Bombardier, US Airways Reach $7.4B Deal
Monday, May 12th 2003, 12:00 am
By: News On 6
MONTREAL (AP) _ A Bombardier Inc. division and US Airways signed a deal worth up to 10.4 billion Canadian dollars ($7.4 billion) for the carrier to buy as many as 275 regional jets.
Bombardier Aerospace said Monday the agreement includes 60 firm orders for its 50-seat regional jet and 25 firm orders for its 75-seat model.
Of the 85 firm orders, 36 were previously placed by GE Capital Aviation Services and committed to US Airways. The net effect increases Bombardier's order backlog by 49 aircraft.
Bombardier said deliveries will start in the fourth quarter of 2003 and continue through the second quarter of 2005.
The deal includes 90 reconfirmable orders, which have scheduled delivery dates but allow the customer to cancel within a specified deadline.
In addition, the agreement includes 100 options to buy a variety of Bombardier regional jets.
Steven Ridolfi, president of Bombardier Regional Aircraft, said US Airways' decision to acquire the Bombardier CRJ200 and CRJ700 regional jets endorses the viability and economics of the smaller jetliners.
US Airways said the new jets will enable it to generate more revenue and compete more effectively on short and medium-length routes.
``Regional jets will allow us to replace and complement larger jet aircraft on routes with poor to marginal performance, which then can be redeployed to operate in more profitable destinations,'' said David Siegel, president and chief executive officer of the Arlington, Va.-based airline.
US Airways recently reported a profit of $1.63 billion in the first quarter of 2003, due to a $1 billion government-backed loan it received when it emerged from bankruptcy on March 31. The airline also received a $240 million investment from the Retirement Systems of Alabama, a pension fund for government workers that is now the carrier's largest shareholder.
That money, and other one-time items associated with the bankruptcy organization, allowed the seventh-largest U.S. airline to record its profit on operating revenue of $1.53 billion.
Excluding one-time items, the airline lost $282 million for the quarter, compared to a $269 million loss on revenue of $1.71 billion in the year-ago quarter.
The company said reduced demand from the war in Iraq, as well as a Presidents' Day weekend blizzard that paralyzed East Coast travel, hurt the company's bottom line.