Prospects brighten in China for Bombardier

Plane manufacturer's conditional deal with lessor CDB may help it woo other companies

PUBLISHED : Wednesday, 23 October, 2013, 3:55am
UPDATED : Wednesday, 23 October, 2013, 3:55am

Bombardier's agreement to sell up to 30 CSeries aircraft to a Chinese leasing company may prompt fresh deals with customers in the country for the world's third-largest airplane maker, chief executive Pierre Beaudoin said.

The conditional deal with CDB Leasing, whose identity was revealed last week, would help Bombardier woo more buyers in China with a leasing option, Beaudoin said yesterday at a business summit in Guadalajara, Mexico.

The company had "a lot of good conversations going on" with Chinese airlines, he said.

"You're able to offer a complete product to the airlines, you sell them airplanes but you can also lease them airplanes," Beaudoin said. "We did that in Russia and it's really starting to work well with airlines coming on. So I expect the same thing in China. It's a good first step."

A sale to CDB Leasing would be a boost to Bombardier, which is depending on the CSeries to almost double its annual revenue towards the end of the decade.

The CDB Leasing deal, which Bombardier announced last year without disclosing the name of the customer, included a conditional purchase agreement for five CS100 and 10 CS300 jets, with options for an additional five CS100 and 10 CS300 planes, Bombardier said this month.

There is a high probability the current conditional agreement with CDB Leasing will be converted into a firm order, according to RBC Capital Markets.

Bombardier rose 4.3 per cent to C$5.30 (HK$39.90) in Toronto on Monday, its highest closing price since August 2011.

Beaudoin said Bombardier would probably add more work at the company's aviation-related manufacturing operation in Mexico, without specifying a timetable.

He said Mexico could potentially handle final assembly of a plane in the future, dependent on an agreement between the country and the US Federal Aviation Administration.

"There is a day where I can see an airplane coming out of Mexico," he said.

Bombardier was likely to bid in all the major passenger-rail projects proposed by Mexico President Enrique Pena Nieto, Beaudoin said.

Tenders on new proposed lines would probably be offered early next year, Deputy Minister of Transport Carlos Almada said.