Bom­bardier signs sec­ond CS300 deal

The Prince George Citizen - - SPORTS - Ross MAROWITS

MON­TREAL — Bom­bardier Inc. said its deal with Air­bus has yet to ig­nite new sales dis­cus­sions, but ex­ist­ing ef­forts have yielded re­sults as the man­u­fac­turer an­nounced back-to-back po­ten­tial or­ders in­clud­ing one with Africa’s largest air­line.

Chief ex­ec­u­tive Alain Belle­mare told an in­vestor con­fer­ence Tues­day that he fielded up­beat calls from some large air­lines – in­clud­ing Air­bus cus­tomers – hours af­ter the deal was an­nounced.

“That’s the rea­son why I’m con­vinced that we are go­ing to see much bet­ter sales mov­ing for­ward,” he said at the Gold­man Sachs In­dus­tri­als Con­fer­ence in Bos­ton.

Bom­bardier (TSX:BBD.B) has signed its sec­ond po­ten­tial C Se­ries order in less than two weeks af­ter Egyp­tAir Hold­ing Co. an­nounced plans to pur­chase up to 24 air­craft.

The agree­ment an­nounced at the Dubai Air­show in­cludes 12 CS300 air­craft with pur­chase rights for an ad­di­tional 12 air­craft.

Belle­mare ac­knowl­edged that the or­ders had noth­ing to do with Air­bus even though the part­ner­ship gave cus­tomers added com­fort that the Euro­pean gi­ant will put its full weight be­hind the C Se­ries.

“This is very good but it’s the work our team was do­ing with air­line cus­tomers,” he told an­a­lysts. “It keeps on build­ing the mo­men­tum up.”

Bom­bardier said that based on the list price of the CS300, a firm order for 12 air­craft would be val­ued at about US$1.4 bil­lion. That would dou­ble if the air­line ex­er­cises the 12 pur­chase rights. How­ever, air­lines typ­i­cally re­ceive large dis­counts.

“It would be dif­fi­cult to wish for a bet­ter car­rier to estab­lish our pres­ence in the re­gion,” Colin Bole, Bom­bardier se­nior vice pres­i­dent com­mer­cial aero­space, said in a con­fer­ence call with re­porters from Dubai.

“It’s a great tem­plate and it is some­thing that will be fol­lowed ex­tremely closely by the other car­ri­ers in the re­gions and the sub re­gions in the area.”

The C Se­ries has also been or­dered by Iraqi Air­ways, Saudi Gulf and Gulf Air.

The na­tional air­line of Egypt told re­porters in Dubai that while it has been study­ing the C Se­ries for a long time, Air­bus’ in­volve­ment makes them feel bet­ter about the pro­gram, Bom­bardier com­mer­cial air­craft pres­i­dent Fred Cromer added on the con­fer­ence call.

Egyp­tAir chair­man and CEO Safwat Musal­lam said the planes will help the air­line to mod­ern­ize its fleet and bet­ter serve des­ti­na­tions in the Mid­dle East and Europe.

An­a­lyst Richard Aboulafia of the Teal Group says Air­bus’ in­volve­ment will as­suage fears that the C Se­ries will be an “or­phan” air­plane be­cause it will have the sup­port of the Euro­pean aero­space gi­ant.

“I would ar­gue that the Air­bus ef­fect will be fairly pro­found,” he said in an in­ter­view.

Aboulafia said the C Se­ries is a great plane but Bom­bardier has had ma­jor fi­nan­cial is­sues.

“That is no longer a prob­lem. You re­move that, you now have just a great jet peo­ple want.”

The Egyp­tAir let­ter of in­tent and a deal for 31 planes plus op­tions for 30 an­nounced Nov. 2 with an undis­closed cus­tomer are ex­pected to be firmed up by the end of the year. That would raise the num­ber of firm C Se­ries or­ders to more than 400.

Bom­bardier said it re­mains con­fi­dent that Boe­ing won’t be able to prove in its trade com­plaint that it has been dam­aged by the C Se­ries since it doesn’t make a plane the size of the CS100 and wasn’t in­vited to bid on the Delta order.

Nonethe­less, Cromer said Bom­bardier is de­vel­op­ing con­tin­gency plans if high tar­iffs con­tinue to be ap­plied on air­craft man­u­fac­tured in Canada and de­liv­ered to the U.S.

“We have op­por­tu­ni­ties to place some of those early Delta po­si­tions with other air­lines,” he said.

Cromer de­clined to say if the sec­ond as­sem­bly line in Alabama es­ti­mated by the com­pany to be built at a cost of more than US$300 mil­lion would be af­fected by the main­te­nance of high U.S. du­ties.

Belle­mare added that Bom­bardier was never seek­ing to use the C Se­ries to com­pete with Boe­ing or Air­bus. Rather, its com­peti­tor for the 100- to 150seat air­craft will re­main Brazil’s Em­braer.

“There were two (com­peti­tors) yes­ter­day and there will be two to­mor­row,” he said.

Belle­mare added that Boe­ing has un­der­es­ti­mated the re­sponse to its trade ac­tion, with sup­port for Bom­bardier com­ing from com­pa­nies and govern­ments such as Canada and Bri­tain.

On the Toronto Stock Ex­change, Bom­bardier’s shares gained nearly 1.6 per cent at C$3.11 in af­ter­noon trad­ing.

CP PHOTO

The Bom­bardier CS300 per­forms its demon­stra­tion flight at the 2015 Paris Air Show in Le Bour­get, north of Paris. Bom­bardier Inc. has signed a let­ter of in­tent to sell up to 24 CS300 air­craft to Egyp­tAir Hold­ing Co.

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