MONTREAL (Reuters) - A recent trade decision allowing Bombardier (BBDb.TO) to sell its newest jets in the United States without hefty duties will boost airline confidence in the program, but the Canadian planemaker still faces challenges to win over lessors, Air Lease Corp (AL.N) Chief Executive John Plueger said on Wednesday.
Bombardier and European planemaker Airbus SE (AIR.PA), which plans to take a majority stake in the CSeries this year, still must convince leasing heavyweights that the 110-to-130-seat CSeries jets has a vast enough customer base to preserve their value and competitive pricing to win orders, Plueger.
Air Lease Corp is a major leasing firm with about $15 billion in total assets.
Last week, the U.S. International Trade Commission handed an unexpected victory to Bombardier against Boeing Co (BA.N). ITC commissioners voted 4-0 that Bombardier’s prices did not harm Boeing and discarded a U.S. Commerce Department recommendation to slap a near 300 percent duty on sales of the company’s CSeries jets for five years. The ITC did not give a reason immediately for its decision.
The decision “removes that very, very large question mark on the CSeries (imports) into the United States,” Plueger said by phone. “Bottom line: It’s a big positive for U.S. carriers, but I think it goes beyond U.S. carriers.”
Having an adequate customer base is vital for lessors, which want to make sure there is sufficient demand by airlines for multiple leases. The CSeries has a backlog of 372 firm orders.
Air Lease Corp did not order the CSeries in the past because “the price and the risk was not a good tradeoff,” when compared to Boeing’s 737 MAX line and Airbus’s A320 NEO family, Plueger said.
“Those two things have been a challenge,” Plueger said of the CSeries. “To the extent that Airbus’s ownership can help on those two points - customer base and price - that will be a positive. It remains to be seen on both of those points.”
Earlier on Wednesday, Boeing Chief Executive Dennis Muilenburg told analysts during a conference call that Boeing is waiting to see the reasoning behind the ITC’s ruling before deciding whether to take further steps in the trade case.
Reporting by Allison Lampert; Editing by Leslie Adler