Bom­bardier se­cures Egyp­tAir or­ders

Business Day - - INTERNATIONAL COMPANIES - Ben­jamin Katz and Anurag Ko­toky

Bom­bardier sealed the sec­ond deal for its C Se­ries jet since reach­ing an agree­ment with Air­bus a few weeks ago that will al­low the Euro­pean air­craft maker to take con­trol of the pro­gramme and help re­vive the for­tunes of the nar­row-body air­craft.

Egyp­tAir Air­lines plans to buy 12 of Bom­bardier’s big­gest vari­ant of the CS300 jet and has op­tions for a fur­ther 12, the car­rier said on Tues­day at the Dubai Air Show. The deal is val­ued at $1.1bn 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 firm’s mar­ket­ing heft and man­u­fac­tur­ing ex­per­tise. The air­craft had been plagued by de­lays and cost over­runs, and was hit re­cently with 300% tar­iffs in the US af­ter a trade com­plaint by Boe­ing.

Bom­bardier CEO Alain Belle­mare told an­a­lysts on Novem­ber 2 that he ex­pected sales of the C Se­ries would ac­cel­er­ate fol­low­ing the deal with Air­bus. Its pres­ence is “adding con­fi­dence about the long-term suc­cess of the pro­gramme”.

That same day, Bom­bardier said an uniden­ti­fied Euro­pean cus­tomer was planning to buy 31 C Se­ries air­craft with op­tions for 30 more.

Bom­bardier has not sealed a ma­jor pur­chase since Delta Air Lines or­dered 75 air­craft in April 2016.

The CS300 car­ries a list price of $89.5m, al­though dis­counts of 50% or more are com­mon in the in­dus­try. The jet, the larger of two C Se­ries ver­sions, is able to carry 130 to 160 pas­sen­gers.

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

Egyp­tAir is also ex­pected to un­veil a deal for six Boe­ing 787 Dream­lin­ers, said peo­ple fa­mil­iar with the talks.

Air­bus has also been in talks to se­cure a com­mit­ment from the car­rier, the peo­ple said.

Egypt Civil Avi­a­tion Min­is­ter Sherif Fathy said in Oc­to­ber that the gov­ern­ment ex­pected to pay about $3.3bn of the cost to ac­quire 45 air­craft.

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