Bombardier Lands Second C Series Win After Airbus Backs Jet
(Bloomberg) -- Bombardier Inc. is closing in on the second deal for its C Series jet since reaching a landmark agreement with Airbus SE a few weeks ago that will see the European planemaker take control of the program to help revive the plane’s fortunes.
EgyptAir Airlines Co. plans to buy 12 of Bombardier’s CS300, the biggest variant of the narrow-body jet, and has options for a further 12, the carrier said Tuesday at the Dubai Air Show. The deal is valued at $1.1 billion before discounts.
The accord is a significant win for Bombardier, which gains another customer for its new jet less than a month after the company agreed to cede control of the C Series to Airbus in exchange for the European planemaker’s marketing heft, manufacturing expertise and financial muscle. The aircraft had been plagued by delays and cost overruns, and recently was hit with 300 percent tariffs in the U.S. after a trade complaint by Boeing Co.
Bombardier expects to turn EgyptAir’s letter of intent into a firm order by the end of 2017, commercial aircraft chief Fred Cromer told reporters on a conference call Tuesday from Dubai. The agreement makes good on the company’s expectations that the Airbus deal will bolster confidence in the program and accelerate sales. Shares rose 2.3 percent to C$3.13 at 10:02 a.m. in Toronto.
Earlier this month, Montreal-based Bombardier said an unidentified European customer was planning to buy 31 C Series aircraft with options for 30 more. That’s a distinct turnaround, as prior to the deal Bombardier hadn’t sealed a major purchase since Delta Air Lines Inc. ordered 75 planes in April 2016.
The CS300 carries a list price of $89.5 million, although discounts of 50 percent or more are common in the industry. The jet, the larger of two C Series versions, can carry 130 to 160 passengers.
Airbus has vowed to cut the aircraft’s production costs and secure thousands of new orders for the plane, which Bombardier spent more than $6 billion to develop. The C Series was two-and-a-half years late and more than $2 billion over budget when it entered service at Deutsche Lufthansa AG’s Swiss unit in July 2016. Swiss and Air Baltic Corp., which began flying the CS300 in December, have reported better-than-expected fuel efficiency, which is key to the jet’s appeal.
EgyptAir is separately expected to unveil a deal for at least six Boeing 787 Dreamliners, the first passenger jets made from lightweight carbon-fiber composites, said people familiar with the discussions. Airbus has also been in talks to secure a commitment from the carrier, the people said.
The shopping spree, following months of negotiations, marks an expansion push for Egypt’s flag carrier after it weathered slumping tourist visits and a fatal crash last year. Egypt Civil Aviation Minister Sherif Fathy said last month that the government expected to pay about $3.3 billion of the cost to acquire 45 planes.
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