Wednesday April 23, 2014




Home »  News »  Business

Bombardier business jets account for most of US$1.9B orders at Paris Air Show

MONTREAL - Bombardier's business jets dominated the aircraft orders announced Tuesday by the Montreal-based company on the second day of the Paris Air Show, accounting for most of the nearly US$2 billion worth of activity if all options are exercised.

VistaJet, which last year placed the biggest order in Bombardier's history, followed up with an order for up to 40 new Challenger 350s that would be worth US$1.035 billion at current list prices, although customers traditionally receive large discounts.

"Having personally participated in the focus groups that led to the Challenger 350 jet's conception, I am confident that this aircraft will deliver the comfort, technology and range that our customers rely on when flying with VistaJet," stated VistaJet founder and chairman Thomas Flohr.

VistaJet said Tuesday it placed 20 firm orders and taken 20 options for the long-range business jet. In November, it placed 56 firm orders and 86 options for Global aircraft from Bombardier. They would be worth up to US$7.8 billion in total if all options are converted to orders.

The Challenger 350 has a range of 5,926 kilometres, giving it the ability to make non-stop connections between all major cities within mainland China, or international flights between places such as Moscow and Dubai.

Deliveries of the aircraft that was launched last month will begin in mid-2014.

Bombardier (TSX:BBD.B) also said an unidentified customer has placed firm orders for 12 Global 8000 business jets, worth a total of US$804 million at 2013 list prices.

It also announced that Horizon Air of Seattle has converted options for three 76-seat Q400 turboprop regional airliners into firm orders worth US$98 million, and reconfirmed options for seven aircraft.

The parent company of Alaska Airlines said the turboprops will be the first used in the northwestern U.S. state.

The three aircraft will increase Horizon Air's orders for Q400 to 51 aircraft , making it the world's largest fleet of the turboprops. Since 1985, Horizon has ordered 100 Dash8/Q-Series aircraft.

"The addition of these three Q400 NextGen aircraft will allow us to venture into the state of Alaska, which is considered America's last frontier and is now an exciting new frontier for Horizon," stated Horizon president Glenn Johnson.

Benoit Poirier of Desjardins Capital Markets said the business jet orders in particular will help Bombardier's margins because it makes more money from the widebody business jets than from regional aircraft and smaller corporate planes.

"We view these orders as positive developments for Bombardier as they indicate that the company’s products are well received by the market and that the business jet market continues to recover with the Global order," he wrote in a report.

Bombardier president Pierre Beaudoin told analysts on Tuesday that business jet orders will turn out okay for the year despite a slow start, according to David Tyerman of Canaccord Genuity.

"This is a critical part of the Bombardier story over the next few years and this is probably the most profitable part of the aerospace business, so getting orders on that side of the business is good," Tyerman said in an interview.

Budget carrier EasyJet on Tuesday agreed to purchase 135 single-aisle Airbus jets worth US$11.9 billion at list prices.

But Tyerman believes Bombardier is still in the running for an EasyJet order to replace its fleet of smaller aircraft.

Bombardier has yet to announce a CSeries order at this year's premier aerospace event and Tyerman isn't sure any will be announced.

"It would mostly happen if the airlines themselves felt that there was some benefit from making a big splash at the show," he said. "If I had to bet, I would say I be quite surprised if there was a large order."

Bombardier remains committed to have 300 firm CSeries orders by the time the aircraft begins deliveries in about a year. Beaudoin indicated that some of those may come from the conversion of options, including from Lufthansa.

Not many orders seem to be contingent on the maiden flight of the CSeries set for later this month, Beaudoin told analysts.

"It doesn't sound like there's going to be ton of orders contingent on the first flight. There maybe some but I don't think it's going to be a an avalanche. These things are just going to happen when they get around to them," Tyerman said.

Walter Spracklin of RBC Capital Markets said Bombardier is being prudent by not pursuing large orders before the first flight to avoid giving large pre-flight discounts.

"What we will be looking for are larger orders (20+) to be announced post first flight where only the large order discount would apply," he wrote in a report.

On the Toronto Stock Exchange, Bombardier's shares lost six cents at C$4.64 in Tuesday morning trading.



Quick Vote

Survey results are meant for general information only, and are not based on recognised statistical methods.


Markets





LOG IN



Lost your password?