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Big aircraft makers line up at Air Canada's door
Reuters <http://money.excite.com/img/logo_reuters.gif>
Thursday September 11, 7:00 PM EDT
(In U.S. dollars unless noted)
By Charles Grandmont
MONTREAL, Sept 11 (Reuters) - The world's four largest commercial
aircraft makers landed at Air Canada's (AC
<http://money.excite.com/jsp/qt/full.jsp?time=0&symbol_search_text=AC> )
headquarters on Thursday, vying for a piece of an order potentially
worth more than $3 billion.
The fact that Air Canada is in bankruptcy protection and struggling to
avoid liquidation did not faze top officials from Boeing (BA
<http://money.excite.com/jsp/qt/full.jsp?time=0&symbol_search_text=BA>
), Airbus (EAD
<http://money.excite.com/jsp/qt/full.jsp?time=0&symbol_search_text=EAD>
)(EAD
<http://money.excite.com/jsp/qt/full.jsp?time=0&symbol_search_text=EAD>
), Bombardier Inc.(BBDb) and Embraer SA (EMBR3).
All had the same message for Air Canada chief executive Robert Milton:
buy our planes and you will start to make money like never before.
"The message we are sending to the Canadians and the world is that
Airbus believes in the future of Air Canada. Let's think of the future
instead of the past," said Airbus North America chief Henri Courpron.
<http://ae.excite.com/adclick/CID=0000b6987d9372bc00000000/acc_random=92
55033445/site=excite.reuters/area=money.news/aamsz=336x280>
Air Canada wants to buy up to 100 regional aircraft, with between 70 and
120 seats, to expand its regional services, the only segment of the
airline industry that has grown since the Sept. 11 attacks.
"It's good news for Bombardier because there is going to be more
regional jets in operation because that's the most efficient way for an
airline to make money," said Bombardier aerospace division chief Pierre
Beaudoin.
Montreal-based Air Canada plans to buy the planes as part as collective
purchase of more than 200 planes to be made along with Germany's
Lufthansa(LHAG), Austrian Airlines(AUAV) and Scandinavian carrier
SAS(SAS), all members of the Star Alliance partnership.
The four partners hope to get better terms by buying planes that are all
configured the same way, instead of each getting customized aircraft.
Being considered are the Boeing 717, the 107-seat Airbus A318,
Bombardier's 70-seat CRJ 700 and 90-seat CRJ 900 and Embraer's 170/190.
Air Canada executives said the order could be split between more than
one manufacturer, but all will be asked for hard bargains.
If all goes to plan, Air Canada expects to exit bankruptcy protection by
year's end after wringing concessions from workers, lessors and
creditors.
BOMBARDIER PLEADS FOR CANADIAN SUPPORT
Bombardier could have a head start on the other manufacturers as Air
Canada already flies 25 of its 50-seat regional jets.
"The incumbent aircraft always has an edge," said Embraer's Mark Hale.
Bombardier, one of Canada's leading industrial groups, also has the
home-turf advantage. A big Bombardier plant sits right next to Air
Canada's headquarters.
"This is an open field, an open game, but we know these guys well
obviously," Milton said as he was standing beside Beaudoin in front of a
Bombardier CRJ-900.
Air Canada has already lined up financing for up to 43 new planes from
GE Capital Aviation Services(GE
<http://money.excite.com/jsp/qt/full.jsp?time=0&symbol_search_text=GE>
), which is Air Canada's largest aircraft lessor and also a key
financial backer in the airline's court-supervised restructuring.
The rest of the financing is likely to come from government help, as all
the manufacturers can ask their respective governments for export loans
to their customers.
That's where Bombardier says it is treated unfairly because it could not
enlist government support for a sale to Air Canada.
"Selling to a neighbor is not an export. Canada should put in place a
program tailored for Air Canada," Beaudoin said. "It's a bit strange
that the local manufacturer who creates jobs locally has a disadvantage
over a manufacturer who is in Brazil."
($1=$1.37 Canadian)
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