Parties Sign A Letter Of Intent For The Sale Of 50 Q400 Nextgen Aircraft For Russian Operators

Bombardier and Rostekhnologii (“Rostec”), a state corporation controlled by the Russian Federation, announced Wednesday that they have signed a series of preliminary agreements that include a letter of intent (LOI) for the sale of 50 Q400 NextGen aircraft; and a Market Development Agreement reached with Rostec and its aircraft leasing subsidiary, Avia Capital Services, that will provide an opportunity to place at least 50 additional Q400 NextGen aircraft in the region. The parties also concluded a memorandum of understanding (MOU) to validate the opportunity to set up a Q400 NextGen final assembly line in Russia.

The LOI, Market Development Agreement and MOU were signed at the 2013 International Aviation and Space Salon, known as the MAKS 2013 Air Show, held at Moscow’s Zhukovsky Airport. Should definitive agreements be reached, based on the list price of the Q400 NextGen airliner, a firm-order contract for 100 Q400 NextGen aircraft would be valued at approximately $3.39 billion US.

The establishment of a Q400 NextGen aircraft final assembly line in the Russian Federation, as outlined in the MOU, is a key commercial requirement of both the LOI and the Market Development Agreement. Under the MOU, Bombardier and Rostec will validate the opportunity to set up a Q400 NextGen final assembly line in Russia that would be managed by a joint venture between the two parties.
 
Should definitive agreements be reached, a Q400 NextGen aircraft final assembly line in Russia would produce aircraft for Russian customers and would be incremental to Bombardier’s current Q400 NextGen aircraft production operations in Toronto, Canada. Bombardier and Rostec are working towards definitive agreements to be concluded in 2014, subject to obtaining the required internal, governmental and third-party approvals, as well as other usual conditions.
 
“The implementation of this project with our potential partner, Bombardier, will contribute to the fleet renewal of our airlines, as well as to improve flight safety and reduce fares on regional routes. We are entering an important stage of validation towards formalizing the creation of this joint venture that will lay the foundation for the future of Russian turboprop aviation,” noted Alexey Fedorov, Managing Director, Aviation Projects, Rostec.
 
“We recognize this as a landmark opportunity for the Q400 NextGen aircraft program. This aircraft is ideally suited for airlines operating within the geographically diverse Russian Federation and the neighbouring regions where, together with Rostec, we are forecasting a 144 per cent growth in demand for 60- to 99-seat turboprops over the next five years,” said Mike Arcamone, President, Bombardier Commercial Aircraft. “Developing local roots in strategic markets is at the core of Bombardier’s strategic framework, and we have identified Russia as being key to our growth and sustainability. The agreements signed today are the next step towards ensuring our long-term competitive position in the Russian Federation and will help secure Rostec’s ongoing establishment of an aviation centre of excellence,” he added.

(Q400 pictured in file photo)

FMI: www.bombardier.com