TORONTO Bombardier Inc's long-delayed CSeries jetliner program got a boost on Monday with two tentative orders worth nearly $1.6 billion, but investor enthusiasm was tempered by lingering concerns about the plane's prospects.
Landing on the first day of the Farnborough International Airshow in England, the deals helped lift Bombardier shares by 2.1 percent but failed to offset fully worries about the $4.4 billion aircraft's order book and development schedule.
Bombardier said that Chinese carrier Zhejiang Loong Airlines Co Ltd had signed a letter of intent for up to 20 CS100 aircraft, a deal worth about $1.28 billion at list prices. Jordan's Petra Airlines Ltd also signed a letter of intent for up to four CS100 and CS300 planes, worth up to $298 million.
The lack of "brand name" customers is a big problem for the CSeries, said Canaccord Genuity analyst David Tyerman, noting that Korean Air and Deutsche Lufthansa are its only well-established buyers.
"We think it will be difficult for the aircraft to be a commercial success without penetration into the larger airline and lessor market," Tyerman said in a note.
Canada's export finance agency said separately on Monday that it will work with counterparts in Britain and the province of Quebec to offer financing for CSeries customers. Other countries may join in the future, Export Development Canada added.
Bombardier's new jet family is the planemaker's big bet on cracking the 100- to 149-seat market but pits the company against industry giants Boeing Co BA.N and Airbus Group AIR.PA
Bombardier has touted the plane's superior fuel and operating efficiencies but has faced a number of obstacles and delays. Most recently, a May 29 major engine failure grounded test planes and prevented their appearance at Farnborough.
Engine maker Pratt & Whitney UTX.N said on Sunday that a relatively minor adjustment was required to fix the problem.
"We are of course still on track, as we said, to the entry into service in the second half of 2015," said CSeries general manager Robert Dewar in a video update on the CSeries website. Structural testing is over 80 percent complete, he added.
There is some skepticism about the 2015 timeline.
National Bank Financial analyst Cameron Doerksen sees service entry toward the end of 2015 "at the earliest."
Monday's orders come two days after Falko Regional Aircraft Ltd, a British lessor, signed letters of intent to buy up to 24 CS100 jets.
It was the first new commitment since February, when Abu Dhabi-based Falcon Aviation Services signed a letter of intent for one CS300 and an option for another. Falcon signed a firm purchase agreement for the two planes, worth some $153 million, Bombardier said on Monday.
Bombardier, which expects 300 firm orders when the CSeries enters service, said it has orders and commitments for 495 jets, with 203 firm orders.
(Reporting by Euan Rocha and Solarina Ho in Toronto and Sweta Singh in Bangalore; Editing by Maju Samuel, Lisa Von Ahn, Paul Simao and Cynthia Osterman)