Philippine Airlines to buy Bombardier’s Q400
Bombardier says Philippine Airlines has signed a letter of intent to acquire up to 12 of its Q400 aircraft in a two-class seating design.
The turboprop planes, which are built at Toronto’s Downsview facility, would have an extra six seats for a total of 86, without changing the size of the plane.
“We are thrilled about the growing interest for the Q400,” said Bombardier spokeswoman Nathalie Siphengphet, who declined to give any timelines to firm up the order. “I can say all hands are on deck to make it happen.”
Philippine Airlines said in a news release it would set aside 10 seats for premium seating, as part of its efforts to become a five-star airline.
“How do airlines make money? More seats, more profits,” said Merv Gray, plant chair for Unifor Local 112, which represents the workers at the Bombardier plant.
And seats at the front of the cabin are even more valuable because those passengers are willing to pay a premium, he added.
Bombardier, which has struggled for years to launch the costly CSeries aircraft program, has been focused on reducing overall costs on other programs including the Q400.
Workers in Downsview agreed earlier this year to allow work on the cockpit and wings to be outsourced, likely to China and Mexico, in an effort to cut the price tag on the plane.
The proposal was contentious because it would eliminate 200 jobs in Toronto, and after initially rejecting the plan last year, workers then voted for it.
Bombardier’s Siphengphet said the company is at the request for proposal stage with suppliers to outsource the work. “We are always trying to be more competitive,” she said.
Gray acknowledged that it would be a big project that wouldn’t move immediately. However, he argued “the sooner you do this the better,” so Bombardier can be price-competitive with Italian-French company ATR, its rival in the turboprop market.
After years of delays, the CSeries jet began commercial flights this summer with Swiss Air Lines. The larger version of the jet is expected to be delivered later this year to launch customer Latvia’s airBaltic.
Due to the ballooning costs associated with the program, Bombardier asked both the federal government and the Quebec government for financial help.
Quebec put up $1 billion (U.S.) in exchange for a 49.5 per cent stake in the CSeries program.
Ottawa has been weighing whether to invest since last year, but this week, for the first time, Innovation Minister Navdeep Bains signalled that it was only a question of when.
“It’s not a matter of if we want to invest. It’s how we do make that investment,” Bains told reporters in Ottawa on Wednesday
“We don’t want to get a deal done for the sake of getting a deal done. We want to do the right thing. We want to be thoughtful. We want to be deliberate,” he said.
Bains made it clear that any deal will be focused on good quality jobs in Canada as well as maintaining a head office here.
But the main thorny issue is believed to be the governance structure of Bombardier, which makes both planes and trains. Under the current dual class structure, the Bombardier and Beaudoin families have voting control even though they only have a minority stake.
In September, Bombardier said it expected to deliver only seven of 15 planes this year, with the delay blamed on supplier Pratt and Whitney, which has had problems meeting engine deliveries.