Dubai leasing firm makes $1 billion turboprop order

SINGAPORE (Reuters) - Dubai Aerospace Enterprise (DAE) is to spend up to $1 billion on new turboprop planes, the aircraft leasing company said on Wednesday, betting on growth in Asia’s crowded regional and domestic markets.

Having had to cancel big orders for commercial jetliners during Dubai’s debt crisis, government-owned DAE has turned to turboprops used for short-haul trips for fewer than 100 passengers. Such aircraft can be operated more efficiently than many jets, particularly in an era of high oil prices.

DAE, the largest aircraft leasing company in the Middle East, said it had ordered 20 turboprop commercial aircraft from French-Italian manufacturer ATR, with an option for a further 20 taking the deal’s total potential value to $988 million.

“We aim to diversify our portfolio and expand into regional aircraft, to meet an increasing demand from airlines that are developing regional air connectivity,” DAE managing director Khalifa Al Daboos said at the Singapore Airshow.

After ordering more than 200 aircraft during an industry boom in 2007, DAE was forced to cancel orders as funds dried up in Dubai’s debt crisis.

In 2011, it canceled outstanding Airbus orders worth $5.8 billion, as well as orders for 35 Boeing 737s.

DAE, which specialises in aircraft maintenance and leasing, ended talks with British aircraft services company BBA Aviation last year to merge parts of its business.

The company has been trying to sell U.S.-based engine repair and maintenance firm StandardAero since 2010, Reuters has reported.

ATR, jointly owned by Airbus Group AIR.PA and Italy's Finmeccanica SIFI.MI, is working on proposals for an all-new 90-seat aircraft rather than its best-selling 72-seat model. But so far it has failed to win shareholder approval as Airbus preserves engineering resources for other projects.

Wednesday’s order by DAE is for ATR 72-600s, with delivery expected between 2015 and 2018.

The Dubai company has lined up customers for the first 20 aircraft and will decide on the options this year, Khalifa said.

“ATRs are today operated by some 190 carriers all over the world, clearly providing us with potential opportunities to place this new fleet,” he added.

Also at the air show, Bangkok Airways said it is spending $200 million to buy six ATR 72-600s, with an option for two more. The planes will replace the company’s eight existing turboprops over the next three years. It has a total fleet of 25 aircraft.

Bangkok Airways President Puttipong Prasarttong-Osoth said the company has yet to finalize its long-term fleet expansion plan.

Additional reporting by Praveen Menon in DUBAI; Editing by Jeremy Laurence and David Goodman