Bombardier's Delta, China deals give it edge on Embraer

Thu Dec 6, 2012 3:26pm EST
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By Brad Haynes and Karen Jacobs

(Reuters) - Bombardier Inc (BBDb.TO: Quote) won up to $3.6 billion in regional jet orders from Delta Air Lines (DAL.N: Quote) and an undisclosed Chinese client on Thursday, recovering momentum in a segment that had slipped to Brazilian rival Embraer (EMBR3.SA: Quote).

Delta said it would buy 40 Bombardier CRJ900 regional jets, with the option to buy an additional 30 planes, in a deal worth up to $3.29 billion. Later on Thursday, Bombardier said a Chinese customer had ordered seven CRJ700 jets in a $330 million deal.

Together the orders reignited prospects for Bombardier's aviation unit and dimmed hopes that Embraer, which was in the running for the Delta deal, could keep up the pace of its production next year.

Embraer shares fell as much as 7 percent in Thursday trading before paring losses to 2.7 percent, while Bombardier shares gained 1.8 percent.

Bombardier has delivered about half as many regional jets as Embraer in recent years and missed out on several major orders, especially in China where Embraer has delivered three in four commercial jets with 120 seats or less.

This year, however, Bombardier has booked more than 90 regional jet orders -- including Thursday's announcements -- compared to a net 12 new orders for Embraer through September.

The Delta deal, along with an historic $7.8 billion business jet order from VistaJet last week, likely lifted Bombardier's order backlog to more than $60 billion, according to Desjardins analyst Benoit Poirier, from $54 billion at the end of 2011.

The order also marked the first shot in what may be an ongoing battle next year to replenish an aging U.S. regional jet fleet, including possible orders from SkyWest SKYW.O and AMR Corp's AAMRQ.PK American Airlines, Poirier told clients in a Thursday note.   Continued...

Bombardier's CRJ900 airliner is shown in this undated handout photograph. Delta Air Lines announced December 6, 2012 it would buy 40 Bombardier CRJ900 jets, with the option to buy an additional 30, in a deal valued at up to $3.29 billion. REUTERS/Bombardier/Handout