February 9, 2010 / 8:01 PM / in 8 years

UPDATE 2-Jazz Air to buy 15 Bombardier turboprops

* Has option to buy additional 15 aircraft

* No purchase price given

* Deliveries to start May 2011 (Adds details, Bombardier comments, share prices; in U.S. dollars unless noted)

VANCOUVER, Feb 9 (Reuters) - Jazz Air Income Fund JAZ_u.TO said on Tuesday it has signed a letter of intent to buy 15 turboprop aircraft from Bombardier Inc BBDb.TO, with an option to buy another 15, as the Canadian regional airline operator updates its fleet.

The Q400 NextGen aircraft will seat 74 passengers and deliveries are scheduled to begin in in May 2011, Jazz said.

No financial terms were released.

Bombardier, the world’s No. 3 civil aircraft maker, said it would not put a dollar figure on the deal until it was firmed up.

“We’re working to finalize a firm purchase agreement on the sale of NextGen Q400 aircraft,” said John Arnone, a Bombardier spokesman.

The list price on a Q400 turboprop is around $29 million.

Jazz, a regional carrier for Air Canada ACa.TO, already flies Bombardier-built Dash 8 turboprops and CRJ regional jets. The new planes will replace 15 of Jazz’s 50-seat regional jets.

“This aircraft (the Q400 NextGen) offers superior passenger comfort, fuel efficiency and improved environmental performance,” Jazz Chief Executive Joseph Randell said in a statement. He said the Q400’s operating costs are “among the lowest of any regional aircraft”.

The Q400, an updated version of the Dash 8, is the aircraft of choice for privately held Porter Air, a regional airline that flies out of Toronto City Centre Airport. Porter currently has a monopoly on commercial flights out of the downtown airport, located just minutes from the city’s financial district, on an island in Toronto harbor.

Jazz has said it wants back into the island airport, and the new turboprops, which are quieter than conventional planes and can take off and land on short runways, are seen as key to its plans.

Jazz released its results at the same time as it announced the aircraft purchase. It said operating revenue dipped 10.6 percent to C$351 million ($328 million) in the fourth quarter.

The drop came on the back of lower charges made to Air Canada, a weaker U.S. dollar exchange rate and a reduction in departures, Jazz said.

Fourth-quarter net income was C$20.8 million. No comparable figure was immediately available.

Shares of Jazz ended up 5 Canadian cents at C$4.12 on the Toronto Stock Exchange on Tuesday. Bombardier ended up 3 Canadian cents at C$5.37.

$1=$1.07 Canadian Reporting by Nicole Mordant and John McCrank in Toronto; editing by Rob Wilson

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