Bombardier suspends plan for Russia venture; profit tops estimates
By Allison Martell
TORONTO (Reuters) - Bombardier Inc reported quarterly earnings that topped expectations on Thursday and said it had put plans for a plane-building joint venture in Russia on hold due to political and economic conditions there, potentially jeopardizing a large Russian order.
The Canadian plane and train maker had been in talks with state-owned industrial and defense conglomerate Rostec to manufacture its Q400 turboprop in Russia, and sell 100 planes in the country.
"Given the political situation and the economy in Russia right now, we're setting this project aside for the time being, and we'll see what happens over the next number of months," Chief Executive Pierre Beaudoin said on a conference call.
Bombardier's shares were down 2.6 percent at C$3.81 at midday on the Toronto Stock Exchange.
Under the terms of a preliminary deal signed last year, Rostec would have bought 50 planes from Bombardier and arranged at least 50 more orders in the region.
Beaudoin said the two companies are still discussing those orders. "They do believe in the Q400," he said. "They need an aircraft such as the Q400."
The European Union, the United States and Canada have brought sanctions against Russia over the conflict in Ukraine, but in July Beaudoin said the situation had not affected discussions with Rostec.
Bombardier said in delivered 71 aircraft in the third quarter, compared with 45 planes a year earlier. Aerospace earnings before interest and taxes rose to $137 million from $86 million, excluding special items. Continued...