Bombardier Announces Delta, China CRJ orders

December 6, 2012

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Bombardier won up to USD$3.6 billion in regional jet orders from Delta Air Lines and an undisclosed Chinese client on Thursday, recovering momentum in a segment that had slipped to Brazilian rival Embraer.

Delta said it would buy 40 Bombardier CRJ900 regional jets, with the option to buy an additional 30 planes, in a deal worth up to USD$3.29 billion. Later on Thursday, Bombardier said a Chinese customer had ordered seven CRJ700s in a USD$330 million deal.

Together the orders reignited prospects for Bombardier's aviation unit and dimmed hopes that Embraer, which was in the running for the Delta deal, could keep up the pace of its production next year.

Bombardier has delivered about half as many regional jets as Embraer in recent years and missed out on several major orders, especially in China where Embraer has delivered three in four commercial jets with 120 seats or fewer.

This year, however, Bombardier has booked more than 90 regional jet orders -- including Thursday's announcements -- compared to a net 12 new orders for Embraer by September.

The Delta deal, along with an historic USD$7.8 billion business jet order from VistaJet last week, likely lifted Bombardier's order backlog to more than USD$60 billion, according to Desjardins analyst Benoit Poirier, from USD$54 billion at the end of 2011.

The order also marked the first shot in what may be an ongoing battle next year the US regional jet fleet, including possible orders from SkyWest and American Airlines, Poirier told clients in a note.

Without new commercial jet orders by early 2013, Embraer's chief executive Frederico Curado said last month that the company would not be able to maintain stable E-Jet output next year, as its order backlog hit a six-year low on thin demand. Curado said that Delta was the airline most likely to make a big regional jet order this year.


Atlanta-based Delta has taken a number of moves to revamp its fleet used on US routes with an eye to eliminating less-efficient planes and adding more first-class cabins that appeal to business passengers.

The order for the two-class, 76-seat CRJ900 comes as Delta moves to retire 50-seat jets that cost more to operate. The 40 firm orders were valued at USD$1.85 billion, with that rising to USD$3.29 billion if all 30 options are exercised.

Delta said on Thursday it expects to start taking delivery of the Bombardier planes in the second half of 2013.

Earlier this year, Delta reached an agreement to add 88 Boeing 717-200 aircraft with 110 seats that are currently in use by Southwest Airlines' AirTran unit. Last year, Delta ordered 100 Boeing 737-900ER jets.