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Friday, February 4, 2011

Bombardier unlikely to snag deal: analysts

Airbus, Boeing may get 100-plane order

Analysts said yesterday that Bombardier Inc. is unlikely to snag a 100-plane order from American International Group Inc.' s aircraft-leasing arm.

International Lease Finance Corp., owned by the insurance company that received a $182.3-billion bailout from Washington, is set to place its first plane order since 2007.

One report quoted insiders who said that the lessor was contemplating Airbus SAS's newly announced A320 neo, Boeing Co.'s 737 as well as Bombardier's CSeries.

But Scott Hamilton of consulting firm Leeham Co. LLC said that although the CSeries is in the running, the order is likely to be a split between Airbus and Boeing.

Richard Aboulafia of Teal Group, a Washington consultancy, said that "The CSeries is just not there yet in terms of appeal to the big leasers.

The CSeries is under development and faces a paradox, he noted: aircraft financiers prefer buying aircraft with a broad base of existing customers.

"It's a catch-22 thing for a plane like the CSeries," Aboulafia said. "They want a large customer base to guarantee marketability and remarketability, as well as the residual value."

"Remember, these things come off lease eventually," she said, making it a tough sell for an unproven -indeed, not yet existing plane -like the CSeries.

"The problem Bombardier has is that they have to gouge their way into that market," Abouafia said.

Bombardier Aerospace spokesman John Arnone said the company does not comment on discussions with customers "unless we're outed by an airline" or leasing firm.

Aboulafia also said the order might be a split, but added that Airbus might have an edge on the deal.

ILFC CEO Henri Courpron said in July that Boeing and Airbus were not the only aircraft manufacturers involved in talks.

ILFC has 939 planes in its fleet.

Airlines now get roughly 40 per cent of their planes from leasing firms.


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