2008, with 51 orders.
For ATR, 2008 proved to be a disappointment. The global economic crisis made a large dent in the airframer's order expectations as it had aimed to break the 1,000 sales mark for its ATR 42/72 family in 2008 (meaning that it was aiming to sign at least 50 orders during the year). It fell significantly short of that target, with 29 orders. This comes on the back of an extremely strong 2007, when its orders broke the 100-unit mark.
Speaking in January, ATR chief executive Stephane Mayer said that 2008's 1,000 total orders target "was set before the crisis", but he added that the airframer "will maintain the objective" in 2009. However, he cautioned that the "plan for 2009 is difficult because there are a lot of uncertainties".
In contrast to the sales gloom, regional airliner deliveries rose almost 10% from 302 to 327 units in 2008, driven by an increase in shipments at Embraer and ATR as Bombardier reduced its output.
Embraer's airliner production rose by a quarter to 162 aircraft (including six Chinese-assembled ERJ-145s), while ATR delivered 55 aircraft - up 31% on 2007. Overall, Bombardier deliveries fell 16% to 110 aircraft.
After two main protagonists all but tied on output in 2007 (Embraer was just two units ahead), the Brazilian airframer eased into a healthy lead last year, making half of all the 2008 deliveries (and 75% of the regional jet sector).
However, 2008 will be the peak in its current cycle, as the airframer has already said that it is slowing commercial output and deliveries will drop to 115 aircraft as part of cuts that will see its workforce reduced by 20% in response to the "unprecedented crisis affecting the global economy".
The largest drop in Bombardier's 2008 output was suffered by the Q Series, with deliveries declining more than 20% from 66 to 54. The bulk of these (43) were the 74-seat Q400 variant. The airframer says rising demand for this model will see it increase output this year. In the meantime production of the older Q200/300 will end this year.
CRJ shipments dropped from 62 in 2007 to 56 and output is expected to remain at this level throughout 2009.
ATR's production ramp-up continued in 2008, but has now been put on hold in response to the deteriorating market. Mayer says that ATR has already seen "some difficulties at some of our customers", which has prompted some delivery deferrals, and warns that "even worse" could be to come.
The company had planned to boost output to 75 aircraft this year and to more than 80 in 2010, but production is now being stabilised at roughly six a month. "This allows us to deliver more than 60 aircraft in 2009," says Mayer, which should ensure that the airframer equals or surpasses the 62-aircraft production record set in 1991.
Mayer adds that while all of ATR's 2009 production has been allocated to customers, not all of the aircraft have finance arranged. "We are increasing our workflow in this area, talking with European banks and institutions."
After several years of growth, the regional airliner backlog began declining in 2008, falling 8% to 861 aircraft by the end of the year. Embraer remains the dominant force, although its share has dropped slightly to just below 50% of the overall market, with Bombardier making a small gain to a 31% share. ATR, which is market leader in the turboprop sector, continues to hold around a fifth of the overall backlog.
