BUSINESS

Bombardier gets leasing company order for 12 CRJ1000 for Garuda airlines

06/20/2012 03:16 EDT | Updated 08/20/2012 05:12 EDT
MONTREAL - Bombardier Aerospace has won a US$595 million order to deliver new aircraft to a subsidiary of Danish leasing company Nordic Aviation Capital that will lease the aircraft to Garuda Indonesia airlines.

The firm order for 12 CRJ1000 is valued at US$595 million at list prices.

Garuda is the first customer in the Asia-Pacific region for Bombardier's latest 100-seat regional jet. It directly ordered six aircraft in February and has options for 18 more planes after considering competitor Embraer's E-190.

The Jakarta-based airline founded in 1949 operates 92 commercial aircraft serving 31 domestic and 19 international destinations.

Nordic Aviation Capital is one of the world's largest lessors of regional aircraft with more than 160 turboprop and jet aircraft serving more than 30 customers in 20 countries.

The order and another leasing company transaction on behalf of Air Norstrum in Spain "illustrate that these aircraft present attractive financing and leasing opportunities for airlines and investors," stated Bombardier commercial aircraft president Mike Arcamone.

"The CRJ1000 NextGen aircraft's superior economics, outstanding fuel economy and excellent passenger comfort ideally meet our requirement for 100- seat aircraft; and the acquisition of these 12 additional aircraft via Nordic Aviation Capital is integral to our network expansion from five regional hubs," added Garuda CEO Emirsyah Satar.

Bombardier (TSX:BBD.B) has received 1,729 firm orders for its CRJ series aircraft, with 1,665 delivered as of March 31 to more than 60 airlines around the world. More than 30 customers also operate corporate variants.

Bombardier said on average a CRJ aircraft takes off every 10 seconds somewhere in the world.

Analysts expect a lull in regional aircraft orders won by Bombardier may be nearing an end after a slew of recent orders.

The Montreal-based manufacturer last year received orders for only four regional jets and seven Q400 turboprops.

Prior to Wednesday's announcement, six customers including WestJet Airlines (TSX:WJA) have placed 43 firm orders and 57 options.

The Calgary-based carrier has ordered 20 turboprops to launch its regional service and has options for 25 more aircraft.

Orders have also come from Horizon Air, Ethiopian Airlines, Eurolot and RwandAir.

"The regional aircraft order outlook is shaping up better than expected,'' Cameron Doerksen of National Bank Financial wrote in a recent report.

He foresees an order resurgence from U.S. airlines as the large American market is showing signs of life for the first time in years.

The company's Brazilian rival Embraer has recently indicated that it is in talks with five carriers for as many as 500 new regional aircraft orders and Doerksen said Bombardier is likely speaking to the same airlines.

Among the potential buyers are Delta Airlines, SkyWest Airlines, American Airlines and US Airways.

Doerksen said he expects 53 regional aircraft deliveries in 2012 — 23 CRJs and 30 Q400s — down from 78 in 2011. Deliveries should rebound modestly to 65 in 2013, but could be higher if it wins any of the possible large-scale orders, he added.

The analyst also said he expects Bombardier to announce orders for the CSeries aircraft at next month's Farnborough air show.

"More orders would be nice, but not necessary," he wrote in a report on Wednesday. "We note that from an order point of view, the CSeries is ahead of Embraer’s E-Jet program at the same point in the program development."

Bombardier reassured analysts on Tuesday that development of the new CSeries is on schedule for its first flight by year end and delivery by the end of 2013.

On the Toronto Stock Exchange, Bombardier shares lost three cents at C$4.02 in afternoon trading.