United Airlines said on Thursday it will buy 40 small planes from Boeing Co, dealing a US$3.2 billion blow to Bombardier Inc’s hopes of landing a major customer for its fledgling CSeries program.
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Bombardier (TSX:BBD.B) has said it was targeting orders from large airlines to help ignite momentum for the CSeries, which seats between 100 and 160 passengers in various configurations.
The aviation giant had been in talks with United Airlines about a 40-aircraft order for its widely praised, but slow selling, C-Series airliner.
These will be flown by pilots of United reducing its dependence on contractors with growing shortage of regional pilots in the U. S. It also shows airlines prefer fewer models in their fleets, making cockpits more familiar to pilots.
The deal appeared to be a loss for Brazil’s Embraer SA and Canada’s Bombardier, under pressure for a headline-grabbing win from a top airline as its flagship CSeries narrowbody jet prepares to enter service in 2016 after delays and cash problems.
United made a decision to stick with the 737, an updated version of a plane that debuted in 1965, instead of the brand-new C Series, which boasts greater fuel and maintenance savings. The Chicago-based carrier said it plans to replace more than half of the 50-seat regional jets in its fleet by 2019.
Delta Air Lines Inc on Tuesday said it was taking a serious look at the aircraft.
Rubel said Bombardier is being squeezed by aggressive pricing from Boeing and Airbus, which undercuts the smaller rival.
The new 737-700s will begin entering United’s fleet in mid-2017. Bombardier has been reluctant to deeply discount the CSeries, a new product that has yet to recover development and early manufacturing costs.
United configures its 737-700s with 118 seats. It has been stuck at 243 firm orders for almost 16 months.
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United Airlines just delivered some bad news to Bombardier as the airplane maker seeks to dig itself out of a financial hole.
