AIR plane still on course

BRITISH AEROSPACE'S two partners in AIR, Aerospatiale and Alenia, may go ahead with building a 70-seat jet on their own after the collapse in December of a $1.2bn plan to construct the plane with BAe.

A senior executive at Aero International (Regional), or AIR, the two- year-old joint venture set up to market the regional aircraft made by all three planemakers, said France's Aerospatiale and Italy's Alenia still believe there's a strong market for the jet.

"There's a lot of demand from airlines to launch a 70-seater," said Alain Brodin, AIR's senior vice president for commercial activities. "The issue remains."

Several jetmakers have been considering building new planes seating fewer than 100 people, expected to be one of the aerospace industry's fastest- growing markets as airlines replace older propeller-driven planes with faster, more efficient jets.

But AIR dropped the plan last December in a decision viewed by analysts as largely motivated by BAe, which views the regional aircraft market with more caution. BAe ran up large losses on its now-defunct Jetstream turboprop programme and only last year broke even on its Avro RJ regional jet.

"We believed strongly in the AIR jet, but unfortunately it was not launched," Mr Brodin said. "I don't think the story is over."

The end of the 70-seat jet programme marked the last joint project planned by the three partners. Another project to build a 100-seat jet with Asian partners was previously transferred to Airbus Industrie, the four-nation European planemaker that also includes BAe and Aerospatiale.

Lacking any joint initiatives, analysts have speculated that AIR could disband. Mr Brodin confirmed that the Toulouse, France-based group, which consists of 900 managers drawn from all three partners, will cease as a joint marketing group.

The 230 BAe managers based with AIR in Toulouse will go back to selling solely the UK company's Avro jets, he said. The remaining Aerospatiale and Alenia executives will sell only the ATR turboprop planes that those two companies produce jointly.

Brodin also maintained economic turmoil in Asia could help sell the 40- and 70-seat ATRs. He said many airlines will want to put smaller planes on Asian routes that have suffered steep declines in passenger travel.

"You cannot abandon routes entirely," he said. "We see the Asian crisis as something that could have a good impact on the turboprops."

He forecast ATR orders of between 40 and 50 for the current year, somewhat less than the 54 sold last year, the best annual figure since the early 1990s.