Bombardier Says American Nears Jet Order Decision
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Bombardier Inc. (BBD/B), the third-biggest aircraft maker, expects American Airlines to decide soon on a regional-jet order it’s negotiating with the bankrupt U.S. carrier that could include at least 30 aircraft.
American is “going to get an opportunity to reshape their regional flying to introduce more large regional aircraft,” Philippe Poutissou, vice president of marketing at Bombardier’s commercial aircraft unit, said today at a conference in Montreal sponsored by Canadian Imperial Bank of Commerce. “They are looking at what we can offer, and what the competition can offer. We would hope they make that decision shortly.”
Bombardier’s discussions with American are centered on CRJ regional jets and not the larger CSeries family, Marc Duchesne, a spokesman for the Montreal-based planemaker, said today in a telephone interview. Bombardier’s regional jets can seat up to 100 passengers, while the CSeries, which held its maiden flight three days ago and is due to enter service in a year, can hold as many as 160 people.
American’s order will likely be “of a similar order of magnitude” to recent regional-jet purchases by Delta Air Lines Inc. (DAL) and United Continental Holdings Inc., Poutissou said.
Delta in December agreed to buy 40 jets from Bombardier -- a deal with a catalog value of about $1.85 billion. In April, United opted to buy 30 Embraer SA (EMBR3) 76-seat regional jets valued at about $840 million.
American said last month that a pending order for larger regional jets has been delayed because a U.S. lawsuit seeking to stop its merger with US Airways Group Inc. (LCC) puts financing for the deal at risk.Michael Trevino, a spokesman for the Fort-Worth, Texas-based airline, today declined to comment on the pending aircraft order beyond its August court filing.
An agreement to buy a “substantial” number of planes was near when the U.S. Justice Department sued to block the US Airways deal on Aug. 13, AMR Corp. (AAMRQ)’s American said in a court filing that didn’t specify its supplier. Embraer said in July that it was in talks with American for an order of 76-seat jets.
Bigger, more-fuel efficient regional aircraft are part of Fort Worth, Texas-based American’s plan to cut operating costs by shedding models with 50 or fewer seats after exiting bankruptcy via the US Airways merger. Backstop financing from the manufacturer and favorable export credit funding are only available upon leaving court protection, the airline said.
The judge overseeing American’s bankruptcy last week approved its reorganization plan, contingent on getting U.S. regulatory approval. U.S. regulators want to block the merger on grounds it would hurt consumers by damping competition and resulting in higher fares.
Bombardier’s Class B shares closed unchanged at C$4.80 in Toronto trading today. They’ve risen 28 percent this year, compared with a 4 percent gain for the S&P/Toronto Stock Exchange Composite Index.
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