Bombardier and Russian Federation state corporation Rostekhnologii (‘Rostech’) have signed a series of preliminary agreements that could see a final assembly line for the Q400 NextGen set up in Russia to produce at least 100 of the turboprop regional airliners for customers there.
The preliminary agreements include a letter of intent (LOI) for the sale of 50 Bombardier Q400 NextGen turboprops and a market development agreement (MDA) reached with Rostech and its aircraft leasing subsidiary, Avia Capital Services.
Meanwhile, the MDA will provide an opportunity to place at least 50 additional Q400 NextGen aircraft in the region.
This opportunity will come through Moscow-based leasing company Ilyushin Finance Co., which has signed a letter of intent to acquire 50 Q400 NextGens. If Bombardier’s preliminary agreements with Rostech are firmed up, these aircraft would be assembled in Russia under a joint venture which would be created by Bombardier and Rostech.
Bombardier and Rostech have also concluded a memorandum of understanding (MOU) to validate the opportunity to set up a Q400 NextGen final assembly line in Russia, which if constructed would be managed by the prospective joint venture between the two companies.
The LOI, market development agreement and MOU were signed on August 28 at the MAKS 2013 Air Show, held at Moscow’s Zhukovsky Airport. Should definitive agreements be reached, a firm order for 100 Q400 NextGens would have a list-price value of approximately US$3.39 billion.
Should definitive agreements be reached, a Q400 NextGen final assembly line in Russia would produce the turboprop regional airliners for Russian customers and would be incremental to Bombardier’s current Q400 NextGen production operations at Downsview in Toronto.
Bombardier and Rostech 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,” says Alexey Fedorov, managing director, aviation projects for Rostech. “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.”
“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 neighboring 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,” says Mike Arcamone, president of 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,” adds Arcamone. “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 center of excellence.”
“Our intent to purchase 50 Q400 NextGen aircraft and our recent firm order for 32 Bombardier CS300 aircraft will provide local operators with the potential to expand regional travel with aircraft that are complementary to the latest Russian-built aircraft which illustrates our strategy to find the best portfolio of products for our customers,” says Alexander Rubtsov, director general of Ilyushin Finance Co.
“The Q400 NextGen aircraft’s excellent fuel efficiency and operational costs; interchangeability with jet service; comfort and outstanding environmental qualities make it an ideal choice for diverse operations across Russia’s vast landscape,” adds Rubtsov. “We look forward to working with Bombardier and Rostech to reach a firm agreement for the aircraft in the near future.”
More than 120 Bombardier commercial aircraft are now in service in Russia and the Commonwealth of Independent States (CIS). Over the next 20 years, Bombardier forecasts a market demand of approximately 400 aircraft in the 20-to-99-seat market in the region.
In yet another demonstration of its growing relationship with Russia and the Commonwealth of Independent States (CIS), Bombardier has also announced its intention to enter into exploratory discussions with Russian aircraft manufacturer Irkut Corporation on potential strategies and collaboration for providing customer support.
Exploratory discussions would focus on the development of Irkut’s customer-support infrastructure within Russia based on Bombardier’s customer-support model and would also explore areas of knowledge sharing and potential future areas of collaboration.
Irkut’s 150-to-212-seat MS-21 commercial airliner is currently in development and is scheduled to enter into service in 2017.