MONTREAL/TORONTO (Reuters) - Canadian planemaker Bombardier Inc (BBDb.TO) faces a pivotal week that may see a key deal announced with Delta Air Lines Inc (DAL.N) but a federal aid package is unlikely to be approved in time for its annual meeting on Friday.
The deal with Atlanta-based Delta for up to 125 CSeries jets is critical for Bombardier as Delta would be the first major U.S. airline to purchase the CSeries, which is entering service years late and billions of dollars overbudget.
Delta’s board is widely expected to approve the purchase, which includes 75 initial orders, this week.
A Delta commitment, coupled with a firmed up agreement for 45 CSeries jets with Air Canada (AC.TO), would put Bombardier’s CSeries order book above the 300 mark, allowing the company to hit a psychologically-important internal target by the time the first plane enters service in July 2016.
“It is a flagship customer outside of Canada, which may enable and help them to capture other orders and it establishes the CSeries as a real player in the market,” said Morningstar analyst Chris Higgins.
Delta could not immediately be reached for comment.
The advance in CSeries order talks comes as Canada’s federal government and Bombardier remain far apart over a $1 billion aid package.
The government wants a say in the suppliers Bombardier is using for the plane program, two sources said, and has asked the company to modify its dual-class share structure which favors the founding Bombardier-Beaudoin family.
Bombardier spokeswoman Isabelle Rondeau declined to comment on the federal talks.
An order from Delta, the second-largest U.S. carrier by passenger traffic, would overshadow a decision on federal aid and the finalization of a separate CSeries investment by the Quebec province.
“The stamp of approval by Delta is worth much more to them than a deal with the federal government,” said an aerospace analyst, who spoke on condition of anonymity because he is not authorized to talk to media.
Quebec, which negotiated a separate $1 billion agreement with Bombardier to be finalized during the second quarter, did not make a first payment to the company as originally expected on April 1.
The province, which wants the same conditions as the federal government, is said to be waiting for Bombardier to finalize an agreement with Canada before completing its own deal, two sources familiar with the matter said.
Quebec Premier Philippe Couillard on Monday said the province would finalize its deal with Bombardier as soon as certain conditions in its agreement with the company are completed. He did not specify what those were or give a timeframe.
”We will eventually finalize the agreement,“ Couillard told reporters on the sidelines of a Montreal aerospace conference. ”It’s only a question related to liquidity and other subjects that have to be met. They will be met. We are there.“ Couillard said he had ”full confidence” that Prime Minister Justin Trudeau’s government recognized the importance of the aerospace sector to Quebec and would invest in the CSeries.
An investment manager whose company owns Bombardier stock said he hoped the federal government made a decision soon because the talks were becoming a distraction for the company’s management.
“The company has to get to the next stage which is operations,” he said, speaking on condition of anonymity because the federal talks are confidential. “Those discussions are taking a lot of time with a lot of people and I’m sure those people would like to be focused elsewhere.”
Additional reporting by Matt Scuffham in Toronto and Jeffrey Dastin in New York; editing by Andrew Hay