Bombardier customer ceases operations, putting regional jet orders at risk

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MONTREAL - Bombardier (TSX:BBD.B) may be forced to cut its production of commercial jets after an Italian airline's apparent demise raised concerns about orders by other customers, an analyst said Thursday.
Cameron Doerksen of Versant Partners said Bombardier's backlog of an estimated 120 regional jets excluding Italy's My Air, isn't large enough to sustain forecasted deliveries unless its wins new CRJ orders in the relative near-term.
"We believe that the CRJ production rate may have to be further reduced unless Bombardier receives new orders," he wrote in a report.
Italian authorities suspended the licence of the low-cost carrier over concerns about its financial ability to provide services. The airline, which has been trying for months to secure new funding, announced that it has stopped selling tickets.
Bombardier's firm orders for 15 CRJ1000s account for 23 per cent of the 64 total orders received for the new aircraft. The CRJ1000 is expected to receive certification and enter into service by December or January.
My Air operated four CRJ-900s and Airbus A320s on routes in Europe and North Africa.
Doerksen suggested the backlog for the CRJ1000 will be impacted if My Air can't find additional funding to resume operations.
Other major orders appear to be fairly safe. Air France subsidiary Brit Air has ordered 14 of the aircraft and Air Nostrum has 35 orders.
But, the My Air situation and increased risk that other airlines may seek to defer orders raises questions about the number of planes that will be delivered.
Bombardier delivered 56 CRJs in its last financial year and has indicated that its production rate will decline this year. Doerksen estimates the company will deliver 50 regional jets annually.
The recession has caused airlines to cancel or defer aircraft orders. Demand for business jets has also fallen.
Bombardier spokesman Marc Duchesne said it hasn't received any deferral or cancellations from My Air and wouldn't speculate on the impact of My Air's situation on commercial jet production.
"We cannot speculate on the outcome of My Air's situation and as more information becomes available we'll assess the situation and proceed accordingly," he said in an interview.

Organizations: Bombardier, TSX, Versant Partners Air France Brit Air Air Nostrum

Geographic location: MONTREAL, Italy, Europe North Africa

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