Bombardier lands $7.8bn VistaJet order

Bombardier lands $7.8bn VistaJet order

Bombardier has secured its biggest ever order of private aircraft with the purchase by Geneva-based charter business VistaJet of 56 new jets and options for another 86.

The deal, worth more than $7.8bn at list prices including options, was 18 months in the making and underscores VistaJet’s ambitions to ride the tide of growth in emerging economies.

Thomas Flohr, VistaJet’s chief executive, said the aircraft would both replace older models in his 36-strong all-Bombardier fleet and fuel expansion in core markets including Russia, Kazakhstan, the Middle East and Africa.

He added that the group had considered other manufacturers but cited cabin size, range and “commonality in the cockpit” as reasons for sticking with Bombardier.

Bombardier’s Global 6000, which is set to enter service later this year, seats a maximum of 14 passengers and can fly for up to 13 hours at a top altitude of 51,000 feet – in line with that of a commercial jet.

The order, with the first delivery due in January 2014 and an aircraft arriving for VistaJet every month after that, is set to keep the manufacturer’s backlog at about three years, said Steve Ridolfi, president of Bombardier’s business jet arm.

It beats the $7.3bn that NetJets – the fractional aircraft owner backed by Warren Buffett – spent on Bombardier aircraft in June, part of a $9.6bn order that also included 150 jets from the US manufacturer Cessna.

But given the delivery schedule, it will not ease a cash crunch at the company that prompted Moody’s and Fitch to downgrade the group’s credit rating this month.

Shares slid 20 per cent in the first half of November on concerns over a balance sheet drained by new product development, particularly investment in the group’s C Series passenger jet, meant to compete with Airbus and Boeing models.

Bombardier shares rose nearly 9 per cent in Toronto on Tuesday, to close at C$3.40.

“The VistaJet order is a good order and does reflect the strength of the product line in the business jet area but I hesitate to read any more into it,” said David Tyerman, an analyst with Canaccord Genuity in Toronto.

He added that Bombardier’s business jet arm was symptomatic of problems at the group, which has seen earnings suffer from a cyclical slump in demand. “Business jet sales are off market lows but not by that much and these new orders don’t really change the equation.”

The deal could, however, provide a boost to Northern Ireland’s private sector jobs figures, given Bombardier’s role as the biggest private employer. The company employs 5,000 people at a number of sites in greater Belfast whose operations include the design and manufacture of a range of parts for the business aircraft on order – including the forward fuselages and horizontal stabilisers.

The announcement comes as business groups and politicians lobby Westminster to devolve corporation tax rate setting powers. They argue devolution would help the province compete with the Republic of Ireland, which charges 12.5 per cent, compared with 24 per cent in the UK.

By Rose Jacobs in London and Jamie Smyth in Dublin

http://www.ft.com/cms/s/0/0304f534-38a8-11e2-981c-00144feabdc0.html#axzz2DRu4xK28

An incredible order for that size of jet. I’m not complaining at more Globals gracing the skies. 😀