//
you're reading...
Business Aviation, General Aviation, Regional Aircraft

SUMMARY: Piaggio Aerospace is set on dropping its poor selling canard configured fast beauty, the Avanti Evo business turboprop aircraft and concentrate on its military derivatives the MPA (maritime patrol version) and the UAV (unmanned aerial vehicle) version, the P.1HH Hammerhead and leave the current global fleet of 219 Avanti aircraft and their current operators and owners with an “orphaned” product which now has a highly questionable future, and watch their residual values plummet . This cannot be a surprise to anyone, especially Mubadala Development the Abu Dhabi (UAE) based 100% owner of Piaggio Aerospace which for 10 years has just watched the program struggle but did little to change that. With only 12 Avanti’s delivered between 2012 and 2015, and only 1 delivery so far in 2016, the program is now a sadly a “joke” and dead in the water, too few sales now to be cost effective to produce, and now any buyer for the aircraft would be very foolish to do so. The now, Textron Aviation (formerly Beechcraft and Raytheon) King Air 350 line has outsold the Avanti 3.2 : 1 for the past 14 years (not even including the King Air 200/250’s), even though the new EVO offers 402 kts cruise and much lower noise levels, customers are just not buying the beautiful canard configure Avanti. I have said it many times, that good aircraft do not always sell well, no matter what OEM thinks of its product, sales tell the real story no matter what anyone thinks, something Bombardier needs to be reminded of with its struggling CSeries today. Now, “radical” General Aviation designs have never done well, they are innovative, sometimes offer great performance and technology, but buyers have stayed away from them, and I quickly look at some of those that have failed, from the Beechcraft Model 2000 Starship, Embraer/FMA CBA-123 Vector, LearAvia Lear Fan 2100 to the OMAC Laser 300, wonderful aircraft, impressive performance and technology, but of those only the Starship went into production, and then only 53 were built. The Piaggio Avanti is the most successful “radical” design aircraft, and yet a the King Air 350 which is a 1970’s designed and stretched aircraft, out sold the Avanti by a wide margin. Welcome to the world of General Aviation aircraft sales, where some of the “best” aircraft fail and disappear (e.g. Piper Cheyenne 400LS, Aero Commander Jetprop 980/1000) while some “mediocre” aircraft become a hit and never go away (e.g. Beechcraft King Air C90 line).

Piaggio Aerospace, 100% owned by Abu Dhabi based Mubadala Development Co. since September 15, 2015 (35% of Piaagio Aero since April, 2006), is re-positioning the company as a key supplier of defense and special mission aircraft.

piaggio-p18vvoo1tos88oau5h21r071b9ibpiaggio-11

This just came out last month in a Industrial Plan, that calls for selling off “non-core” civilian maintenance and engine overhaul business, and focus on its military programs, the P.1HH Hammerhead UAV (Unmanned aerial vehicle) version of its P.180 Avanti twin turboprop and the MPA (maritime patrol Aircraft) version of the same aircraft.

piaggio MPApiaggio-P1HH_Italy

Worth noting that the P.1HH Hammerhead prototype crashed on May 29, 2016 off the coast of Sicily, cause unknown, but a major set back for the program which has orders from Italy and off course Abu Dhabi (UAE).

CEO Carlo Logli of Piaggio Aerospace (also ex-CEO of Superjet International, the Italian Russian JV on the Sukhoi SSJ-100-95 regional jet) said after the Industrial Plan was released “military platforms provide sustainable and scalable growth trajectory for Piaggio Aerospace, which has been severely impacted by the contraction of the business aviation market”.

The company is now looking for approval from its lenders and the Italian government for a new restructuring plan.

Last week, on August 24th, the Board of Piaggio Aerospace announced that CEO Carlo Logli is stepping down after 3 years, that follows a pledge he made earlier in the week on August 16th to reassure operators of Avanti’s that the production and support will continue, as operators have been very nervous since the Industrial Plan announcement of June 28, 2016.

Now rightly so, all operators should be worried now, as the indications are Piaggio Aerospace will seize production of the Avanto Evo shortly, leaving the operators with an “orphan”, which greatly affects resale values and long term support, which will drive maintenance costs higher over time, not good and sad as well for the program.

The company has struggled for years, under a partnership with Tata of India and the Ferrari family, but success was illusive.

The Avanti program struggled more often than not, and even recently Piaggio Aerospace was putting on a bright face trying to convince itself and the market that the company will bounce back, with a $153 million investment in production at its new 1.37 million ft2 facility at Villanova d’Albenga factory (90 minute drive from Genoa), and its “new” P.180 Avanti Evo model.

Mubadala Development struggled with the program since it took a 35% share in 2006, so 10 years and some blame lies there for sure, it recently sold SR Technics to China’s HNA Group after several years under its management and struggling as well. Nothing has come out lately on a light business jet project that Piaggio was suppose to be working on with Mubadala’s financial help, but that would have not gone well either as that segment is hurting badly today.

Though now, Mubadala Development is eyeing a minority stake in Russian Helicopters as it may seek partial privatization of 25%, and it is probably the best investment in Russian Aerospace by a mile. But Mubadal is going to have to look inwards at what its strategy is as Piaggio will NOT be a big business even with the military business and the MRO is a big business today, and they are getting out of that.

But that was not to be, the $7.395 milion Evo is an improvement over the Avanti II, but the additional “benefits” have not done anything for new sales. The new Evo offers a 5 bladed composite propeller (less noise -20% internally, -68% less noise externally), 60 USG of extra fuel (+250 nm range), and some slight improvement in cruise and rate of climb, not enough to turn sales around.

The Avanti had its 1st flight in September 1986 and started deliveries in September, 1990, but with only 219 in service globally, this is NOT a successful program. The program dates to 1983 when Piaggio Aero started work with Learjet, but that came to a close in 1986, but the program stayed in Wichita, Kansas with the 1st 12 airframes built by local H&H Parts and Plessey Midwest, before moving production to Genoa, Italy.

The $7.0 million a piece King Air 350 line from Raytheon, Beechcraft and now Textron Aviation has slaughtered Avanti orders for years, as the appeal of the Avanti, regardless of its good looks, very fast speed could not overcome the rugged appeal of the King Air brand, the value proposition was just never there for the Avanti. See the graph below, the competition was never there, between 2002 and 2015 only 187 P.180 Avanti were delivered (13.4 per year average) versus 600 King Air 350 deliveries (42.9 per year average), the King Air 350 alone outsold the Avanti 3.2 to 1, and that does not include the King Air 200/250 models either, which can be considered competitors.

Piaggio-graph

Sales do not always go to the nicest looking or fastest aircraft, customer by value and in this case the value proposition was always in favor of the King Air 350 brand. In terms of comparison between the two, the Avanti EVO is priced at $7.395 million, max. cruise 402 kts, FL410, takeoff distance at SL, ISA 3,262 feet, useful load of 3,775 lbs (31% of MTOW) and a MTOW of 12,100 lbs while the King Air 350 i is priced at $7.0 million, max. cruise 312 kts, FL 350, takeoff distance at SL, ISA 3,300 feet, useful load of 5,030 lbs (33% of MTOW) and a MTOW of 15,000 lbs.

The Avanti has looks, speed, service ceiling but still could not compete with the more rugged and respected King Air 350i.

 

King air 350 xxxpiaggio evo2

The other issue is that the Avanti, is what I call a “radical” design, its beautiful with front canards and pusher propellers, very different from the “standard” design of propellers in front pulling the aircraft with elevators for pitch in the back.

Yes, “radical” designs have never been a success in General Aviation, and there are other examples of this.

1.Beechcraft Model 2000 Starship, had only 53 aircraft produced between 1989-1995. It was carbon fiber built 8 seat twin powered by 2 x PT6A67A engines of 1,200 shp, MTOW of 14,900 lbs with a max. cruise of 335kts, 1,514 nm range and service ceiling of FL350. The price was too high at $3.9 million when it came out in 1989 competing with Lear 31 (125 kts faster) and Citation V (85 kts faster) on price but could not compete on performance and economics.

starship-2Starship_fly-by

——————————————————————————————————————————-

2.Embraer/FMA CBA-123 Vector, a 19 passenger turboprop airliner program by Brazil and Argentina in 1990 that would compete with the pressurized Beech 1900C, BAe J31/32 Jestream and Swearingen/Fairchild Metro III at a time that segment was growing. The aircraft incorporated a pusher configuration with 2 x Garret TPF 331-20A each with 1,300 shp, 6 bladed props, propelling the aircraft up to 321 kts and a range of 1,000 nm with a MTOW of 17,000 lbs. The aircraft incorporated many new technologies, later use don the ERJ-145 program like EFIS, FADEC and AHRS. The program cost $300 million and unit price was at $5.0 million, too expensive for most regional airlines at that time, but a winner it would have been.

Embraer-FMA_CBA-123_Vector_(IA-70_Parana)_(PT-ZVE)emb-123

—————————————————————————————————————————————–

3.LearAvia Lear Fan 2100, only 3 prototypes built between 1981-1985, the aircraft was powered by 2 x PT6B35F turboshafts of 650 shp each with two independent driveshafts turning a single propeller giving twin engine safety with single engine handling. The aircraft had a 7,350 lbs MTOW, max. cruise of 369 kts and a range of 1,540 nm with an impressive 3,450 fpm climb rate and a service ceiling of FL 410. The downfall was that the FAA did not think the combined gearbox driving a single propeller was adequately reliable, the same issue would come up a few years later when Ayres Aircraft designed the LM200 Loadmaster for Fed Ex (initial order for 50) with 2 x LHTEC TP800’s and one Hamilton standard propeller.

lear-fan-2100-5-1024x779.jpg-1024×779-Google-Chrome-11252014-43721-PM.bmp

LET-2-ayres-lm200-loadmaster

Ayres Aircraft LM200 Loadmaster (above picture)

——————————————————————————————————————————————–

4.OMAC Laser 300 in 1981 built 3 prototypes powered by a single PT6A-135 pusher with a MTOW of 6,450 lbs, max. cruise of 252 kts, 1,880 nm range and FL 300. The aircraft was started in reno, nevada but later moved to Ayres Aircraft in Albany Georgia (ag aircraft manufacturer, and later owner of Czech Republic’s LET where it moved ahead with the LM-200 Loadmaster cargo aircraft with 2 engines and 1 prop for Fed Ex). The end was in 1989 when it could not find the $20 million for certification and production ramp up, a common problem with these private aircraft programs to this day.

OMAC_Laser_300

———————————————————————————————————————————————-

Thank you for reading my blog, hope you learned something and any questions or disagreements let me know, till next time bye.

Advertisements

About Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow

I am a Canadian and EU national with an MBA and 33+ years experience in aviation business development with 20 years overseas and work in 25+ countries. A former investment/merchant banker (mergers and acquisitions to corporate turnarounds). airline and OEM senior executive and past owner of 6 successful aviation companies in 3 countries (executive jet charter/management companies, aircraft sales, aircraft broker, airline/aerospace consulting to aircraft insurance). I have a very diverse aviation background with 75+ aviation companies (45+ airlines of all sizes, OEM's, airports, lessors, MRO to service providers) as consultant, executive management, business analyst and business development adviser. Excellent success track record in International Business Development. Most work with airlines is with new start-ups and restructuring of troubled carriers. I sold new business jets, turboprops and helicopters for Cessna, Raytheon, Gulfstream to Eurocopter as an ASR as well as undertaking sales and marketing of commercial aircraft for Boeing, de Havilland, Dornier, Saab and Beechcraft. Brokered everything from LET-410's to B747's and from piston PA31 to G550 business jets. I look beyond the headlines of the aviation news and analyze what the meaning and consequences of the new information really means. There is a story behind each headline that few go beyond. Picked the name Aviation Doctor, as much of my work has been with troubled companies or those that want and need to grow profitably. I fix problems be in the business, and help with restructuring for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com and I comment a lot on Google+, my Facebook and LinkedIN.

Discussion

Comments are closed.

%d bloggers like this: