Embraer studies turboprop to be developed through Boeing venture

By Tim Hepher

DUBLIN, Jan 20 (Reuters) - Brazilian planemaker Embraer is in the advanced stages of studying the launch of a new turboprop aircraft to be developed through a venture it is planning with Boeing, subject to corporate approvals, a top executive said on Monday.

The aircraft would be in the same size range or even larger than the 70-seat ATR-72, a Franco-Italian aircraft that currently dominates the market, Embraer Commercial Aviation Chief Executive John Slattery told Reuters.

"It sits in our target market, which we have always been clear is below 150 seats, and will have natural adjacency to the E2 offering," he said, referring to the company's family of 80-120-seat regional jets. "The business case is going well."

Embraer agreed in 2018 to fold its commercial aircraft activities into a venture to be controlled by Boeing. The deal has won approval from several regulators but the European Union is continuing to evaluate the deal's impact on competition.

Slattery said Embraer would not go ahead with the project on a standalone basis because of the cost estimated at billions of dollars and other priorities. But he stressed there was no connection between the turboprop study and talks with regulators over the rest of Embraer's commercial airplane activities.

"The amount of balance sheet required for a new state-of-the-art commercial aircraft is of an order of magnitude that we simply don’t have the appetite for, outside of the joint-venture environment," Slattery said, adding, "No JV, no TP".

He added he did not expect any such hurdle to arise because Embraer remains confident the Boeing deal will be approved on its merits, citing the support of several purchasing airlines.

Embraer is also in "meaningful" discussions with engine makers General Electric, Rolls-Royce and Pratt & Whitney Canada about an engine for the new plane.

Analysts say turboprops are more efficient than jetliners over short distances, especially when oil prices are high. Airlines have used them to serve isolated communities that would not otherwise have air service in countries like Indonesia.

ATR, co-owned by Airbus and Italy's Leonardo , controls about four fifths of the market, with the rest addressed by the De Havilland Canada DHC-8. China is also targeting the turboprop market with its future Xian MA700. (Reporting by Tim Hepher; editing by Mark Potter)