UPDATE 2-ATR aircraft deliveries plunge, sees slow recovery

Adds background on Embraer, comment on freight demand

By Tim Hepher

PARIS, March 17 (Reuters) - Deliveries of turboprop aircraft built by Franco-Italian manufacturer ATR AIR.PA, LDOF.MI plunged to an 18-year low last year as regional airlines bear the brunt of the coronavirus crisis, company figures showed on Wednesday.

Chief Executive Stefano Bortoli said deliveries fell to 10 aircraft in 2020, compared with 68 reported for 2019, while new orders shrank to 6 from 52 published a year earlier.

ATR, jointly owned by planemaker Airbus and Italian aerospace group Leonardo, aims to double deliveries in 2021.

"It will take a few years to get back to 2019 levels," Bortoli told a news conference.

After cancellations, ATR posted three net orders in 2020, down from 48 in 2019.

ATR swung to a 138-million-euro loss in 2020 from a profit of 106 million euros a year earlier, according to Airbus data.

Domestic routes, where turboprops are more efficient than jets on short hops, are widely expected to lead the recovery from the industry's worst meltdown, ATR said.

For now, a glut of second-hand aircraft and the weak balance sheets of regional buyers are weighing on demand for turboprops.

Bortoli said this surplus would "take a while" to clear, while noting 15 used aircraft had been sold in recent months.

Turning to future demand, ATR distanced itself from a public pledge by Airbus to create a hydrogen-powered passenger plane by 2035, with designs focusing on a new zero-emission turboprop.

Instead Bortoli laid out a strategy of making incremental changes to ATR's own existing 48-78 seat range of turboprops.

"Our roadmap is about existing family members ... and improving those aircraft," the former Leonardo executive said, referring questions on the futuristic proposals to Airbus.

Industry sources say such a project would lie outside the scope of work agreed between Airbus and Leonardo.

ATR, which dominates sales of current-generation regional turboprops, faces little immediate pressure to launch a new model of its own after its nearest competitor De Havilland suspended production of the competing Q400 earlier this year.

Analysts say a potential new turboprop studied by Brazil's Embraer EMBR3.SA could force ATR to rethink its strategy.

But it is not clear how willing Airbus and Leonardo - their finances stretched by COVID-19 - would be to fund any new ATR plane. Airbus blocked earlier proposals for a larger ATR model.

Embraer is looking for a financial or industrial partner before deciding whether to mount an attack on ATR's position. Plans for a tie-up with Boeing BA.N collapsed last year.

ATR said it expected demand for its planes to be sustained by freight demand and their low environmental footprint.

(Reporting by Tim Hepher; Editing by Edmund Blair and Elaine Hardcastle)

((tim.hepher@thomsonreuters.com; +33 1 49 49 54 52; Reuters Messaging: tim.hepher.thomsonreuters@reuters.net))