Bombardier Signs CSeries Deal With Iraq
Iraqi Airways has signed a letter of intent to acquire five CS300 jetliners, the first customer commitment for the Bombardier plane announced at the Dubai Airshow.
The agreement, signed two months after Bombardier began test flights of the new-generation plane, includes options on 11 additional CS300 aircraft, which could raise the deal's total list value to US$1.26 billion.
Saad Al-Khafaji, the CEO of Iraqi Airways, said the CSeries jets will complement the airline's six CRJ900s, an older, smaller jet model made by Montreal-based Bombardier (TSX:BBD.B).
"Growing passenger demand in an increasingly competitive Middle East and European airline market has created a need for fuel-efficient, comfortable, technology-advanced aircraft like the CSeries jetliners," Al-Khafaji said in a statement issued by Bombardier.
Bombardier has booked orders and commitments for 419 CSeries aircraft, including firm orders for 177 planes. It expects to receive 300 firm orders by the time the plane enters into service, in about a year.
Sebastian Mullot, director program management for the CSeries, told a transportation conference in Toronto that the CSeries has undergone 200 hours of flight and ground testing without finding any serious issues. He said a second test aircraft will soon take flight.
Mullot said the true performance of the CSeries will only be confirmed in the first half of next year after it undergoes more in depth testing.
The aerospace division of Bombardier Inc. (TSX:BBD.B) also announced Tuesday that low-cost Thai carrier Nok Air has ordered two Q400 NextGen turboprops with options for two more and purchase rights on four others in a deal potentially worth US$258 million.
Nok Air will be the launch customer for a new extra capacity Q400 with 86 seats.
"Specifically tailored to airlines looking at further increasing the productivity of their aircraft, the extra capacity seating option enables the Q400 NextGen aircraft to offer increased revenues and flexibility, as well as best-in-class seat mile costs," said Mike Arcamone, president Bombardier Commercial Aircraft.
The extra capacity seating will make the Q400 more competitive with rival ATR, which has been a hot seller because of its lower price tag. The revised Q400 will offer a seven per cent fuel burn and up to 17 per cent operating seat cost advantage over ATR.
Abu Dhabi Aviation, which is the largest commercial helicopter operator in the Middle East, also signed a letter of intent for two Q400 NextGen turboprop planes, valued at about US$70 million.
Abu Dhabi Aviation already has one Q400 and three older Bombardier Dash-8 propeller-driven planes. Its main activities relate to the support of offshore oil, engineering and construction companies.
Walter Spracklin of RBC Capital Markets said the orders are positive, with the value of potential business totalling about US$2 billion, with a couple of days remaining in the biennial air show.
"While Bombardier has not scored a major CSeries order of 20-plus aircraft at the air show, many of the major Middle Eastern carriers (including Qatar Airways) remain open to potential CSeries orders in the future. Coupled with an improved Q400 backlog with recent orders announced, we believe Bombardier has so far put together a decent showing in Dubai," Spracklin wrote in a report.
On Monday, Bombardier announced the national airline of Ivory Coast and leasing company Palma Holdings were interested in buying up to a total of 12 Q400s.
On the Toronto Stock Exchange, Bombardier's shares gained seven cents at $4.72 in Tuesday afternoon trading.