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Demand of Bombardier regional aircraft starts to grow

June 11, 2012, Montreal - A lull in regional aircraft orders won by Bombardier Inc. may be nearing an end as demand is expected to heat up from U.S. airlines, industry analysts said Friday.


June 11, 2012
By The Canadian Press

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

So far this year, orders have rebounded with WestJet Airlines leading the six customers that 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, Garuda Indonesia, Ethiopian Airlines, Eurolot and RwandAir.

"The regional aircraft order outlook is shaping up better than expected, says Cameron Doerksen of National Bank Financial.

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 says Bombardier is likely speaking to the same airlines.

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

Air Canada could also order more smaller planes if it wins scope relief as part of an arbitrated labour settlement with pilots, Doerksen added in a report. Scope clauses limit the number and size of aircraft that can be contracted out to a regional airline such as Chorus Aviation.

More Toronto-assembled Q400s could be ordered if Chorus exercises 15 options and Garuda adds turboprops to its fleet. The Russian market also holds promise since Bombardier recently received type certification for the Q400 in that country.

Doerksen 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.

Any such increase would lead to a rebound in production rates and help margins.

Walter Spracklin of RBC Capital Markets also says the order potential is heating up with SkyWest leading his list of potential buyers.

He also says a Chinese airline and EgyptAir could potentially place orders for the new CSeries.

"We expect increased sales and marketing activity heading into the Farnborough air show in July to raise the prospects that a sizable order could be announced for Bombardier.''

Spracklin said a CSeries order from a Chinese or Middle Eastern carrier could be announced along with "sizable orders'' from emerging and developed market carriers.