Bombardier In Spotlight As Delta Deal Nears

Bombardier faces a pivotal week that may see a key deal announced with Delta Air Lines, but a federal aid package is unlikely to be approved in time for its annual meeting on Friday.

The deal with Delta for up to 125 CSeries aircraft is critical for Bombardier as Delta would be the first major US airline to purchase the CSeries, which is entering service years late and billions of dollars over budget.

Delta’s board is widely expected to approve the purchase, which includes 75 initial orders, this week.

A Delta commitment, coupled with a firmed up agreement for 45 CSeries with Air Canada, would put the CSeries order book above the 300 mark, allowing the company to hit a psychologically-important internal target by the time the first plane enters service in July 2016.

The advance in CSeries order talks comes as Canada’s federal government and Bombardier remain far apart over a USD$1 billion aid package.

The government wants a say in the suppliers Bombardier is using and has asked the company to modify its dual-class share structure which advantages the founding Bombardier-Beaudoin family.

A Bombardier spokeswoman declined to comment on the federal talks.

STAMP OF APPROVAL

An order from Delta would overshadow a decision on federal aid and the completion of a separate CSeries investment by the Quebec province.

“The stamp of approval by Delta is worth much more to them than a deal with the federal government,” said an aerospace analyst, who declined to be named.

Quebec, which negotiated a separate USD$1 billion agreement with Bombardier, did not make a first payment to the company as originally expected on April 1.

The province, which wants the same conditions as the federal government, is said to be waiting for Bombardier to complete an agreement with Canada before completing its own deal, two people familiar with the matter said.

Quebec Premier Philippe Couillard said the province would finalise its deal with Bombardier as soon as certain conditions in its agreement with the company are completed. He did not specify what those were or give a timeframe.

“We will eventually finalise the agreement,” Couillard told reporters on the sidelines of a Montreal aerospace conference. “It’s only a question related to liquidity and other subjects that have to be met. They will be met. We are there.” Couillard said he had “full confidence” that Prime Minister Justin Trudeau’s government recognised the importance of the aerospace sector to Quebec and would invest in the CSeries.