Bombardier Dodges CSeries Blow on Aid for Buyer AirBalticBy and
Latvia to assist flagship carrier while German investor joins
Jet is `key to the future development' of airline, CEO says
Bombardier Inc.’s CSeries jetliner order with AirBaltic AS looks to be on firmer footing after the Latvian government moved closer to approving a financing package for the country’s struggling flagship carrier.
“This is great news,” Marianella de la Barrera, a Bombardier spokeswoman, said Wednesday in a telephone interview from Toronto. “AirBaltic has an impressive network of aircraft and routes, and the CSeries is tailor-made for their operation. They have full confidence in us, and their support has been unwavering.”’
Bombardier, stuck on 243 firm CSeries orders for more than a year, can ill afford to lose a customer like AirBaltic, which has agreed to buy 13 of the jets. Now set to enter service in 2016, the aircraft is more than two years late and development costs have ballooned by $2 billion to $5.4 billion, draining cash at the Montreal-based planemaker.
Latvia is willing to invest 80 million euros ($87 million) while German investor Ralf-Dieter Montag-Girmes contributes 52 million euros for a minority stake, Transport Minister Anrijs Matiss said Wednesday. Latvia’s Parliament still must review the deal when it passes the nation’s budget on Nov. 30.
“We have a positive decision from the government today, and that is a good sign for AirBaltic’s stability,” AirBaltic Chief Executive Officer Martin Gauss said in Riga during a press conference broadcast by state television. “This will allow us to do what we planned, to finance the acquisition of Bombardier airplanes.”
The CSeries “will be coming in September next year, and that is the key to the future development of AirBaltic,” Gauss said.
With negative equity of 75 million euros, AirBaltic has been unable to secure bank lending due to the state of its finances, Matiss said on Latvian television. Latvia’s government will have the right to buy back the German investor’s stake at a later date, he said.
“The situation in AirBaltic is stable, but as we know, it’s necessary to renew the fleet,” Matiss said. “This payment is necessary for acquiring the new airplanes, and definitely we need new airplanes, there is no doubt.”
Bombardier’s order tally for the CSeries is 57 short of its target for 300 by the time the aircraft enters service. The only customer ranked among the world’s top 20 by passenger traffic is Deutsche Lufthansa AG. The last firm deal came in September 2014, when a unit of Australia’s Macquarie Group Ltd. agreed to buy 40 of the planes.
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