Bombardier CSeries Boosted on Agreement to Sell 15 Jets
Bombardier Inc. (BBD/B) won a conditional order valued at $1.02 billion for 15 CSeries jets, buoying a model that has struggled for orders in the narrow-body airliner market dominated by Boeing Co. (BA) and Airbus SAS.
The buyer of five CS100 models and 10 CS300s doesn’t want to be identified, Bombardier said yesterday in a statement on the eve of the Farnborough air show near London, the aerospace industry’s highest-profile trade event of the year.
Bombardier is trying to break the grip of Airbus and Boeing on single-aisle jet sales to airlines. The Montreal-based planemaker had 138 orders heading into the air show as it seeks to win buyers for a new model able to seat 100 to 149 people, the smaller end of the narrow-body aircraft segment.
“I don’t know if it’s being cracked open, but we’re certainly playing in that area,” Guy Hachey, the president of Bombardier Aerospace, said today in a Bloomberg Television interview from Farnborough. “We’ve figured out there’s a niche for 100 to 140 seats that’s underserved, with a product that’s not optimized. We’ve optimized that product.”
The company gave no timetable for when the acquirer might be identified. The value of the order was based on list prices, Bombardier said. Airlines typically buy at a discount.
Bombardier’s biggest CSeries order so far is from Republic Airways Holdings Inc. (RJET), which agreed to acquire 40 of the planes in 2010. With other carriers taking only a few CSeries jets so far, compared with scores of planes in recent Boeing and Airbus deals, Bombardier has said its focus is on finding as many buyers as possible.
“Given that delivery slots are sold well into 2016, we are not concerned with the level of orders for the CSeries,” Cameron Doerksen, a National Bank Financial analyst who rates the shares outperform, said in a note to clients. “Bombardier could announce additional orders over the next several days.”
Bombardier’s Class B stock fell 0.2 percent to C$4.03 at the close in Toronto today. The shares have declined less than 1 percent this year.
While Bombardier has planned to fly the CSeries in late 2012 and enter it in commercial service by the end of next year, Hachey said July 8 that the timeline for the maiden flight was at risk because of flight-control difficulties. He said today that the target for a commercial debut was still achievable.
The company is still working toward a first flight this year, Hachey said today. “We’d like to enter service at the end of 2013.”