May 25, 2018 / 2:00 PM / in 3 months

Leonardo shares rise on Canada helicopter fleet plans

MILAN (Reuters) - Shares in Italian aerospace and defense group Leonardo (LDOF.MI) jumped on Friday after Canada said it planned to work with the company to refurbish its fleet of search-and-rescue (SAR) helicopters.

FILE PHOTO: A hostess walks past a Leonardo's helicopter logo at the headquarters in Vergiate, near Milan, Italy, January 30, 2018. REUTERS/Massimo Pinca

In a tender notice dated May 24, the Canadian government said it planned to replace or update obsolete systems on its CH149 Cormorant fleet, increase its size and procure a rotary wing SAR flight simulator.

Leonardo declined to comment. Its shares rose more than 3 percent to 9.086 euros.

“Canada intends to carry out this project through a non-competitive process with the original equipment manufacturer, Leonardo,” the Canadian government said.

The contract under discussion could be worth more than $1 billion and account for almost 7 percent of the group 2018 order intake with an operating margin topping 10 percent, Italian broker Banca Akros said in a report.

Canada has been operating a fleet of 14 AgustaWestland helicopters, now called Leonardo Elicotteri, since 2000.

Reporting by Stefano Rebaudo; Editing by Susan Fenton

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