Bombardier’s $3 billion deal is in peril after Republic Airways files for bankruptcy

Bombardier CS300 Republic Airways

Republic Airways Holdings filed for bankruptcy protection on Thursday.

According to the AP, the airline which mainly operates regional flights on behalf of Delta, United and American Airlines, had been struggling through a period of shrinking profits and pilot shortages.

Another wrinkle to this story is that Republic is the Bombardier C-Series’ first North American customer and one of the aircraft’s largest buyers.

Republic placed an order for 40 CS300 jets in February, 2010 with a list value of over $3 billion.

The airline also holds an option to purchase up to 40 addition C-Series jets which could push the total value of the Republic order up to $6.34 billion.

The Republic C-Series has been rumoured to be on the rocks for several years now, and some industry observers believed it was a goner long before the bankruptcy.

“I think there’s no chance they take delivery,” Airways News senior business analyst Vinay Bhaskara told Business Insider. “This is what I believed even before the bankruptcy. But this gives them the ability to dislodge or cancel the order contract.”

Republic ordered its fleet of CS300 jets, a 160-seat rival to the Boeing 737 and Airbus A319, for Frontier Airlines which it purchased out of bankruptcy in late 2009.

However, Republic sold Frontier in 2013 and now it is unclear where its fleet of Canadian airliners will end up.

“Republic may sell the delivery slots instead of cancelling,”he said.

This would certainly not be welcomed news to Bombardier. Should Republic put its early production slots on the markets, it would in effect create addition competition for Bombardier’s sales team which is desperately trying to move the company’s critically acclaimed but slow-selling jet.

Shares of Bombardier are trading down more than 7% in morning trading.

Bombardier Stock 2/26

NOW WATCH: The days of restaurant tipping are dying