BAe wants pounds 200m subsidy: Help sought with development of new family of turboprops

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The Independent Online
BRITISH Aerospace is to ask the Government for at least pounds 200m in launch aid to develop a new family of 50-70 seat turboprop aircraft for the regional airline market.

The programme will cost pounds 400m to pounds 450m in total but BAe is seeking a minimum of half of that from the Department of Trade and Industry.

The launch aid application, due to be submitted in the next three months, will be BAe's first since it won pounds 450m in government support in 1987 to take part in the Airbus A330- A340 programme. It will be a key test of the commitment of Michael Heseltine, President of the Board of Trade, to an industrial strategy.

The launch of the two new turboprop aircraft by BAe's Jetstream division, based in Prestwick, Ayr, also depends on it securing collaborative partners among the world's 10 other turboprop manufacturers.

BAe hopes to launch the new aircraft, the Jetstream 51 and 71, by the end of this year and introduce them into service from late 1997. Both aircraft will cruise at speeds of more than 400mph.

However, Allan MacDonald, Jetstream Aircraft's managing director, said yesterday the programme would be launched only if it had financial backing from the Government and risk-sharing partners. 'I do not foresee a situation where the UK government is not going to give us the support necessary,' he said.

BAe last year transferred all turboprop aircraft manufacture to Prestwick, where it has a workforce of 2,500, and has strong support from the Scottish Office.

Joining forces with a rival manufacturer would help reduce BAe's share of the cost and talks are being held with a range of potential partners.

The other leading players in the turboprop market are ATR, a French-Italian joint venture, Saab of Sweden, Bombardier of Canada and Casa of Spain. BAe is also considering bringing in a partner from one of the developing aerospace manufacturing nations such as Korea, India and Indonesia.

The Jetstream 51 and 71 would compete with the Fokker F70, the ATR72, the Canadair Regional Jet and Saab 2000. BAe has tested demand for the planned aircraft on 30 airlines in Europe, the US and Asia Pacific, and estimates the market for 40-80 seat turboprops between now and 2011 at almost 2,400 aircraft. Its present family of turboprops ranges from the 19-seat Jetstream 31 to the 64- seat Avanced Turboprop, due to be replaced by the 70-seat Jetstream 61 early next year.

Philip Conduit, president of Boeing, said yesterday that the accord on commercial aircraft subsidies signed last year between Europe and the United States should be incorporated into the Gatt Uruguay round, a move that could cut government launch aid for 100-seater plus aircraft from 33 to 20 per cent.

Avro, the regional jet joint venture formed between BAe and Taiwan Aerospace in January, announced orders for the RJ100 jet worth dollars 165m from the Turkish airline THY and Pelita Air Service of Indonesia. These are the first orders since the company was formed and take orders for the RJ jet to 39.

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