Bombardier Gets $937M Order From Jazz Air

MONTREAL (CP) -- Jazz Air LP plans to replace some of its aging fleet of passenger aircraft and spend up to US$937 million to purchase as many as 30 new turboprops from Bombardier, the two Canadian companies announced Friday.

Jazz currently sells most of its seating to Air Canada, which uses the Halifax-based regional airline's smaller planes to serve lower-traffic routes.

The Halifax-based airline, owned by Jazz Air Income Fund, will start by buying 15 planes, valued at US$454 million. It also has options for 15 more Q400s.

Jazz Air president and CEO Joseph Randell said the new planes will be configured with 74 seats. They are expected to replace 15 of Jazz's 50-seat regional jets, after deliveries begin in May 2011.

"The introduction of the Q400 NextGen aircraft is a perfect complement to our fleet of Canadian-built Bombardier turboprops and regional jets," Randell said in a statement.

The order, which confirms a letter of intent signed by the companies in February, is seen as a precursor to Jazz's return to the Billy Bishop airport on one of the islands at Toronto's lakefront.

The island airport is closer to the city's downtown than the much larger Pearson International but has been controversial locally, with many opponents in nearby residential areas objecting to the noise of flights.

Jazz -- then a subsidiary of Air Canada -- last flew into the city airport in 2006, before Porter Airlines started service using a fleet of Bombardier Q400s to reach destinations in Canada and the United States.

Porter has often promoted the Q400s as a quieter type of plane than either jets or older turboprops. The Q400s are also capable of speeds and distances that are comparable to some regional jets.

The Toronto Port Authority is looking to allocate between 40 and 60 landing spots in addition to the 120 available to Porter, which is expected to soon take delivery of its 20th aircraft.

Jazz's plan for deploying the new Q400s hasn't been finalized.

"Under our capacity purchase agreement, Air Canada determines the commercial aspects of our business such as marketing, pricing, scheduling, the type of aircraft deployed on the routes, etc.," Jazz spokeswoman Manon Stuart wrote in an email.

The Q400 NextGen plane model was launched in 2008 and is assembled in Toronto, at Bombardier's Downsview manufacturing plant.

The order alone won't impact employment at the facility, said Bombardier spokeswoman Maranella Delabarrera.

"This transaction was already factored into this year's budget, but we are currently assessing ongoing transactions and should know more soon," she said in an interview.

Jazz's fleet currently consists of 64 CRJ regional jets and 64 older turboprop plane models, all made by Bombardier.

The deal comes a day after U.S. air-safety regulators announced they will order fixes to Bombardier Q400 turboprops already in service to prevent stalls in icy conditions.

The directive from the Federal Aviation Administration requires airlines to inspect, and possibly replace, various parts on 69 turboprops that are in service with U.S. carriers.

It also focuses on possible malfunctions of devices that help warn pilots about an impending aerodynamic stall, particularly in icy conditions. Another concern is that heating elements that prevent ice build-up on the sensors -- known in the industry as angle of attack sensor vanes -- could deteriorate with age.

The agency says there have been no reported incidents or accidents involving the problem, which is unrelated to the crash of a Colgan Air Q400 in Buffalo, N.Y., in February 2009 that killed 50 people.

Bombardier said the directive flows out of its own warning to Transport Canada in the fall of 2009 about potential problems on a similar part used by another aircraft manufacturer.

On the Toronto Stock Exchange, Jazz units were up five cents at $5.12 in early afternoon trading. Bombardier shares were off eight cents at $5.39.

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