Delta says Bombardier's CSeries 'fits a need' but technology level has pushed up cost

MONTREAL -- Bombardier may be struggling to sell its CSeries planes because of the high level of technology in the new narrowbody aircraft, the head of Delta Air Lines said Tuesday.

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"It's highly engineered, which I think has been some of the challenges they've faced in marketing it, getting to a price point to get paid for that engineering," president Ed Bastian told analysts at the J.P. Morgan Aviation, Transportation & Industrials Conference webcast from New York City.

"But it's an aircraft that we think and we believe can make a big difference for the industry."

Delta is looking for a replacement for its aging small narrowbody fleet, including about 120 McDonnell Douglas MD-180s that are expected to retire over the next five years or so.

While the CSeries "fits a need," Bastian said price is a factor in whether the large Atlanta-based carrier places an order for the 110- to 160-seat plane that is set to enter into service by summer. Executives toured the CSeries in December.

Air Canada CEO Calin Rovinescu also told the conference that price was a big factor in the Montreal carrier's recent decision to sign a letter of intent that includes a firm order for 45 of the larger CS300 planes, plus options for 30 more aircraft.

"We obtained a good deal," he said. The airline has refused to disclose the purchase price, which analysts believe includes a deep discount off list prices.

The planes are scheduled to be introduced beginning in late 2019 or early 2020 once deliveries of Boeing 737 MAX planes wind down. The larger Bombardier (TSX:BBD.B) CSeries will replace 25 Embraer E-190s before they require costly maintenance overhauls.

However, Rovinescu said the airline is able to delay deliveries for new planes if market conditions at the time are weaker than forecast.

The CSeries has received commitments for 678 planes, including 243 firm orders.



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