May 6, 2016 / 3:04 AM / 4 years ago

Bombardier pushes for airline talks, China breakthrough after Delta deal

MONTREAL/SINGAPORE (Reuters) - Boosted by a pivotal CSeries deal with Delta Air Lines (DAL.N), Canada’s Bombardier Inc (BBDb.TO) is rekindling sales talks with several U.S. and European carriers, even as it eyes China, the world’s fastest-growing aviation nation.

A Bombardier C Series aircraft is displayed at the Singapore Airshow at Changi Exhibition Center February 18, 2016. REUTERS/Edgar Su/File Photo

Montreal-based Bombardier is leveraging last week’s order for 75 of the 110-seater CSeries narrowbodies to renew contact with established Western carriers, while harboring mid-term plans to win a breakthrough order from Chinese airlines, company executives said.

The Delta deal, along with an expected firm order for 45 planes from Air Canada, give Montreal-based Bombardier the North American “anchor” it needs to bolster efforts globally, the company’s chief executive said in an interview with Reuters.

“I would say the focus (on China) has to increase,” Chief Executive Alain Bellemare said. “Clearly, this is a target market for us.”

The momentum has helped the company to “advance” its conversations with Chinese carriers, say company executives.

Chinese passenger traffic has grown by double digits over the last decade, and industry observers expect the country’s air travel market to remain buoyant despite any economic slowdown.

Airbus Group SE (AIR.PA) predicts the Chinese domestic market will leapfrog the United States as the world’s largest within 10 years.

Rising passenger traffic in cities away from the main hubs of Beijing, Shanghai and Guangzhou can help convince airlines to opt for the 110-150 seat CSeries planes, said Andy Solem, who oversees commercial aircraft sales in China.

“Trunk growth is slowing down, but we don’t play in those markets given the slot constraints in these hubs. There is growth outside these cities,” said Solem.

Boeing (BA.N) projects demand for 4,630 new single-aisle airplanes worth $490 billion in China over the next 20 years.

Smaller regional jets, however, are not as widely used in China as in North America, where they account for 20-25 percent of aircraft fleets.

Chinese airlines like Air China (601111.SS) , China Southern Airlines (600029.SS), China Eastern Airlines (600115.SS) and Hainan Airlines (600221.SS) also have hundreds of Airbus A320s and Boeing Co’s 737s on order.

Solem, however, points out that Chinese carriers also operate “several hundred” smaller A319s and 737-700s variants, and these are unlikely to be replaced by the larger variants of the Airbus and Boeing planes that have been ordered.

The CSeries will help the airlines to “right-size their fleets” with a more cost-efficient product, he added.

In China, Bombardier has not yet firmed up a 2014 letter of intent from China’s Zhejiang Loong Airlines Co Ltd to acquire 20 CS100 aircraft. CDB Leasing, a unit of the China Development Bank, also has a conditional purchase agreement for 15 planes.

The manufacturer is in talks with other Chinese airlines and leasing companies, which are becoming an important source of aircraft globally, and hopes to finalize orders “sooner rather than later”, said Solem.

He added that the CSeries’ imminent entry into service with launch customer Swiss International Air Lines will help, with airlines saying they want to look at its operating data and performance before making a commitment.

Airbus and Boeing have also increased their presence in China to get more sales. Airbus, for example, assembles A320s in Tianjin and both companies have plans to open cabin completion facilities in the country.

Bombardier manufactures some CSeries components in China, and Bellemare does not expect any imminent changes to the level of the company’s presence in the country.

“It’s critical for cost and it’s critical for market access,” Bellemare said. “When you work in China you develop relationships with Chinese leaders and that has tremendous benefits when you look at getting orders from local Chinese airlines.”

Reporting by Allison Lampert in Montreal and Siva Govindasamy in Singapore. Additional reporting by Tim Hepher in Paris; Editing by Stephen Coates

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