Delta Air Lines is thinking about placing an order for Bombardier’s flagship C-Series airliner.
“We actually think for the right price, it’s quite an impressive aeroplane,” Delta CEO Richard Anderson said today during the company’s earnings call.
“So we are taking a very serious look at it.”
According to the Delta CEO, company executives had the opportunity to preview the C-Series shortly before Christmas after Bombardier flew an example of the jet down to Atlanta.
Bombardier shares jumped as much as 9% in the wake of those comments, and were about 2% higher late Tuesday.
The Canadian aeroplane maker has been in search of a headline-grabbing order from one of the continent’s major players for the C-Series — which is set to enter service later this year with Swiss.
However, Bombardier has had a tough time convincing major North American airlines to purchase the highly praised, but slow selling aircraft.
Last week, United Airlines reportedly picked Boeing’s 737 over the C-Series for a 30-plane $2 billion order.
So Anderson’s words are certainly music to Bombardier’s ears.
But as United’s decision to go with Boeing shows, there’s a lot that can happen between Delta kicking the tires and praising the aircraft, and actually reaching a deal.
Even though, Anderson complimented Bombardier for the impressive work it has done on the plane, much of the his praise was directed to the jet’s advanced engines — The Pratt & Whitney PW1500G with Geared Turbofan Technology.
“The geared turbofan is really the first true innovation since the Boeing 787 Dreamliner revolutionised composite structures for aeroplane fuselages,” Anderson said. “It’s an impressive plane, particularly given the engine technology.”
The problem for Bombardier is that those fuel efficient and ultra-quiet geared turbofan engines are not unique to the C-Series. In fact, variants of the PW1000G family of engines can be found on a variety of other jets including Embraer’s new E-Jet and the Airbus A320neo — one of the C-Series main rivals.
Secondly, Delta isn’t signing on with out one heck of a sweet deal.
While airline bosses are known for driving a hard bargain, few in the business are as shrewd and value-oriented as Anderson and Delta’s management team. The company is famous for extracting maximum value out of its fleet renewal deals. During the 2000s, Delta made a killing by buying up used MD-80/90 airliners at a mere fraction of their value when everyone else was dumping them in favour of newer, more fuel efficient jets.
This doesn’t necessarily mean Delta won’t buy the Bombardier C-Series, but if it extracts a steep enough discount from the Canadian company then the sale won’t do for Bombardier’s finances — even if it does end a sales slump for the aircraft. Note, Anderson was careful to point out that its an aircraft he likes “for the right price.”
By all indications, Anderson was duly impressed by the Canadian jet. And if Bombardier can put the right deal together, it’s perfectly reasonable for Delta to buy if the price is right.
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