$1bn regional jet launch set for later this year

The regional aircraft manufacturer AI(R), in which British Aerospace has a one-third stake, said yesterday it expected to go ahead with the $1bn (pounds 610m) development of a new 58-70-seater jet this year.

The launch of the programme would be an important boost to BAe's regional aircraft operations, where hundreds of jobs are under threat because of doubts over the Jetstream 41 turboprop aircraft's future.

Patrick Gavin, chief executive of AI(R), said in Toulouse that it would select an engine manufacturer for the new jet this spring. "The programme is expected to be launched during 1997 with the first delivery in 2001," he added.

The other partners in AI(R), which has been set up like a mini-Airbus, are Alenia of Italy and Aerospatiale of France. Alenia is also interested in taking a 10 per cent stake in the planned Airbus A3XX super jumbo.

An initial marketing campaign covering more than 30 airlines in Europe, North America and Asia has been carried out to establish the kind of aircraft customers want. A second marketing campaign providing up-to-date information on the programme began last month as part of the pre-launch activities.

Mr Gavin put the world-wide market for 40-90-seat aircraft at 4,000, of which more than 2,000 were jet-engined. A BAe spokesman said, however, that the three partners would need to be convinced about the industrial case for the aircraft.

BAe is in talks with the Government about launch aid for the programme but it is also seeking support for a 100-seat regional jet that Airbus is developing with China and the proposed A3XX.

The new AI(R) jet would replace the existing ATR 42 and 72 range made by the French and Italian partners. BAe makes the Avro regional jet and the Jetstream 41 for the consortium.

BAe's regional aircraft division employs about 2,000 at factories in Prestwick, Scotland, where the Jetstream 41 is produced, and at Woodford, near Manchester. Despite a succession of job cuts at Prestwick which have taken down the manned capacity of the plant to 15-20 aircraft a year, the Jetstream line is still heavily loss-making. A spokesman said the future of plant was under continuous review.

AI(R) meanwhile disclosed that it had started the year on a high note with 12 orders in January for new jets from Air Greece, Air Dolomiti and an unnamed customer. Orders last year totalled 59 while 85 aircraft were delivered. AI(R) has 250 customers world-wide and about 1,500 aircraft in the air.