Bombardier Receives Large Order From Delta Air Lines – ValueWalk Premium

Bombardier Receives Large Order From Delta Air Lines

Bombardier Receives Large Order From Delta Air Lines

Delta Air Lines, Inc. (NYSE:DAL) has ordered potentially 70 regional jets from Belfast’s Bombardier, Inc. (TSE:BBD.A) (TSE:BBD.B) (PINK:BDRBF) in response to changes in the planes used for domestic travel.

On Thursday, the carrier announced it had placed an order for 40 CRJ900 planes with an option for 30 additional ones, reported the Associated Press. The deal could have a $3.29 billion value based on list prices should Delta exercise the options, but there's always a possibly for a discount on its large order.

Why Bombardier, Inc. (TSE:BBD.A) (TSE:BBD.B) (PINK:BDRBF)? Ed Bastian, president of Delta Air Lines, said that they specially selected the CRJ900 planes because they are the most cost-efficient jets for their class. He added via the Belfast Telegraph, “This jet satisfies perfectly the agreement that we have made with our pilots to add 70 more 76-seat jetliners to our fleet.”

The order comes as Delta Air Lines, Inc. (NYSE:DAL) moves toward bigger jets. The new ones will include 76 seats, which is smaller the company's mainline planes but greater as compared its 50-seat regional jets. These are less profitable now thanks to increased fuel prices.

Delta has also decided to move away from the smaller seating capacity as it thinks passengers do prefer bigger planes, notably for longer flight times. Back in June, Delta pilots accepted a new union contract that enables it to grow flying via the bigger regional jets as it gets rid of the 50-seaters.

For Bombardier, Inc. (TSE:BBD.A) (TSE:BBD.B) (PINK:BDRBF), the new order furthers its relationship with Delta.

Mike Arcamone, president of Bombardier Commercial Aircraft, said, “Building on a relationship that is 20 years strong, we are delighted that Delta continues to select Bombardier CRJ regional jets to replenish its fleet.

“CRJ aircraft have been in service with Delta Air Lines, Inc. (NYSE:DAL) Connection carriers since 1993 when Comair became the first North American airline to operate the CRJ100 regional jet. Since then, Delta has been a steady Bombardier CRJ customer and has been a major contributor to the worldwide success of the CRJ aircraft programme. We look forward to a continuing relationship with Delta and have every confidence in our ability to provide solutions to meet the airline's business requirements.”

The new planes will include first-class seats–something new for regional planes. Delta will also sell the additional seats at greater price.

Similar to its other regional jets, a regional partner will fly the new planes for the carrier's behalf via Delta Connection. Delta already flies its CRJ-900s through Pinnacle Airlines Corp., SkyWest Inc. (NASDAQ:SKYW) and SkyWest’s ExpressJet unit.

As for which regional airline will fly planes, a Delta spokesman said this hasn’t been confirmed yet.

The first wave of new planes will start arriving late in 2013.



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