BAe Systems Regional Aircraft [PNK: BAESY] has delivered the final Avro RJ to Blue 1 (formerly Air Botnia) of Finland, bringing to a close 22 years of BAe 146/Avro RJ production. The delivery of the last regional jet marks the end of BAe's involvement in civil aircraft production, a lengthy history that also includes production of the popular Jetstream turboprop models.

BAe will continue to support the aircraft by supplying spares and maintenance, which is arguably a much more profitable business.

The BAe 146, the predecessor of the Avro RJ, had been plagued by reliability problems, mostly centering on its four Honeywell [NYSE: HON] engines. The aircraft was upgraded and renamed the Avro RJ.

The aircraft model never really caught on in the United States, due to heavy competition from Bombardier [Toronto: BBDb] and Embraer [NYSE: ERJ]. While the model is relatively popular in Europe, only two U.S. regional carriers, Air Wisconsin and Mesaba Airlines, currently operate them.

In all, 390 Avro RJs and BAe 146s were built and delivered, according to BAe, making the jet one of the most successful by a British manufacturer.

The final aircraft BAe delivered, an Avro RJ85, took a commemorative flight from BAe to its final customer. It was flown from FlyBE Aviation Services in Exeter, UK, where it had been customized, to Helsinki, Finland. The flight included passes over two BAe facilities in the United Kingdom: Weybridge, Surrey (the home of BAe's European spares logistics center) and Hatfield, Herts (asset management), where many of the BAe 146s had been built.

The aircraft then landed at Woodford, near Manchester (BAe's customer training and engineering division, and the former assembly line), followed by Prestwick, Scotland (headquarters of BAe Regional Aircraft and its customer support and engineering center).

The production of the BAe 146/Avro RJ harkens back to the heyday of regional aircraft production 20 to 30 years ago, when many manufacturers of regional aircraft competed for business. Saab no longer produces regional aircraft, and Fokker has left the business, leaving Bombardier and Embraer as the two remaining heavyweights in regional aircraft production.

BAe "just got out of the civil business entirely," said Douglas Abbey, executive director of the Regional Air Service Initiative (RASI). "Now they're supporting it. They may establish their asset management organizations -- one for the props and one for the jets -- to keep residual values up and supplies and spares available for operators. But when that happens, there's generally a degradation in interest [in the aircraft type]."

Air Wisconsin, in its code-share relationship with AirTran Airways [NYSE: AAI] and United Airlines [OTC: UALAQ], operate 12 BAe 146-200s, and five BAe 146-300s, according to statistics compiled in September by RASI. Mesaba has 36 Avro RJ85 in service in its code-share operation with Northwest Airlines [Nasdaq: NWAC]. But Northwest recently announced that it might end its contract with Mesaba for the Avros, a decision that could wipe out 40 percent of Mesaba's revenues (CRAN, Oct. 13). While nothing has been decided yet, CRAN learned last week that Mesaba has ferried one of its newer Avros from its base in Minneapolis/St. Paul to Goodyear, Ariz., where aircraft are either repainted or prepared for long-term storage.

The BAe 146/Avro RJ's low-noise characteristics have helped it succeed in mainly European markets where noise is a concern. It was one of the first jets ever to pioneer the steep approach, Abbey told CRAN, and was the favored airplane for London City Airport, surrounded by a large metropolitan area.

"It was an aircraft that ultimately was developed into a niche market, so it didn't have widespread appeal," Abbey said. In addition to London City, it was a popular aircraft for places such as Lugano, Switzerland, and Toronto, Canada, because of its "neighborhood-friendly" characteristics. "But ultimately it had two more engines than most of its competitors and, other than Air Wisconsin and Mesaba, it didn't really have longstanding customers in the United States," Abbey said.

BAe's future support business for the aircraft stands to reap higher profits for the company. Current models could be in service for as long as 50 years. "It's much more lucrative to be in spares/support," Abbey said. "There's an increasing amount of support and maintenance as [the airplanes] get older. It's a very profitable line of work."

More than 50 carriers operate the BAe 146/Avro RJs worldwide, according to BAe. In Europe, the aircraft tops the list of jets in service in sheer numbers. More than 30 carriers, many of which are members of the European Regions Airlines Association, operate about 200 of the aircraft there, BAe said.

The final Avro RJ delivered to Blue 1 will operate on the same routes as its other five Avro RJ85s. The carrier, owned by the Scandinavian Airlines System (SAS), operates more than 80 daily flights to and from five cities in Finland to Stockholm and Gothenburg in Sweden; Oslo, Norway; Copenhagen, Denmark; Brussels, Belgium; and Dusseldorf, Germany.

>>Contact: Douglas Abbey, RASI, 202-338-1727; David Dorman, BAe Systems, 44 (0)1582 488336, email: david.dorman@baesystems.com .<<

History of the BAe 146/Avro RJ

The BAe 146 first flew commercially in 1983, powered by four Honeywell ALF 502 turbofan engines. The aircraft was designed specifically to meet the demanding requirements of the regional air transport market, where heavy utilization over short sector lengths are paramount.

A total of 221 BAe 146s were built between 1983 and 1993 when the model was succeeded by the Avro RJ series.

Three different length versions of the BAe 146 were built -- the Series 100 with 70-84 seats, the 200 Series with 85-100 seats and the 300 Series with 100-112 seats. The aircraft was also manufactured as a pure freighter and as a VIP transport aircraft. The three different size variants retain complete engineering and operational commonality.

The BAe 146 features five-abreast seating and matches the seat width, aisle width and headroom of larger mainline jets. The cabin layout also is unique among regional jets, with toilets, galleys and doors located at each end of the cabin.

Air Canada [OTC: ACNAQ], Air France [PNK: AIFRF.PK], British Airways [NYSE: BAB], Qantas [Australia: QAN] and United Airlines [OTC: UALAQ] -- or their regional affiliates -- are among the carriers who fly BAe 146s.

Older BAe 146s are becoming more attractive to the freight market by virtue of lower residual values and pricing levels.

The Avro RJ was developed from the BAe 146, the major changes being:

• Honeywell LF507 engines, with significantly lower operating temperatures for reduced maintenance costs and increased thrust under "hot and high" conditions.
• All digital, ARINC 700, avionics with Cat IIIa low weather-minima landing capability (with Cat IIIb available as an option).
• New Spaceliner passenger cabin with increased comfort and improved appearance.
• Developed design weights, reduced drag and increased cruising altitude, which increase range, economy and operational flexibility.

Like the BAe 146, the Avro RJs are a complete family of regional jets. There are three variants: RJ70, RJ85 and RJ100, which have different cabin lengths, but complete engineering and operational commonality.

Following on the success of the BAe 146, the Avro RJ was built between 1993 and 2003, achieving 170 sales with the final four aircraft being delivered in October and November 2003.

British Airways, Lufthansa [OTC: DLAKY], Northwest Airlines [Nasdaq: NWAC] and THY Turkish Airlines -- or their regional affiliates -- are among the carriers operating the Avro RJ series.

Source: BAe Systems