Indian deal gives Bombardier turboprops new lift

Bombardier Inc. announced Tuesday that it has secured a letter of intent from India’s SpiceJet Ltd. for up to 50 Q400 aircraft, a move one analyst says ensures the viability of the turboprop program.

The signed agreement for the purchase of 25 Q400 turboprops and the rights to buy an additional 25 jets could be worth up to US$1.7 billion, based on the list price of the jet, and is a sign that demand is healthy in markets that cannot support more expensive planes, said Bombardier’s commercial aircraft president Fred Cromer.

SpiceJet operates 20 78-seat Q400 aircraft, and plans on configuring the new orders to an 86seat model.

“This acquisition will help us further increase connectivity to smaller towns and cities and help realize (Indian) Prime Minister Narendra Modi’s vision of ensuring that every Indian can fly,” said Ajay Singh, SpiceJet’s chairman and managing director in a statement.

The order comes a day after the Montreal-based company announced at the Paris Air Show that it signed an agreement with Philippine Airlines Inc. for seven Q400s

Desjardins Capital Markets analyst Benoit Poirier said in a note to clients that the new orders are a positive sign for the company.

“These announcements are likely to ensure the viability of the Q400 program as Bombardier had only 26 aircraft in its firm backlog as of March 31, which represented about a year of visibility on production,” Poirier wrote.

“With this order tally of 57 aircraft since the beginning of the show, Bombardier has posted its best order performance at a European air show since Farnborough 2014 (74 units), despite the absence of commitments on the CSeries.”

Bombardier’s shares jumped to $2.67 shortly after markets opened in Toronto on Tuesday, before closing up one cent at $2.63.