Delta Air Lines reached an agreement, worth $5.6 billion, earlier this month to purchase 75 CSeries jetliners from Montreal-based Bombardier, beating out competitors Boeing, Airbus and Embraer.
The deal is the largest to date for the struggling manufacturer, who recently announced the lay off of 7,000 employees as they tried to cope with lack of buyers for their new series of planes, a first-quarter loss and declining revenue.
"Bombardier needs this order," George Ferguson, senior analyst for aerospace and airlines, told Bloomberg. "The challenge here for the manufacturers is being very aggressive. Even if Bombardier gets the order, it’s going to be painful price-wise.”
The Delta order includes a firm order of 75 CS100 jets, with options for another 50. Deliveries are expected to start in early 2018.
The CSeries aircraft has been delayed and over budget, but Bombardier also received a letter of intent in February from Air Canada to purchase 45 CSeries planes, with an option of 30 more.
Bombardier has been in agreement to eventually receive federal aid, including a $1 billion investment by the province of Quebec to fund the CSeries effort. But Quebec's finance minister, Carlos Leitao, told media this month the new deal with Delta makes aid "less urgent."
Embraer asked the Brazilian government to file a complaint with the World Trade Organization (WTO) over the governments proposed financial support for the Bombardier aircraft, which Paulo Cesar Silva, the president and CEO of the Commercial Division, says is illegal under WTO rules. Bombardier said the deal complies with the WTO.
"We have a view that this support from the Canadian governments…has given Bombardier the ability to be more aggressive in these campaigns," Silva told Forbes. "Of course, we need more information about the structures. However, it looks to us that if you look at the Delta campaign, and what we were offering and how we lost that campaign, it looks like [the C Series] was offered below production costs."
After Delta's potential order was reported in the Wall Street Journal and comments were made by the CEO expressing interest in the aircrafts, shares of the company were up 3.5 percent to 2.08 Canadian dollars per share.
