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Rival’s SkyWest deal sideswipes Bombardier’s jet ambitions

Bombardier CS300 Aircraft

Bombardier

Bombardier Inc.'s efforts to win a big regional-jet contract have been dealt a blow with the announcement that rival Mitsubishi Aircraft Corp. has clinched an agreement to sell 100 regional planes to U.S. commuter airline SkyWest Inc.

St-George, Utah-based SkyWest has been a major Bombardier regional-jet customer in the past and the plane maker was considered to be a leading candidate to win a big contract with the carrier.

The agreement in principle between Japan's Mitsubishi and SkyWest is for 100 jets to replace SkyWest's current fleets in its ExpressJet and SkyWest Airlines divisions.

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The planes would range in size from 70 to 90 seats and the delivery time frame is 2017 to 2020.

The agreement – valued at $4.2-billion (U.S.) was announced at the Farnborough air show outside London on Wednesday.

SkyWest's total regional-jet fleet count is about 500.

Marc Duchesne, spokesman for Bombardier's commercial aircraft unit, said in a telephone interview from Farnborough that the Mitsubishi-SkyWest agreement has not been finalized and is only a letter of intent.

"We're still in discussions with [SkyWest] for a big order. In no way is the game over," he said.

Montreal-based Bombardier has over the years sold a total of 425 regional jets to the airline and the relationship with SkyWest is a good one, he added.

Bombardier also has the advantage of being able to deliver planes to SkyWest immediately, while  Mitsubishi's MRJs (Mitsubishi Regional Jets) are still in development, said Mr. Duchesne.

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On another front, he said Bombardier will announce an order for its Q400 turboprop planes on Thursday.

On Tuesday, Bombardier said Latvia-based Air Baltic Corp. had signed a letter of intent to buy 10 C Series aircraft and take purchase rights on another 10 of the jets. The C Series is an all-new single-aisle jet in the 90- to 140-seat range.

RBC Dominion Securities analyst Walter Spracklin said in a research note Wednesday it's important to keep in mind that SkyWest will be looking to replace a total of more than 400 aircraft over the next decade, "and as such keeps the door open for further order announcements" that might well involve Bombardier and/or its Brazilian rival Embraer.

"The real surprise here is that SkyWest has elected to purchase the MRJ, which has had only 70 orders logged and has had to overcome delays and developmental issues. Long term, this order for Mitsubishi provides validity to the 70- to 90-seat MRJ and likely adds to the competitive landscape for the [Embraer] E170/190 and the [Bombardier] CRJ700/900 regional jetliners."

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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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