Bombardier’s Larger CSeries Model Draws Lion Air Interest

PT Lion Mentari Airlines is interested in buying Bombardier Inc. (BBD/B)’s CSeries aircraft and may announce an order at next year’s Farnborough Air Show, Chief Executive Officer Rusdi Kirana said.

Indonesia’s biggest budget airline is in talks with Bombardier about being the initial customer for the CS300 model, Kirana said today at a press conference in Montreal. Deliveries of the plane, which can seat as many as 160 people, ideally would begin in 2016, he said.

The CSeries “is a big quantum leap for Bombardier,” Kirana said. “Usually what they make is quite normal aircraft, but this one is very special.”

Adding Lion Air as a customer would be a boost for Bombardier, which is still 123 firm orders short of a target of 300 by the time the aircraft enters service in about a year. The first CSeries test plane successfully completed its maiden flight 10 days ago -- 8 1/2 months late.

Lion Air already has 700 planes on order and expects to have ordered 1,000 aircraft within two to three years, Kirana said in March. The Jakarta-based carrier agreed to buy 230 Boeing Co. (BA) 737 planes last year.

Marc Duchesne, a Bombardier spokesman, confirmed that the companies are in discussions over a CSeries order, saying that Kirana yesterday toured Bombardier’s production facilities in Mirabel, Quebec. The spokesman declined to comment on the timing of a possible deal, adding that Bombardier doesn’t typically identify initial customers ahead of time.

Bombardier’s Class B shares rose 0.4 percent to C$4.83 at the close in Toronto. They have gained 28 percent this year.

First Look

Kirana, who is in Montreal for the International Civil Aviation Organization’s triennial general assembly, said he met with the head of Bombardier’s commercial aircraft unit, Mike Arcamone, yesterday and saw the CSeries for the first time.

Bombardier will probably send a sales team to Indonesia to hold further talks with Lion Air executives next month, Kirana said. Pricing hasn’t come up in the discussions yet, he said.

“This aircraft is beyond my expectations,” Kirana said. “I heard that the CSeries was a good aircraft, but when I saw it last night, it surprised me. I think the aircraft will be one for the future.”

Bombardier has said the CSeries, which features the new geared turbofan engine from United Technologies Corp. (UTX)’s Pratt & Whitney, will cost about 15 percent less to operate, cut fuel burn by about 20 percent and produce less noise.

‘Biggest’ Order

While Kirana declined to specify how many CSeries planes Lion Air is planning to buy, he said that “when I order, we are going to be the biggest at that time.”

Bombardier’s largest CSeries firm order so far is from Republic Airways Holdings Inc. of the U.S., which agreed in 2010 to buy 40 jets, with options for another 40.

Should Lion Air go ahead and buy the CSeries, deliveries would probably be spread out over five years, the CEO said.

Lion Air hasn’t decided which routes it would deploy the CSeries on, Kirana said. The company also operates a long-haul carrier called Batik Air, which began operations this year.

“We are not sure whether we can put this aircraft on full service or high-density, low-cost” routes, he said.

Traffic at Lion Air will probably climb at least 10 percent annually in the next few years, Kirana said, citing growing demand for air travel as Indonesia’s middle class expands. About 70 million people flew in Indonesia last year, a 14-fold increase from 2000, he said.

Lion Air expects to carry 36 million passengers this year and 40 million in 2014, the CEO said. About 32 million people flew with the company last year.

To contact the reporter on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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