Happy Canada Day
A lot of champagne corks have been popped this week in Montreal. Tuesday was, of course, Canada Day. On Wednesday Bombardier issued a press release announcing a firm order for 50 aircraft from a new customer. And options for another 70 jets.
Bombardier valued the order and a “first-of-its-kind services agreement” at $1.7bn. Bombardier’s share price jumped 21% to C$148. In July 2020 it was at C$10.75.
The name of the start-up operator has been the subject of intense speculation this week. Its identity is not being released until it starts marketing and Bombardier is respecting this carefully. Deliveries are set to begin in 2027.
The OEM is not revealing the split between Global and Challenger aircraft. Presumably it also covers options to switch to a new Challenger variant if one is announced.
“We build trust each day with each customer thanks to dedicated team members around the world who ensure their consistent satisfaction,” said Éric Martel, president and CEO, Bombardier in the press release. “Our more than 18,000 Bombardier employees are proud to welcome this new, important customer to our family.”
While this order is great news for Bombardier, it is not without its downsides. Fleet orders give OEMs certainty and introduce aircraft to new customers, but all business jet manufacturers have strong backlogs now.
Salespeople at other manufacturers (particularly those in other territories to the start-up who were not going to get commission) will be privately relieved that they have not lost slots that they can sell to their prospects.
The only people who should be concerned by the announcement are other start-ups looking to place fleet orders. Business aviation manufacturers do not have the same backlogs as commercial jet OEMs (Airbus and Boeing do have slots for ACJs and BBJs) but they do not have much slack for the next few years. If you are a fleet buyer and are not already negotiating your order, you need to speed up.
At least two more fleet orders are expected in the next few months – at least one from an existing leader and a smaller one from a new buyer in the Middle East.
Of course, it is not only Canadians who have national holidays in July. Happy Independence Day to everyone in America today. The same to anyone in Malawi on Tuesday next week and those of you in the Bahamas on Thursday.
Some 46 countries have national holidays celebrating independence from Great Britain. We do not take it personally.
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