UPDATE 2-Bombardier, Rostec in tentative turboprop aircraft deal

Wed Aug 28, 2013 4:38pm EDT
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By Solarina Ho

TORONTO Aug 28 (Reuters) - Bombardier Inc signed a preliminary deal to sell 100 short-haul Q400 NextGen aircraft in Russia and set up a joint-venture assembly line for the planes in that country.

Bombardier, a Montreal-based plane and train maker, said on Wednesday it signed a letter of intent to sell 50 Q400 NextGen turboprop aircraft to the Russian state-owned industrial and defense conglomerate Rostec.

Rostec and its aircraft leasing subsidiary also agreed to secure orders for at least 50 more Q400s in the region, and Moscow-based leasing firm Ilyushin Finance Co signed a letter of intent to acquire those planes.

The sales are contingent on establishing a final assembly line for the aircraft in Russia, which would be a joint venture of Bombardier and Rostec, the Canadian company said. The companies hope to conclude a definitive deal in 2014, subject to various approvals.

Analysts said the deals would open the door to the lucrative Russian market for Bombardier and give the Q400 series a boost.

Bombardier said the orders for the 100 planes would be worth $3.39 billion at list prices.

Q400 planes are currently assembled in Toronto. Bombardier said the Toronto plant would continue to produce Q400s for all markets outside of Russia and maintain responsibility for the overall Q400 program.   Continued...