TORONTO (Reuters) - Bombardier Inc said on Thursday it has signed a highly anticipated $3.06 billion deal to sell 40 of its new C-Series planes to Republic Airways Holding Inc, and that it looks forward to more deals as the commercial aerospace market stabilizes.
Bombardier, the world’s No. 3 civil aircraft maker, said the agreement includes options for an additional 40 aircraft. If those options are exercised, the value of the deal would jump to about $6.34 billion.
Shares of the Montreal-based company gained 39 Canadian cents, or 7.1 percent, to C$5.87 on the Toronto Stock Exchange.
With the recession forcing many airlines to put off buying new planes, Bombardier had not had an order for its C-Series aircraft, the company’s first foray in the narrow body 100-150 seat market, since last March. That’s when it won C-Series orders from Deutsche Lufthansa AG and Lease Corp International Group.
“They obviously are expecting orders for the planes, but we haven’t seen one for quite a while and I think there was probably a bit of angst in the marketplace, waiting for additional orders, so this should alleviate some of that,” said Cameron Doerksen, an analyst at Versant Partners in Montreal.
Ben Boehm, vice-president of Bombardier’s commercial aircraft programs, said the company is in active discussions with more than 65 potential customers worldwide and that he is confident more orders are on the way.
“I think the airlines are in a much better shape this year than they were last year and they’re getting very confident and are starting to look forward as to what do they need to be looking out for the next 10 years,” Boehm said in an interview.
Bombardier has now recorded firm orders for a total of 90 C-Series aircraft and has booked options for an another 90. The new plane is set to start flying in 2013.
“Positive momentum for the aircraft program is likely to help Bombardier’s discussions with other airlines that are taking a close look at the C-Series for replacement or growth of their regional fleets,” said Rama Bondada, an analyst at Macquarie Securities in New York.
He added that the scale of the order is also positive for Bombardier’s engine supplier, Pratt & Whitney, which is a unit of United Technologies.
Indianapolis, Indiana-based Republic, said back in December that it was evaluating the C-Series planes as it looked to fleet replacement for its low-cost carrier Frontier Airlines.
Republic, which also owns Chautauqua Airlines, Lynx Aviation, Midwest Airlines, Republic Airlines and Shuttle America, said at the time it was also in discussions with Airbus and Boeing.
It said part of what made the Bombardier offer attractive, beyond the C-Series’ 15 percent-plus lower fuel burn, was that it may be able to tap into some “very attractive” export financing through Export Development Canada, a government agency.
The company had purchasing commitments for four Airbus aircraft in 2011 and another four in 2012, that it inherited when it bought Frontier, but said it was not obliged to follow through on the orders.
The C-Series aircraft are scheduled to be delivered to Republic in the second quarter of 2015.
Bombardier is also the world’s No. 1 trainmaker. On Wednesday, the company announced it had signed a framework agreement with French National Railways for as many as 860 regional trains, a deal that would be worth about 8 billion euros ($10.85 billion) if fulfilled in total. The initial firm order, worth about 800 million euros, is for 80 double-deck electric trains.
Reporting by John McCrank, editing by Peter Galloway and Rob Wilson