MONTREAL – Bombardier Aerospace says it is heading towards another production rate increase for its large Global business jets after the manufacturer announced more new orders with several airlines Tuesday.
“It’s logical to come to the conclusion that rates would increase further in the future, but we will not say by how much,” spokeswoman Danielle Boudreau said Tuesday from the Paris Air Show.
The company also declined to confirm analyst speculation that a further increase could come next year.
The world’s largest business aircraft manufacturer had already announced a rate increase last winter due to sustained demand for its largest corporate planes, even during the recession.
Bombardier (TSX:BBD.B) doesn’t disclose the actual production rate for its individual aircraft.
The large cabin aircraft are manufactured in Toronto with final assembly completed in Montreal.
Bombardier had a 23-month backlog of orders for the Global planes as of the first quarter.
On Tuesday, it announced several orders for its new Global 7000 and 8000 planes, which are slated to enter into service in 2016 and 2017 respectively.
Australia’s AVWest placed a US$400 million order for four Global 7000 and two Global 8000 ultra long-range jets, of which two were ordered earlier this year.
Bombardier also said VistaJet of Switzerland has placed a firm order for 10 Global 8000 aircraft worth approximately US$650 million.
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The company has yet to announce where the new planes will be assembled.
Michael Willemse of CIBC World Markets said the outlook for the business jet segment remains solid.
“We expect business jet shipments to increase significantly over the next two years as production rates match a rising backlog for business jets,” he wrote in a report.
The business aircraft orders were overshadowed on the second day of the air show by the signing of its launch customer for the CSeries in Asia.
Korean Air has agreed to buy 10 Bombardier (TSX:BBD.B) CS300 aircraft with an option on 10 more and purchase rights for yet another 10, the company said.
The two sides signed a letter of intent after several months of negotiations, but did not disclose financial details.
The larger 130- to 149-seat CSeries is slated to enter into service the end of 2014, a year after the 110- to 125-seat CS100 version.
Korean Air currently operates a fleet of 136 passenger and cargo jet aircraft to 112 cities in 39 countries.
Gary Scott, president of Bombardier Commercial Aircraft, said the order signals an entry into the fast growing Asia-Pacific market.
“Korean Air is one of the world’s most prestigious airlines and we are extremely proud that it has selected the CSeries aircraft to meet its route expansion requirements,” Scott said.
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CSeries customers now come from Asia, Europe and North America.
The order came a day after Bombardier announced a deal with an unnamed “major network” carrier for 10 CS100 planes.
Bombardier has so far sold 123 aircraft, including 51 CS100 and 72 CS300 aircraft.
Cameron Doerksen of National Bank Financial said winning an order from the Boeing customer is a “solid win for Bombardier likely against competition.”
“Although not a big firm order, with options, Korean Air will become a significant customer. Also, Korean Air is a well-recognized airline thereby giving more legitimacy to the CSeries program,” he wrote in a report.
VistaJet, a privately-owned company, bills itself as the world’s premier provider of luxury private aviation services. It exclusively flies Bombardier products. Its deal came six years after it ordered its first Global plane.
In January, VistaJet ordered two Challenger 605 and six Global 6000 jets.
The latest order raises VistaJet’s order backlog to about US$2 billion.
Steve Ridolfi, president of Bombardier Business Aircraft said the momentum for the Global aircraft remains strong as the need for long-distance travel increases in step with the growth of international commerce.
“Global aircraft provide the ideal combination of privacy and in-flight productivity for their passengers while rapidly linking key long-distance city pairs non-stop,” he stated.
Bombardier said the Global 8000 will fly farther than any other business jet, connecting Hong Kong to New York non-stop.
On the Toronto Stock Exchange, Bombardier’s shares closed up 11 cents to C$7.03 in Tuesday trading.
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