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AMR, US Airways deal may mean orders for Bombardier - but not right away: analyst

A view of two US Airways Express planes next to an American Airlines plane (background) at the Ronald Reagan Washington National Airport in Arlington County, Virginia, February 10, 2013.

The long-anticipated merger of AMR Corp. and US Airways holds the promise of more aircraft orders for Bombardier Inc., says an analyst.

AMR Corp. – parent of American Airlines Inc. – and US Airways announced an all-stock deal Thursday that values the combined company at $11-billion (U.S.).

"For Bombardier, this transaction is significant and has positive long-term implications as the new entity would be more profitable; therefore, this merger could translate into new aircraft orders (regional aircraft and/or CSeries)," Desjardins Securities analyst Benoit Poirier said in a research note to clients Thursday.

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But he said new orders aren't likely to materialize for a couple of years because of regulatory and other hurdles.

After Northwest Airlines and Delta Air Lines announced their tie-up on April 15, 2008, approval from the U.S. Federal Aviation Administration came almost two years later, on Jan. 3, 20120, said Mr. Poirier.

Bombardier finally booked an order from Delta on Dec. 6, 2012, more than four years after the announcement, he said.

Bombardier and Brazilian rival Embraer SA anticipate regional-jet sales in North America of between 250 and 400 orders over the next 18 months, he said.

"However, as a result of the [AMR-US Airways] merger announcement, we see some downside to this forecast from a potential 2-year order delay from the new entity."

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More


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