Aug 21, 2011
MOSCOW - A Russian aircraft leasing company said on Wednesday it had reached a tentative agreement to buy 10 C-Series aircraft from Bombardier
Inc , a shot in the arm for the Canadian planemaker's ambitious plans to build a bigger-sized airliner.
Ilyushin Finance Corp (IFC) said it has signed a letter of intent to buy seven C-Series CS300 planes and three smaller C-Series CS100 aircraft, in what would be Bombardier's first sale of its yet-to-be-launched jet into the growing Russian market.
"If Bombardier can announce additional new orders for the C-Series in the coming months to build on the IFC win, we believe that investor optimism in the program will be regained," said National Bank Financial analyst Cameron Doerksen.
Bombardier's stock inched higher on the Toronto Stock Exchange after the news. By early afternoon it was 4 Canadian cents, or 0.8 percent, higher at C$5.10.
Sales of the new, single-aisle 110- to 130-seat C-Series jetliner, which will compete with smaller Boeing Co and Airbus models, have seesawed over the past two years, leading to market worries about the wisdom of the costly program.
The CS100 is set to be launched late in 2013 followed by the CS300 in 2014.
Momentum on the C-Series program was strong heading into the Paris Air Show in June, Doerksen said. But that wobbled after Republic Airways , the C-Series jet's biggest customer, placed an order for the rival Airbus A319 neo. That raised concerns it may cancel its Bombardier order.
Boeing's recent announcement that it will launch a re-engined 737, whose smaller models will compete with the C-Series, has also muddied the outlook for Bombardier's $3 billion new plane program.
RUSSIAN DEAL COULD BE SIGNED BY YEAR-END
The deal with IFC includes an option to buy a further 10 C-Series planes and purchase rights on a further 10.
The list price for the 10 mid-sized aircraft is $660 million, IFC head Alexander Rubtsov said at the MAKS airshow outside Moscow. A definite deal could be signed by the end of this year, he said.
"We see this order as a nice win for Bombardier given that it represents the first time Ilyushin has purchased aircraft not manufactured domestically," Stonecap Securities analyst Scott Rattee said.
If confirmed, the order would push the C-Series order book to 143 firm orders and its customer base to nine.
"This letter of intent represents a significant breakthrough for Bombardier in a market with huge potential," Bombardier spokesman John Arnone said by telephone from Moscow.
The Montreal-based planemaker forecasts that, over the next 20 years, Russia will require about 430 new aircraft seating between 60 and 149 passengers to replace its aging fleet.
Although this is the first C-Series foray into Russia, Bombardier has sold nearly 60 of its smaller CRJ aircraft to 12 different airlines and operators in that country over the years, Arnone said.
IFC, 48 percent owned by state-owned United Aircraft Corp , was founded in 1999 as a lessor of Russian-made aircraft: Ilyushins, Tupolevs and Antonovs.