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Bombardier wins new C Series deal to end 18-month sales drought
[MONTREAL] Bombardier Inc won the first major sales agreement in 18 months for its beleaguered C Series jet as it prepares to hand control of the aircraft program to Airbus.
An unidentified European customer intends to buy 31 of the all-new planes with options for 30 more, Bombardier said Thursday as it reported earnings. That softened the blow from a cut to the company's forecast for C Series deliveries this year.
The preliminary deal underscores the brighter outlook for the C Series after production delays and cost overruns marred Bombardier's US$6 billion investment and forced the company to rely on government assistance. Airbus agreed to take a majority stake in the partnership that builds the plane, vowing to cut production costs, win thousands of new orders and move some manufacturing to Alabama to sidestep recently imposed US tariffs on the aircraft.
"This order is definitely getting the market's attention," said Nick Heymann, an analyst at William Blair & Co. "Their ability to bring home the big orders has been enhanced by the Airbus partnership. People are starting to understand this deal with Airbus has completely changed the market." If the European customer finalizes its intent to purchase C Series planes, the deal would mark the first major sale of the aircraft since Delta Air Lines agreed to buy 75 of the single-aisle jets in April 2016. The only deal since then was a two-plane transaction with Air Tanzania at the end of last year.
The Delta purchase prompted a complaint to the US government by Boeing, which said the planes were sold at "absurdly low prices." In response, the Commerce Department slapped import duties of 300 per cent on the C Series, saying Montreal-based Bombardier sold it at less than fair value after receiving illegal government subsidies in Canada.
Bombardier said it would miss this year's delivery target for the C Series as it grapples with engine delays. Customers will receive only 20 to 22 of the aircraft, down from an earlier plan for about 30, the company said in a statement.