Tue Feb 3 2015
Byline: Vanessa Lu Toronto Star
Bombardier Aerospace has won an order for up to 23 Q400 turboprops from Air Canada partner Chorus Aviation, which flies regional flights under the Air Canada Express banner.
The deal calls for 13 firm orders and options for 10 planes, which are built at Toronto's Downsview facility. Based on the list price, the firm order is valued at $424 million (U.S.), and could increase to $758 million if all options exercised.
"It's a great way to start the year. Thirteen firm aircraft is significant," said Bombardier spokeswoman Marianella de la Barrera. "We're seeing demand for Q400s despite falling fuel prices. The value proposition is still there."
The Bombardier deal comes after Air Canada and Chorus Aviation, parent company of Jazz Aviation, reached a new capacity purchase agreement that has been endorsed by the Jazz pilots.
"We are transforming Chorus to become a more formidable competitor in the regional aviation industry," said Chorus president and CEO Joseph Randell in a news release.
"Our interests are aligned with Air Canada. Our amended CPA and fleet modernization improves fleet economics and enables a stronger relationship for the long term," he added.
Air Canada estimates the new agreement will result in approximately $550 million (Canadian) in financial value over the next six years, compared with the previous deal.
Annual benefits in 2015 are expected to increase operating income by approximately $50 million, increasing each year throughout the following five years.
"The agreement significantly increases our competitiveness in regional markets through lower unit costs and an improved product offering," said Air Canada president and CEO Calin Rovinescu in a news release.
"The resulting stronger network will support our commercial strategy of expanding internationally and increasing connecting traffic through our hubs," Rovinescu added.
The purchase of additional Q400s is part of an overall Chorus fleet change plan that will see the 78-seat Q400 plane gradually replace smaller Dash 8-100s and CRJ-200 regional jets over the next 11 years.
The carrier also announced it will work with Bombardier to extend the life of 26 existing Dash 8-300s, which are slated to operate until 2025.
Chorus also announced it was splitting its business into two operating units. The first one, known as Jazz, will include a mix of larger, newer aircraft including the Q400 and regional aircraft.
The second unit will consist of the older Dash 8-100 and Dash 8-300 planes and will have its own workforce, modelled after Air Canada Rouge, which flies leisure routes at a lower cost.
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Bombardier lands Q400 airliner contract; Deal with Air Canada partner involves 23 turboprops with a firm order valued at $424M