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Russian leasing company signs deal to buy up to 42 Bombardier CSeries planes

By: Ross Marowits, The Canadian Press

Wednesday, Feb. 20, 2013 at 3:32 PM | Comments: 0

MONTREAL - A Russian leasing company has agreed to purchase up to 42 Bombardier CSeries aircraft in a potential $3.42-billion deal, the aircraft manufacturer announced Wednesday, shortly after it disclosed Transport Canada has certified the plane's Pratt & Whitney engine.

Ilyushin Finance Co. seeks to acquire 32 of the larger CS300 planes at a list price of about US$2.56 billion, and has options for 10 additional planes, making it one of the largest CSeries orders to date.

The transaction signed Wednesday at Bombardier's final assembly facility in Mirabel, Que., follows a letter of intent signed in 2011 for 30 CSeries planes. The agreement is subject to approval by Ilyushin's shareholders.

The company's director general said the aircraft leasing world is rapidly changing as airlines seek to replace older, less efficient planes because of high fuel costs and environmental concerns.

"The CSeries aircraft offers transcontinental range, superior field and runway performance, and a superb cabin that will bring air transport into the 21st century," Alexander Rubtsov said in a news release.

The CSeries order is Ilyushin's first for a large, non-Russian plane and will join the firm's Russian Superjets and MC-21 aircraft.

The head of Bombardier's commercial aircraft group called the agreement a "landmark opportunity" for the company and the new plane.

"The CSeries aircraft was tailor-made for operation in this vast region and has the potential to offer a step-change in air travel in Russia and throughout the Commonwealth of Independent States," Mike Arcamone stated a day before Bombardier discloses its fourth-quarter and 2012 results Thursday.

There are currently 95 Bombardier CRJ regional jets and turboprops in service or on order in Russia and the CIS. Bombardier said it is also exploring opportunities for its Q400, with reports saying it may assemble some of these planes in Russia.

As of Dec. 31, Bombardier had booked orders and commitments for 382 CSeries aircraft that include firm orders for 148 CSeries airliners.

Earlier Wednesday, Bombardier and Pratt & Whitney announced that Transport Canada had certified Pratt & Whitney's geared turbofan engine that will power the CSeries.

The U.S.-based engine manufacturer — a division of United Technologies (TSX:UTX) has conducted more than 4,000 hours of testing since September 2010, including 340 hours of flight testing on a Boeing 747 flight test airplane.

Bombardier CSeries general manager Rob Dewar said the engine's certification is a "significant milestone and critical step" leading to the aircraft's first flight test, which has been delayed six months until sometime before June.

"We are very pleased with the engine's performance and the overall, steady progress of the CSeries aircraft program," he said in a news release.

He said Bombardier (TSX:BBD.B) has achieved several key milestones over the last few months, accepted two engine propulsion systems and is completing final assembly of the first test aircraft.

Pratt & Whitney vice-president Bob Saia said the company has demonstrated the "the durability and game-changing performance of our Geared Turbofan engine architecture," including the targeted double-digit improvement in fuel efficiency and noise reduction.

The PW1500G engines type certified through Transport Canada by Pratt & Whitney Canada were assembled at Pratt & Whitney Canada's Mirabel Aerospace Centre, north of Montreal.

Each aircraft will be powered by two engines, which use an advanced gear system to allow its fans to operate at a different speed than the low-pressure compressor and turbine.

The 110- to 149-seat CSeries is partially made from advanced composite materials that promise to deliver a 15 per cent reduction in cash operating costs and a 20 per cent fuel burn reduction.

On the Toronto Stock Exchange, Bombardier's shares rose more than four per cent, gaining 17 cents, at $4.28 in afternoon trading on Wednesday.

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