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Bombardier customer ceases operations, putting regional jet orders at risk

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Bombardier customer ceases operations,
putting regional jet orders at risk

A Bombardier customer in Italy has ceased operations, putting at risk its order for 15 new CRJ 1000 regional jets from the Montreal-based company.


July 23, 2009
By Administrator

July 23, 2009, Montreal – A Bombardier (TSX:BBD.B) customer in Italy has ceased operations, putting at risk its order for 15 new CRJ 1000 regional jets from the Montreal-based company.

Italian aviation authorities have suspended the licence of low-cost carrier My Air, whose firm orders account for 23 per cent of the 64 total orders received for the new seat aircraft. The CRJ1000 is expected to receive certification and enter into service by December or January.

Bombardier spokesman Marc Duchesne said the Montreal-based aircraft manufacturer is monitoring the situation but hasn't received any deferral or cancellation from My Air.

Analyst Cameron Doerksen of Versant Partners said the backlog for the CRJ1000 will be impacted if My Air can't find additional funding to resume operations.

Other major orders appear to be fairly safe, he wrote in a report Thursday. Air France subsidiary Brit Air has ordered 14 of the aircraft and Air Nostrum has 35 orders.

Bombardier has delivered 56 CRJs this fiscal year but has indicated that its production rate will decline.

The economic recession has caused commercial airlines to cancel or defer aircraft orders, threatening aircraft backlogs. Demand for business jets has also fallen.

Although Duchesne said Bombardier has not received new cancellations or deferrals for its commercial jets, Doerksen said the company may have to further reduce the CRJ production rate unless it receives new orders.

Doerksen estimates the total CRJ backlog, excluding My Air, is around 120 planes. Annual deliveries are forecast at 50, but that may be optimistic given the potential for other deferrals, he said.

Bombardier shares lost three cents at $3.59 in morning trading on
the Toronto Stock Exchange.