A 10-plane order from Korean Air gave Bombardier Inc.'s slow-selling C Series jet a much-needed boost and its first Asian customer.
The order, announced at the Paris Air Show on Tuesday, is worth about $660-million (U.S.) at list prices, though deep discounts are routine, especially for any new airplane's first round of customers. "Korean Air is a well-recognized airline, thereby giving more legitimacy to the C Series program," National Bank Financial said in a note.
The deal is at the letter-of-intent stage and should be definitive shortly. Korean Air also booked 10 options and 10 purchase rights, taking the total potential orders to 30, or about $2-billion, based on list prices.
An option is the right to purchase an aircraft for delivery at a certain time. A purchase right comes with no definite delivery date.
Walter Cho, Korean Air's senior vice-president, said the South Korean carrier would not exercise the options until 2015, when its C Series planes are in service with the airline. The Pratt & Whitney engine used on the C Series had its first test flight Monday in Quebec. The plane itself is scheduled to make its maiden flight in the second half of 2012.
The Korean Air order took the number the number of sales announced at the Paris show to 20 since Monday, putting the total firm order book to 123 aircraft, with 119 options. "Following the build of momentum at the Paris Air Show, we would expect the flow of orders to continue for the balance of the year albeit at a measured pace and magnitude," UBS analyst Tasneem Azim said in a note.
Bombardier had hoped for more orders at the air show, but one of its biggest potential customers, Qatar Airways, said on Monday that it was not ready to commit to the C Series. Gary Scott, president of Bombardier's commercial aircraft division, said: "We're in ongoing discussions [with Qatar] We have been at this stage for some time."
Korean Air said the C Series jets are additions to its fleet, not replacements for older aircraft. They will be used on short- and medium-haul flights to as many as 50 cities in China, Japan and elsewhere in southeast Asia. It bought the CS300, the larger of the two C Series models, with 130 to 143 seats.
In a separate announcement, Bombardier said VistaJet of Switzerland had placed an order for 10 Bombardier Global 8000 large business aircraft, an order worth about $650-million. AVWest, a corporate jet operator in Australia, ordered four Global 7000 and two Global 8000 business jets, for a total order value of $400-million.
Another Canadian aerospace company, flight-simulator maker CAE Inc., announce the sale of six simulators at the Paris Air Show to airlines in Europe, Asia and the United. States.
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Eric Reguly