Bombardier Rises on Second Boost for CSeries Jet
Bombardier Inc. (BBD/B) rose the most in almost three weeks after the aircraft maker announced its second sale agreement for the CSeries jet in two days.
Bombardier’s widely traded Class B stock advanced 3.1 percent to C$3.68 at the close in Toronto today for its biggest gain since Nov. 30. It’s declined 9.4 percent this year.
AirBaltic AS agreed to buy 10 CS300 airliners in a deal with a value of about $764 million that may rise to $1.57 billion if purchase rights are exercised for 10 more jets, Montreal-based Bombardier said today in a statement. The company said yesterday an unnamed carrier signed a letter of intent to buy 12 of the smaller CS100 models, which have a list value of about $870 million, with options to buy 18 more jets.
Bombardier last month delayed the maiden flight of the CSeries to June after unspecified issues with suppliers. Analysts including National Bank Financial’s Cameron Doerksen in Montreal had said orders would be scarce until the jet flew because the postponement raised credibility questions about the plane.
“While not large fleet replacement or expansion orders, we believe these orders are a major win for Bombardier’s CSeries fleet, which we believe is gaining momentum as first flight approaches,” Nick Heymann, an analyst at William Blair & Co. in New York, said in a note today. “Bombardier’s fundamental resurgence will be accompanied by additional significant order activity once the CSeries flies over the next couple of quarters,” said Heymann, who rates the shares outperform or buy.
Assembly of the first flight-test aircraft is progressing smoothly and the wings are being joined to the fuselage at the company’s factory in Mirabel, Quebec, Bombardier said yesterday.
Bombardier had booked 138 firm orders and 214 commitments through Sept. 30 for the CSeries, which will break the duopoly shared by Airbus SAS and Boeing Co. (BA) when it enters service in 2014.
The orders announced today and yesterday would be in keeping with the pattern of CSeries purchases in smaller batches than those for Airbus’s A320 and Boeing’s 737. The larger companies’ single-aisle models have routinely sold by the dozens or even hundreds of aircraft at a time. Republic Airways Holdings Inc. (RJET) is the biggest buyer of the new Bombardier plane, with an order for 40.
“Customers are keeping options open ahead of certification and achievement of performance targets,” said Turan Quettawala, an analyst at Scotiabank Global Banking and Markets in Toronto, referring to the development of the CSeries. Quettawala, who made the comments in a note to clients yesterday, has a sector perform rating on Bombardier, the equivalent of hold.
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