Big CSeries order could be back from brink
Bombardier Inc.’s third-biggest CSeries customer is close to securing financing for its order, a move that would salvage a deal that seemed not long ago to be at risk of falling apart due to Western sanctions against Russia.
Moscow-based Ilyushin Finance Co. (IFC) confirmed Wednesday that it is nearing a deal with lenders to finance its order for up to 49 of the jetliners, provided it can first sign an agreement with an airline that wants to operate the aircraft.
“I can confirm that this is true,” Elena Rubtsova, deputy CEO at IFC, said in an email. “We are in the process of negotiation and (will) keep all the details confidential.”
As first reported by industry website Flightglobal.com, IFC is looking outside Russia for a European operator and it expects to have an agreement in place by the end of September.
IFC said in April that it was “reevaluating” its significant CSeries order after Export Development Canada stopped offering financing to Russian customers as a result of sanctions imposed by the federal government in response to the conflict in Ukraine.
“Market financing for the new type of aircraft, like the CSeries, is extremely expensive and rarely available today,” Rubtsova said at the time.
While Bombardier didn’t help IFC in securing new financing, company spokeswoman Marianella de la Barrera said it has “been working with the airline to overcome their concerns.”
“Considering that market (Russia) still continues to represent a key growth opportunity for us, having a firm customer in place, a solid customer like IFC to feed that market is absolutely positive news,” she added.
De la Barrera wouldn’t comment on whether Bombardier had changed any of the terms of IFC’s contract.
The CSeries project has been plagued by repeated delays that have frustrated customers, caused much turmoil at Bombardier, including several executive changes, and have driven the company’s stock value down to nearly a quarter of where it traded at the end of 2014.
A recent analysis by Leeham Co. found that 108 of the 194 CSeries orders scheduled to be delivered between 2016 and 2018 fall into the aviation consultancy’s yellow or red risk categories, meaning they could be delayed or cancelled outright.
IFC’s order received a red rating, partly because two of the airlines the company plans to lease the CSeries to — UTair Aviation in Ukraine and VIM Airlines in Russia — may not need or want the aircraft anymore because of geopolitical and economic issues.
“If they get the financing, I would say that moves them from red to yellow,” Leeham’s managing director Scott Hamilton said in an interview.
He added that finding a customer outside Russia would significantly reduce the risk that the IFC order will fall apart.
Bombardier has not announced a new firm order for the CSeries in nearly a year. To date, the company has secured 243 firm orders, 57 shy of its 300-order target.