Bombardier's CSeries aircraft gets lift with new tentative orders
By Susan Taylor
TORONTO (Reuters) - Bombardier Inc's long-delayed CSeries jetliner program got a boost on Monday with two tentative orders worth nearly $1.6 billion, but investor enthusiasm was tempered by lingering concerns about the plane's prospects.
Landing on the first day of the Farnborough International Airshow in England, the deals helped lift Bombardier shares by 2.1 percent but failed to offset fully worries about the $4.4 billion aircraft's order book and development schedule.
Bombardier said that Chinese carrier Zhejiang Loong Airlines Co Ltd had signed a letter of intent for up to 20 CS100 aircraft, a deal worth about $1.28 billion at list prices. Jordan's Petra Airlines Ltd also signed a letter of intent for up to four CS100 and CS300 planes, worth up to $298 million.
The lack of "brand name" customers is a big problem for the CSeries, said Canaccord Genuity analyst David Tyerman, noting that Korean Air and Deutsche Lufthansa are its only well-established buyers.
"We think it will be difficult for the aircraft to be a commercial success without penetration into the larger airline and lessor market," Tyerman said in a note.
Canada's export finance agency said separately on Monday that it will work with counterparts in Britain and the province of Quebec to offer financing for CSeries customers. Other countries may join in the future, Export Development Canada added.
Bombardier's new jet family is the planemaker's big bet on cracking the 100- to 149-seat market but pits the company against industry giants Boeing Co BA.N and Airbus Group AIR.PA
Bombardier has touted the plane's superior fuel and operating efficiencies but has faced a number of obstacles and delays. Most recently, a May 29 major engine failure grounded test planes and prevented their appearance at Farnborough. Continued...