AA Boosts Bombardier’s CRJ Position
The fortunes of Bombardier Aerospace’s regional jet business received a considerable boost today as American Airlines announced the signing of a letter of intent for 22 CRJ700s. During a conference call today, American Airlines executive v-p and CFO Thomas Horton said the airline expects Bombardier to start delivering the new airplanes–equipped with two-class cabins–to its American Eagle regional subsidiary some time near the middle of next year. He also said he expects American will secure full financing for the transaction, implying there will be no effect on its cash position and raising the prospect of a relatively straightforward conversion to a firm order. American Airlines also said it plans to convert all 25 of its existing CRJ700s to a two-class configuration.
The announcement comes as Bombardier mulls the possibility of cutting CRJ production at its plant in Mirabel, Quebec, as the company weathers a commercial airliner sales drought exacerbated by the recent cancellation of an order for 15 CRJ1000s by Italy’s MyAir, which recently lost its operating certificate due to financial troubles. Bombardier also awaits a decision by the Supreme Court of Canada on a $1 billion claim by Kuwait Airways against Iraq. The case has delayed delivery of nine of 10 CRJ900s to Iraq Airways, which Kuwait wants to hold liable for damages it suffered during the first Gulf War.
Separately, American Airlines announced today that it would equip its 42 Boeing 787s on firm order with GE-Aviation GEnx turbofans.
American has also secured $2.9 billion in new liquidity and aircraft financing, and will institute a series of network changes designed to strengthen its Chicago, New York, Los Angeles, Dallas and Miami hubs.