Bombardier Inc. announced that it has landed an order for 10 of its C Series aircraft from a Russian company. Now, 10 planes might seem like a relatively small number to get excited about, even if it comes with the purchase rights to buy up to 20 more – but analysts see the order as significant nonetheless. Why?
Cameron Doerksen, an analyst at National Bank Financial, pointed out that the deal marks a breakthrough into the Russian market for Bombardier, where demand for new airplanes is expected to be brisk. And perhaps more important, Bombardier had to overcome some significant competitive obstacles.
Russian leasing company Ilyushin Finance is the name behind the deal, and historically the company has financed only Russian-built passenger airplanes. No wonder: It is 48 per cent owned by United Aircraft Corporation, which is Russia’s main manufacturer for civil and military airplanes.
“Momentum on the C Series program was strong into June’s Paris Air Show, but with Republic Airways’ order for the competing A319neo and Boeing’s launch of a re-engined 737, the market has again become more skeptical of the program,” Mr. Doerksen said in a note. “If Bombardier can announce additional new orders for the C Series in the coming months to build on the IFC win, we believe that investor optimism in the program will be regained.”
He maintained an “outperform” recommendation on the stock, along with a price target of $8.50.