Bombardier strengthens pact with China's COMAC

Tue Nov 13, 2012 1:30pm EST
 
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TORONTO (Reuters) - Canada's Bombardier Inc BBDb.TO and Commercial Aircraft Corp of China Ltd COMAC) have strengthened an existing cooperation agreement to include possible joint sales and marketing on their new C-Series and C919 planes, the companies said on Tuesday.

Announcing the second phase of a contract that could also include collaboration on future product lines, the companies said they hoped for cost benefits for both planes.

Under an agreement first announced in March, the two companies say they have made efficiency and product development gains on cockpit-crew interfaces, electrical systems, development of aluminum-lithium standards and specifications, and technical publications.

"This relationship should facilitate the sale of the C-Series aircraft in the Chinese market, which is the second-largest addressable market for the aircraft after the U.S.," BMO Capital Markets analyst Fadi Chamoun said of the latest phase of the pact.

Bombardier said last week that it was delaying the first flight of its C-Series jetliner by six months. That sparked concerns about its ability to meet that deadline and attract new orders for a plane that will compete with aircraft built by industry giants Airbus EAD.PA and Boeing BA.N.

The C-Series will not compete with COMAC's C919s, as Bombardier's aircraft have 100 to 149 seats and COMAC's planes have 168 to 190 seats.

Common systems on the two types of plane could give Bombardier and COMAC an advantage in selling each other's aircraft to fleet operators, because crews could train on the same platforms and share technical publications, for example.

"We believe that by joining efforts, Bombardier and COMAC have more firepower to compete in the narrow body segment in terms of technology, financial resources, marketing and customer support capabilities," Chamoun said.

Bombardier shares were down 3 Canadian cents at C$3.34 on the Toronto Stock Exchange at mid-session on Tuesday. The stock has dropped nearly 5 percent since Nov 7, when Bombardier announced the delay to the first flight of the C-Series.

(Reporting by Susan Taylor; Editing by Janet Guttsman, Bernard Orr)