Two days after the CEO of Delta Air Lines Inc. said the company is taking a “serious look” at Bombardier Inc.’s CSeries jetliner, another major U.S. carrier dashed hopes that it too could be a linchpin customer for the troubled aircraft.
United Airlines announced Thursday that it will buy 40 narrow-body aircraft from Boeing Co. in a deal worth US$3.2 billion at list prices.
United had made it clear that it wanted to replace its 50-seat regional planes with larger aircraft in 2016. Chief financial officer Gerry Laderman said the CSeries was a candidate but the airline opted for Boeing’s 737-700 instead.
However, he said the airline “will continue to look at aircraft” and hasn’t ruled out Bombardier for future purchases.
Bombardier hasn’t recorded a new firm order for the CSeries since September 2014, and it desperately needs a big-name customer to restore confidence in the program.
The excitement starts to build when we have those conversations with a customer like Delta
In an interview this week, Bombardier’s president of commercial aircraft said he’s feeling “very positive” about how talks with potential customers are going, although he has nothing concrete to announce yet.
“We’re starting to get the inbound interest that we were expecting, so it’s very encouraging and I couldn’t be happier with where we are today,” Fred Cromer said.
Cromer showed the CSeries to Delta’s team in Atlanta right before Christmas and he said they were keen to learn about its technical specifications.
“They’re very interested in the 100-seaters and the 100- to 150-seat category is obviously where the CSeries fits,” Cromer said.
“You start getting deeper and deeper into those conversations and I can tell you, the excitement starts to build when we have those conversations with a customer like Delta.”
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On a conference call with analysts earlier this week, Delta CEO Richard Anderson called the CSeries a “pretty impressive” airplane.
“We actually think that at the right price it is quite a competitive airplane, particularly given the engine technology,” Anderson said. “So we are taking a very serious look at it.”
The CSeries was certified by Transport Canada in mid-December and will enter into service with Swiss International Air Lines AG in the second quarter of this year.
Production is also ramping up, and the first plane designated for Swiss is now structurally complete. Cromer said Swiss pilots are currently at Bombardier’s site in Mirabel, Que., to train on the aircraft.
“I met the first crew when they came off the airplane and they couldn’t be happier,” Cromer said.
“It flew exactly as advertised and they were pretty excited about it, they were anxious to get in and do it again. I think it was all thumbs-up from their point of view, which was great feedback.”
However, National Bank analyst Cameron Doerksen said the stock — which is down 70 per cent since the beginning of last year — will only move higher when new orders are announced.
A deal with Delta or another marquee customer “would be a significant program-legitimizing order and a major positive for the company,” Doerksen wrote in a recent analysis.
He added that the weak Canadian dollar could prove to be a “nice tailwind” for Bombardier’s aerospace division in 2016, with a potential $288 million in cost reductions, excluding hedging, if the current exchange rate holds.
However, Cromer said the loonie hasn’t affected discussions around the price of the CSeries.
“There has not been a lot of volatility in those pricing discussions,” he said. “The pricing discussions are really more deal-specific.”