Bombardier gets US$326-million aircraft orders, including five Q400s for WestJet
MONTREAL - Bombardier announced the sale of eight commercial aircraft valued at US$326 million on Thursday, including WestJet's conversion of five of 25 options for Q400 turboprops into firm orders.
The Calgary-based airline said last June's launch of WestJet Encore using the turboprop has "reshaped" the regional aircraft market in Western Canada by adding new destinations and feeding traffic to its main network.
"While the Q400 NextGen aircraft is well known for its efficiency on short-haul missions, we have also been able to leverage its jet-like speed to reach new destinations and connect cities further apart, and this will be instrumental as we look to expand Encore's service offering to our guests in Eastern Canada," CEO Gregg Saretsky said.
Based on the list price, the purchase is valued at about US$167 million.
The planes will be delivered in the second half of 2015, increasing the airline's fleet of Q400s to 25 by the end of next year.
WestJet (TSX:WJA) still has options for 20 more Bombardier Q400 aircraft between 2016 and 2018.
Meanwhile, Bombardier (TSX:BBD.B) said Thursday that it has also sold three CRJ regional jets.
Long-time customer Adria Airways signed a firm order for two CRJ900 NextGen aircraft valued at US$92 million at list price, although customers typically get large discounts. The Slovenian member of the Star Alliance network has been a Bombardier customer since 1997 and operates eight regional jets.
"Our Bombardier CRJ900 regional jets have proven to be most efficient and economical assets to increase capacity and replace larger aircraft where passenger loads are insufficient," CEO Mark Anzur said.
The scheduled and charter airline flies 160 scheduled flights per week to 20 cities throughout Europe.
Also ordering an aircraft is a customer from Latin America, which asked not to be named. It has signed a firm agreement for one CRJ700 NextGen aircraft for use in unidentified special mission applications. Possible special mission uses include surveillance, maritime patrol, search and rescue, VIP transport and medical evacuation.
The contract, including ancillary services and modification work on the aircraft, is valued at about US$67 million. The aircraft's list price is nearly US$40 million.
The CRJ series aircraft are in service with more than 60 airlines in some 50 countries and have transported more than 1.4 billion passengers.
Meanwhile, Bombardier Inc. announced that it had extended its letter of credit facilities for its transportation and aerospace divisions by an additional year to 2017. The maturity dates of revolving credit facilities were also extended by one year.
"We are delighted with this continued demonstration of our syndicate banks' support of our business plan and strategic orientation," said chief financial officer Pierre Alary.
Walter Spracklin of RBC Capital Markets agreed with that assessment.
"The extension provided does highlight the comfort Bombardier's syndicate banks have on the company's business plans and balance sheet despite high leverage," he wrote in a report.
On the Toronto Stock Exchange, Bombardier's shares closed up four cents at $4.08 in Thursday trading.
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