Bombardier sees C Series orders fly at Farnborough

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Bombardier Inc. is kicking off the Farnborough International Airshow with a number of sales agreements for its new C Series aircraft, including letters of intent for up to 24 units from two airlines.

The Montreal-based plane and train maker said on Monday it has a letter of intent from Zhejiang Loong Airlines Co. , Ltd. for 20 CS100 airliners valued at about $1.28-billion (U.S.).

Meanwhile, Jordan-based Petra Airlines Ltd. has inked a letter of intent to buy up to two CS100 and two CS300 planes. If all four aircraft are bought, list prices put the deal at about $298.4-million.

The orders follow Saturday's announcement that Britain-based lessor Falko Regional Aircraft Ltd. has signed two letters of intent to buy up to 24 CS100 aircraft. Bombardier did not state the estimated value of that deal.

The latest round of orders are the first for the much-delayed C Series aircraft since the first quarter.

Bombardier is trying to break into the bigger 100-to-149-seat market with the C Series, bumping it up against giants Boeing Co. and Airbus Group NV.

The C Series is still in the testing phase – although flight tests were halted after engine failure in late May – and is not expected to make an appearance at Farnborough, the world's biggest aerospace fair.

The company says the new plane offers fuel and operating efficiencies superior to those of existing airliners in the category, but it has failed to score marquee deals with high-profile airlines at a time when other manufacturers are booking a significant number of orders.

The tally for C Series orders and commitments now stands at 495, which includes firm orders for 205 units.

Bombardier president and chief executive officer Pierre Beaudoin is sticking to his goal of booking 300 firm orders by the time of entry into service, expected in the second half of 2015, despite several delays and technical problems including engine failure.

Mr. Beaudoin said in recent interviews he expects a resumption of flight testing in a few weeks.

AltaCorp Capital analyst Chris Murray said in a note Monday that engine-maker Pratt & Whitney has indicated the root cause of the engine failure was an oil seal in the engine and a design change is being tested.

"Fuel burn, noise and emissions data are also meeting expectations," he said.

Desjardins Securities analyst Benoit Poirier said in a research note that the total value of the new C Series deals is $3.08-billion.

"We highlight that these are the first commitments for the CSeries program since the Singapore Airshow in February. As a result, we believe these orders should quiet some concerns in the marketplace about the strength of the CSeries program, which was also impacted by the engine-related incident that occurred on [Flight Test Vehicle 1] on May 29."

Also on Monday, Bombardier said Falcon Aviation Services LLC, based in Abu Dhabi, placed a firm order for two CS300s. One of the jets is a conversion of a letter of intent while the other was an option announced in February.

In a separate announcement on Monday, Export Development Canada said it is teaming up with its British counterpart and Quebec's economic development agency to create a financing partnership for the C Series.

EDC, UK Export Finance (UKEF) and Investissement Québec (IQ) will jointly finance C Series customers.

Other countries may join in the future, the EDC said.

The three agencies will "actively look for opportunities to work together to provide financing solutions for CSeries customers among the world's commercial airlines and lessors."

EDC already has extensive experience financing Montreal-based Bombardier's regional jets, EDC senior vice-president of financing and investments Carl Burlock said.

The partnership reflects the fact that the new plane is assembled in Quebec but has key components made in Ireland.

Each partner's contribution will vary depending on the way each transaction is structured, EDC said.

Financing will follow the rules laid out five years ago for commercial aircraft financing by the Organization for Economic Co-operation and Development.