Bombardier lining up five CSeries launch customers, says analyst

MONTREAL - Signs are building that the long-anticipated launch of Bombardier's new CSeries regional jet may take place next week with an analyst report that the aerospace manufacturer (TSX:BBD.B) has lined up five potential customers for more than 200 aircraft.

Analyst Jacques Kavafian of Research Capital said Monday that Shanghai Airlines will join China Southern, Lufthansa, International Lease Finance Corp. and Qatar Airways as the first airlines to place orders for the new fuel-efficient jets.

Together, they should generate enough orders to meet Bombardier's threshold of 50 to 100 orders from financially solid airlines.

While he wouldn't confirm the interest of the Chinese airlines, Bombardier spokesman Marc Duchesne said there is strong global interest.

"Our sales (force) is visiting with many airlines around the world and the feedback and the discussions are positive," he said.

The two Chinese airlines have convened a meeting of the Civil Aviation Administration of China on July 14 to obtain the required state approvals to purchase the aircraft.

The Chinese agency will likely purchase the aircraft to obtain volume discounts and ensure standardized equipment, and then allocate them to the individual airlines, Kavafian said.

Such a meeting could allow Montreal-based Bombardier to announce the CSeries go-ahead as early as July 15 at the Farnborough Air Show in England. The airplane is slated for delivery in 2013.

Another potential customer is Malaysian Airlines. U.S. airlines Northwest and Delta, which are in the process of merging, are also believed to be a future customers, but won't be able to commit in time for the official launch.

"High oil prices make such an aircraft highly valuable, given that it would provide 20 per cent cash operating cost savings to airlines over competing products," Kavafian wrote.

A partnership with China Aviation Industry Corp. (AVIC 1) to invest US$400 million in the CSeries to make components will assure other Chinese orders over time, he added.

Pratt & Whitney will provide the aircraft's geared turbofan engines.