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Monday, October 4, 2004

Supply Side

  • Bombardier [BBD] has secured a long-promised order from Air Canada [ACNAQ], which is exiting the Canadian equivalent of Chapter 11 bankruptcy protection. Air Canada has placed a firm order for 15 CRJ 700s and 30 CRJ 200s. Bombardier will begin delivering the 50-seat CRJ 200s this month and the first 75-seat CRJ 700 will be delivered next May. The 75-seat plane will be configured with a two-class cabin. The purchase agreement includes options for 45 additional aircraft. The firm order is worth $821.2 million and the order with options would be worth $2.45 billion. Air Canada will deploy the planes to its regional unit, Air Canada Jazz. The order was first announced in January (CRAN, Jan. 5). Also, Air Canada placed a firm order last week for 45 Embraer 190s in a deal valued at $1.35 billion. The agreement includes options for 45 additional aircraft. The total deal would be worth $2.7 billion. The initial purchase is contingent upon Air Canada completing its Canadian bankruptcy reorganization. The first new Embraer 190 will be delivered in November 2005. The planes will be configured into a two-class cabin.

     

  • General Electric [GE] is on track to sell 450 engines to power RJs this year. As a result of the Air Canada deals with both Bombardier and Embraer, GE will power 205 RJs sold so far this year. While GE again anticipates selling 450 engines this year, the engine mix is changing with more CF 34-8 engines sold as the airframe builders sell the 70-seat or larger jets.

    GE has also worked out a deal with Bombardier to offer a common engine for both the CRJ 700 and CRJ 900 series. The more powerful CF34-8C5BI designed for the CRJ 900 will replace the CF34-8CI that had been placed on new CRJ 700s. The change could reduce maintenance costs by 10 to 15 percent on the CRJ 700s. If the final agreement is signed in the next 30 days, as anticipated, the new engines will be placed on the new CRJ 700s by mid-2005. An upgrade kit will be ready in 2006 so that the engines can be swapped on existing CRJ 700s at their first scheduled engine shop maintenance. Substituting the new engine was determined to be the most cost-effective way to handle "maintenance issues" that have developed with the CRJ 700, said Ron Hutter, with GE small engines marketing, at the ERA general assembly.

  • ATR, which has sold 12 new planes so far this year, is also on target to resell or lease more than 60 used ATRs. So far this year, the French turboprop builder has handled 43 used aircraft.

     

  • The European Regions Airline Association has launched the ERA Academy as a joint venture with OD Consulting and InfoWerk. The academy will offer online, multimedia training to regional airlines in Europe, Africa and China. Preliminary research has indicated that the airlines want high-quality training at an affordable price, said Olaf Dlugi, of OD Consulting. Over the next eight weeks, the academy will be surveying airlines to determine what courses they most desire.

     

  • A three-way joint venture plans to bring cell phone and email to both regional and mainline aircraft. Airbus, Sita and Tenzing have formed Onair to offer both voice and cabin connectivity by building on an aircraft's existing communications infrastructure. Airlines will need to make minimal upfront investments. The service will not be limited to Airbus aircraft. Last year, Seattle-based Tenzing linked up with Verizon to install an email system on United Airlines' [UALAQ] and Continental Airlines' [CAL] planes. The first program Onair will offer airlines will be Internet browsing and connections to corporate email systems. In 2006, the second phase will enable passengers to use their cell phones while airborne.

     

  • Emerald Airways, based in Liverpool, will take delivery of three ATP aircraft that are being converted to freighters. BAe Regional Aircraft is leasing one ATP from its inventory of 40 ATPs and has brokered the sale of two others from Biman Bangladesh Airlines. BAe will shepherd the conversion of the passenger aircraft at Romero in Baneasa, Bucharest. Romero will install large freight doors in these planes. The Emerald deal marks the second in the BAe ATP conversion program. The ATP was first introduced in 1988 and production ended in 1994 with 62 planes built. Emerald, founded in 1992, operates two ATPs on passenger routes under the brand name FlyJem.

     

  • Club328, an executive jet operator, last month took delivery of its first of eight Dornier 328Jets. Club328's order earlier this year was the first sale for Virginia- based AvCraft since it acquired the assets of the Dornier 328Jet program from the bankrupt Fairchild. In mid-October, Club328 will obtain the second 328Jet to roll of the Oberphaffenhofen, Germany, production line. It was one of eight planes partially built when Fairchild shut down the line in 2002. Club328 will receive the third and fourth planes in December. Club328 has dubbed the plane SpaceJet for marketing purposes. It made its maiden voyage when it flew guests to the Monaco Boat Show on Sept. 23.
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