You are here

Bombardier near US$1.1b C Series deal with EgyptAir

[MONTREAL] Bombardier Inc is in advanced discussions with EgyptAir over a potential US$1.1 billion order for C Series jets, adding to the program's momentum from a recent partnership with Airbus SE, people familiar with the matter said.

An agreement, which is likely to include a firm order for 12 CS300 jets, could be announced as early as Tuesday at the Dubai Air Show, said the people, who asked not to be named because the talks are private. Options to buy another dozen planes are also under discussion, said one of the people. There is no guarantee that a deal will be reached.

The purchase would give Bombardier 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 planemaker's marketing heft and manufacturing expertise. The aircraft had been plagued by delays and cost overruns, and recently was hit with potentially crushing tariffs in the US after a trade complaint by Boeing Co.

For EgyptAir, the order is part of an expansion push 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 US$3.3 billion to help its flag carrier acquire 45 planes and has been in talks with Airbus and Boeing.

Market voices on:

Bombardier declined to comment for this story, and EgyptAir didn't respond to requests for comment.

Bombardier Chief Executive Officer Alain Bellemare told analysts two weeks ago 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 program," he said Nov 2.

That same day, Montreal-based Bombardier said an unidentified European customer was planning to buy 31 C Series aircraft with options for 30 more. Bombardier hasn't sealed a major purchase since Delta Air Lines Inc ordered 75 planes in April of last year.

The CS300 carries a list price of US$89.5 million, 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 new orders for the C Series, which Bombardier spent more than US$6 billion to develop. The C Series was two-and-a-half years late and more than US$2 billion over budget when it entered service at Deutsche Lufthansa AG's Swiss International 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.

The C Series absorbed a blow this year when the US Commerce Department slapped the plane with 300 per cent tariffs after a complaint by Boeing, which said the planes were sold to Delta at "absurdly low prices."