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Monday, February 25, 2008

Singapore Watch

Regional manufacturers toted up more sales during last week’s Singapore Air Show including aircraft placements by both ATR and Embraer, all of which continued the trend toward larger regional aircraft. In addition, Saab reported that the market was tightening for turbo-prop availability.
Regional Aviation News Publisher John Persinos provided context for show when he interviewed Jimmy Lau, managing director, Singapore Airshow and Events. Lau said this year’s show is home to 800 exhibitor companies from 42 countries, slightly down from last year. He says that at least 30,000 trade attendees were expected, 15,000 from overseas, roughly on par with last year’s attendance. He also reported that the defense-to-commercial ratio, was about 55/45.
Lau pointed out that a major factor driving growth in the Asian aerospace market is accelerating consolidation of Maintenance, Repair and Overhaul (MRO) work. “Asia is increasingly an MRO center and many OEMs have a presence here,” he said. “This region of the world can provide quick MRO turnaround times.”
The salient point, said Persinos, is a basic matter of economics: this region is the key to aerospace’s continued prosperity. As the rest of the global economy skids into recession, aerospace is forecast to continue its winning streak, in large part because of sustained demand in Asia.

ATR Places ATR 72s
While Philippine-based, low-fare carrier Cebu Pacific took delivery of the first of 10 ATR 72s, during the show, both Laotian-based Lao Airlines and Air Tahiti placed orders for one aircraft each. The deals for the new aircraft are valued at approximately $36 million.
Cebu inked two contracts with ATR last year for the purchase of a total of 10 ATR 72-500s, and options for eight additional aircraft, valued at over $330 million. Cebu Pacific will take delivery of its ATRs in 2008 and 2009. All the aircraft are configured with 72 seats and feature the state-of-the-art technological innovations in the field of communications and navigation aid tools and passenger comfort.

Lao Airlines – the flag carrier of Laos – announced the purchase of a new ATR 72-500. This aircraft is the first -500 series ATR for the airline, which already operates two ATR 72-200s. This new 70-seat ATR will be equipped with the “Elegance” cabin, new PW 127M engines and Light Emitting Diode (LED). The aircraft will be also equipped with state-of-the-art technological innovations in passenger comfort, communications and navigation aid tools and be delivered in 2009.
The airline, based in Vientiane, was established in September 1976 as Lao Aviation. The name was changed to Lao Airlines in early 2003. It is wholly owned by the Government of Laos and operates domestic services to 10 destinations and international services to Cambodia, China, Thailand and Vietnam.

Air Tahiti announced the purchase of an ATR 72-500, valued at over $18 million. With the acquisition of this aircraft, the French Polynesian operator currently operates four ATR 42-500s and five ATR 72-500s. Three additional ATR 72-500s currently on order, including the aircraft announced last week, are to be delivered in 2008 and 2009.
This 66-seat aircraft will be equipped with 120-minutes ETOPS (Extended Range Twin-engine Operations) capability, the “Elegance” cabin, higher rated PW 127M engines. Thanks to the ETOPS 120 capability, Air Tahiti is able to operate its ATR fleet over an island network as vast as Europe, making the aircraft critical to its expansion. With an annual traffic of 860,000 passengers, Papeete-based Air Tahiti is the principal domestic airline of the French Polynesia.
Since 1980, air traffic in the Polynesian archipelago has been increasing at an annual average rate ranging from seven to 10 percent as a result of hotel development on the islands as well as a boost in the local economy. The airline’s network includes 47 islands scattered over the full dimension of French Polynesia.
ATR reached a record year in 2007 with orders for 113 new aircraft. Since the beginning of the program, ATR has sold 953 aircraft (417 ATR 42s and 536 ATR 72s) and has delivered 757 (397 ATR 42s and 360 ATR 72s), thus posting a current backlog of 196 aircraft.

Embraer Books Orders Involving 35 Aircraft
Embraer booked orders from four companies involving 35 aircraft, announcing them last week when it said if all options are exercised the orders could be worth more than $1.512 billion. The company also confirmed its forecast to deliver between 195 and 200 aircraft per year in 2008 and 2009 for the Commercial, Executive, and Defense and Government (state-owned airlines and transportation of government officials) aviation segments. Furthermore, the company expects to deliver 10 to 15 Phenom jets in 2008 and another 120 to 150 in 2009.

New E-Jets Order from Virgin Blue
Australia's Virgin Blue Airlines Pty Ltd. exercised four purchase rights for ERJ 190 jets and to convert another three into options for the same model. The total value of this new deal, at list price, is $150 million, and could reach $262.5 million, if all options are confirmed. This transaction is already included in Embraer's fourth quarter firm order backlog as "undisclosed".
Virgin Blue currently operates three ERJ 170s and will soon receive its first ERJ 190. The firm orders of the Australian airline now total 24 aircraft: six ERJ 170s and 18 ERJ 190s.
In November 2006, Virgin Blue acquired three ERJ 170s and 11 190s. Just a few months later, even before it received its first plane, the company confirmed three options for the 170 and three purchase rights for the 190. Besides the 24 firm orders, the Australian airline also has another six options for the ERJ 190 and 10 purchase rights.
Virgin Blue's ERJ 190 jets, configured with 104 seats, in a single-class layout, will be the first of this model in the world to operate with ETOPS (extended-range, twin-engine operations) certification, starting in the first half of 2008. ETOPS certification allows aircraft to fly nonstop routes over large uninhabited areas, like oceans and deserts.

Embraer Confirms Two E-Jets Options for Regional
Embraer and Regional, a wholly owned subsidiary of Air France, signed a contract for two additional E-Jets, one ERJ 170 and one ERJ 190, confirming options originally taken in August 2007. The value of the new deal, at list price, is $69 million. Both planes are scheduled for delivery in 2009.
"It is great news for Embraer to see an important carrier, from the Air France/KLM Group," said Mauro Kern, executive vice president, Airline Market. "Regional was the first operator of the ERJ 190 in Europe and, with this additional order, is now the company's largest customer on that continent."
The new Regional ERJ 190, configured in a 100-seat, single-class layout, will join the five aircraft already delivered and will be deployed on the carrier's inter-regional network of 46 major cities in Europe. Regional also has seven ERJ 170s on firm order, configured in a 76-seat, single-class layout, and will receive the first one this year. The airline has a fleet of 48 Embraer aircraft (five ERJ 190s, 28 ERJ 145s, nine ERJ 135s, and six EMB 120 Brasilias), making it the manufacturer's largest European customer.
Regional (Compagnie Aerienne Europeenne) was created in March 2001, from the merger of three smaller French airlines -- Flandres Air, Proteus Airlines, and Regional Airlines. The airline serves 20 cities in France and 26 in other European countries. Regional's headquarters are located in Nantes. Its fleet is supported by two company-owned maintenance centers in Clermont-Ferrand and in Lille. Regional owns 53 aircraft.

Embraer and Jetscape Sign for 10 Embraer 190 Jets
Embraer and the U.S. aircraft leasing company Jetscape, Inc., based in Fort Lauderdale, Fla., signed an agreement for the acquisition of 10 ERJ 190s, with options for an additional 10 aircraft and another 10 purchase rights for the same model. The total value of the agreement is $375 million, at list price, and could come to $1.125 billion, if all options and purchase rights are confirmed. Deliveries are scheduled to start in 2009.
"With the big lessors focused primarily on larger aircraft, this order enables Jetscape to establish itself as a leader in the growing 70- to 120- passenger jet leasing market," said John Evans, chair and CEO of Jetscape. "We are convinced of the viability of the leasing market for E-Jets. It's the right size, the right time and the right aircraft for Jetscape and our customers."

Embraer Confirms Six Embraer 170 Jets for EgyptAir Holding
Embraer received confirmation from EgyptAir Holding Company for six additional Embraer 170 aircraft. Deliveries will begin in 2009. The original contract, covering six firm orders and six options (now confirmed), was announced in September 2006. The total value of the new agreement, at list price, is $189 million.
These ERJ 170s will be configured in a single-class layout, seating 76 passengers in leather seats, operating under EgyptAir's newly created subsidiary, EgyptAir Express. The airplanes will be deployed on the carrier's primary and secondary routes and will be fully integrated with domestic and regional markets.
On December 31, 2007, the ERJ 170/190 E-Jets had logged 764 firm orders and 786 options from more than 40 customers in 25 countries on five continents, and had surpassed 1.2 million flight hours.

Turboprop Demand High
During it’s show press briefing, Saab Leasing reported a dearth of turboprops such that there are not enough to meet demand. President and CEO Michael Magnusson described the next few years as challenging because Saab supplies are diminishing, which is, of course, good for aircraft values. While turboprop supplies have declined for 30- to 50-seat turboprops, regional jets of the same size have remained stable at 46 in February 2006 to 45 this month, largely as the result of fuel prices. The number of used turboprops fell by more than half from 141 to 69 from February 2006 to this month.

ST Aerospace secures US$160M contract extension from Flybe
Flybe awarded ST Aerospace Solutions (Europe) A/S (STA Solutions), a subsidiary of Singapore Technologies Aerospace Ltd (ST Aerospace), a contract to support the component maintenance and management requirement of Flybe’s additional Bombardier Dash 8 Q400 aircraft. STA Solutions is the current provider of this service on Flybe’s Q400 fleet. The contract, which includes the additional aircraft and an extension of the existing contract till 2016, is worth $160 million. ST Aerospace is the aerospace arm of ST Engineering.
"As the largest regional airline in Europe, we expect high levels of performance and commitment from our suppliers,” said Flybe Director Aviation Services John Palmer. “Over the past four years, STA Solutions has contributed to our success and proved itself to be a dependable and efficient supplier. We are confident in extending our relationship further and look forward to STA Solutions' support as a vital part to Flybe's success in the future."
The relationship between Flybe and ST Aerospace Solutions started in 2004, when Flybe operated 12 Q400 aircraft. Today, with STA Solutions' support, Flybe has expanded its Q400 fleet to 33 aircraft and continues to expand. In May 2007, Flybe signed a deal for 15 Q400 with options for a further 15. Flybe has now confirmed orders increasing its Q400 fleet to 60 aircraft. It is currently the world's largest Q400 operator. Flybe performs all its own maintenance and is the only Bombardier approved Q400 Service Center in Europe.
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