Bom­bardier lands an­other C Se­ries deal

The Globe and Mail (Ottawa/Quebec Edition) - - REPORT ON BUSINESS - BEN­JAMIN KATZ ANURAG KO­TOKY FREDERIC TOMESCO

Egyp­tAir’s com­mit­ment for 12 CS300s is sec­ond order since Air­bus agreed to take over pro­gram

Bom­bardier Inc. is clos­ing in on the sec­ond deal for its C Se­ries jet since reach­ing a land­mark agree­ment with Air­bus SE a few weeks ago that will see the Euro­pean plane maker take con­trol of the pro­gram to help re­vive the plane’s for­tunes.

Egyp­tAir Air­lines Co. plans to buy 12 of Bom­bardier’s CS300, the big­gest vari­ant of the nar­row-body jet, and has op­tions for a fur­ther 12, the car­rier said Tues­day at the Dubai Air Show. The deal is val­ued at $1.4-bil­lion be­fore dis­counts.

The ac­cord is a sig­nif­i­cant win for Bom­bardier, which gains an­other cus­tomer for its new jet less than a month af­ter the com­pany agreed to cede con­trol of the C Se­ries to Air­bus in ex­change for the Euro­pean plane maker’s mar­ket­ing heft, man­u­fac­tur­ing ex­per­tise and fi­nan­cial mus­cle. The air­craft had been plagued by de­lays and cost over­runs, and re­cently was hit with 300per-cent tar­iffs in the U.S. af­ter a trade com­plaint by Boe­ing Co.

Bom­bardier ex­pects to turn Egyp­tAir’s let­ter of in­tent into a firm order by the end of 2017, com­mer­cial air­craft chief Fred Cromer told re­porters on a con­fer­ence call Tues­day from Dubai. The agree­ment makes good on the com­pany’s ex­pec­ta­tions that the Air­bus deal will bol­ster con­fi­dence in the pro­gram and ac­cel­er­ate sales.

Ear­lier this month, Mon­tre­al­based Bom­bardier said an uniden­ti­fied Euro­pean cus­tomer was planning to buy 31 C Se­ries air­craft with op­tions for 30 more. That’s a dis­tinct turn­around, as prior to the deal Bom­bardier hadn’t sealed a ma­jor pur­chase since Delta Air Lines Inc. or­dered 75 planes in April, 2016.

The CS300 car­ries a list price of $89.5-mil­lion (U.S.), al­though dis­counts of 50 per cent or more are com­mon in the in­dus­try. The jet, the larger of two C Se­ries ver­sions, can carry 130 to 160 pas­sen­gers.

Air­bus has vowed to cut the air­craft’s pro­duc­tion costs and se­cure thou­sands of or­ders for the plane, which Bom­bardier spent more than $6-bil­lion to de­velop. The C Se­ries was 21⁄2 years late and more than $2-bil­lion over bud­get when it en­tered ser­vice at Deutsche Lufthansa AG’s Swiss unit in July, 2016. Swiss and Air Baltic Corp., which be­gan fly­ing the CS300 in De­cem­ber, have re­ported bet­ter-than-ex­pected fuel ef­fi­ciency, which is key to the jet’s ap­peal.

Egyp­tAir is sep­a­rately ex­pected to un­veil a deal for at least six Boe­ing 787 Dream­lin­ers, the first pas­sen­ger jets made from light­weight car­bon­fiber com­pos­ites, said peo­ple fa­mil­iar with the dis­cus­sions. Air­bus has also been in talks to se­cure a com­mit­ment from the car­rier, the peo­ple said.

The shop­ping spree, fol­low­ing months of ne­go­ti­a­tions, marks an ex­pan­sion push for Egypt’s flag car­rier af­ter it weath­ered slump­ing tourist vis­its and a fa­tal crash last year. Egypt Civil Avi­a­tion Min­is­ter Sherif Fathy said last month that the gov­ern­ment ex­pected to pay about $3.3-bil­lion of the cost to ac­quire 45 planes. Bom­bardier (BBD.B) Close: $3.11, up 5¢

REMY DE LA MAUVINIERE/AS­SO­CI­ATED PRESS

A Bom­bardier ex­ec­u­tive said a deal with Egyp­tAir for the CS300, seen on its demon­stra­tion flight at the Paris Air Show in 2015, is ex­pected to be firmed up by the end of the year.

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