October 17, 2017 / 4:33 AM / a month ago

Airbus-Bombardier deal expected to jumpstart CSeries jet sales in Asia: analysts

SINGAPORE (Reuters) - Airbus SE’s (AIR.PA) deal for a majority stake in Bombardier Inc’s (BBDb.TO) CSeries jet program is expected to jumpstart sales of the Canadian aircraft in Asia, analysts said.

FILE PHOTO: Bombardier’s C-series aircraft is pictured at an airport during its static demo event in New Delhi, India October 5, 2017. REUTERS/Adnan Abidi/File Photo

The Airbus-Bombardier deal will give the European planemaker a 50.01 percent interest in the CSeries program, while the jet will get a better sales network. The 110-to-130 seat plane has not secured a new order in 18 months and is being threatened by a possible 300 percent duty on U.S. imports.

In Asia, Korean Air Lines Co (003490.KS) is so far the only customer of the narrowbody jets and is slated to soon take delivery of the first of 10 CS300 aircraft.

“Interest in the CSeries has been low in this region and having Airbus supporting the program could be a big boost,” Brendan Sobie, Singapore-based chief analyst at CAPA Centre for Aviation, told Reuters on Tuesday.

Airbus has a much stronger market position in Asia than Bombardier, which is in the middle of a 5-year turnaround plan after considering bankruptcy because of a cash-crunch as it developed multiple plane programs simultaneously.

Airlines in Asia have likely held back from placing orders due to concerns that Bombardier’s weak financial position placed the CSeries program in jeopardy, said Shukor Yusof, founder of Malaysia-based aviation advisory firm Endau Analytics.

“Potential buyers of the CSeries are now given comfort with Airbus becoming a major shareholder thus ensuring stability in the program,” he said.

Several Asian airlines could not be reached immediately for a comment on the Airbus-Bombardier deal.

While the deal would reinforce the effective global duopoly of Airbus and Boeing Co (BA.N), it would also boost the CSeries’ appeal to potential buyers, said Association of Asia Pacific Airlines Director General Andrew Herdman.

CHINESE DREAMS

Bombardier has been pushing particularly hard to sell the CSeries in China, with an executive last month saying the planemaker was in talks with the country’s three top airlines and aimed to close deals in the coming months.

China has been working to develop homemade alternatives to break the grip that Airbus and Boeing hold over the world’s commercial aerospace industry.

As a narrowbody jet with a range of more than 3000 nautical miles, the CSeries fills a gap between China’s 90-seat ARJ21 regional jet and its larger 158 to 168 seat C919 narrow body.

Before the Airbus deal was announced, Bombardier had held talks with Chinese firms about investing in the CSeries jets and improving sales through better access to the Chinese market, two sources familiar with the situation told Reuters.

Richard Aboulafia, a U.S.-based analyst at Teal Group, said the decision not to invest in the CSeries made China look “much less serious” about developing its aerospace sector.

“They could have swept in any time with a relatively modest offer, and acquired mountains of intellectual property.”

Reporting by Jamie Freed; Editing by Himani Sarkar

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below