Bombardier to sell 100 Q400 planes to Russia

Canada’s Bombardier and Russia’s Rostec State Corporation have signed agreements on 100 turboprop Q400 NextGen planes, as well as on the establishment of a joint venture to assemble such aircrafts in Russia. The documents were signed at the MAKS- 2013 air show. In compliance with the contract, the Avia Capital Services leasing company (a Rostec subsidiary) will ensure the delivery to Russia of 50 Q400 NextGen planes built in Canada. The agreement will become a firm contract only after the establishment of a joint venture to assemble such planes in Russia. At least 50 of the aircrafts would be assembled using Russian capacities. Russia’s leasing company Ilyushin Finance and Bombardier signed an agreement on these planes. It specifies that the aircrafts would be purchased from the Canadian-Rostec JV. If definitive agreements are reached, an order for 100 Q400s would be worth about $3.39 billion based on list prices, Bombardier reported. Establishing the assembly line “is a key commercial requirement” of both preliminary aircraft deals, Bombardier said. The parties are aiming to reach definitive agreements next year, it stated. “Developing local roots in strategic markets is at the core of Bombardier’s strategic framework, and we have identified Russia as key to our growth and sustainability,” Bombardier said in a statement. The joint venture will be established on a parity basis, Rostec stated. During 2014 the corporation will invest $100 million in the construction of a plant in the Ulyanovsk port special economic zone. Bombardier would contribute to the JV intangible assets its technology, design documentation and intellectual property rights. During the first year the planes will be built in Canada, and then in Ulyanovsk they will be adapted for a particular customer. However, starting from 2015, Rostec plans to fully localize the assembly, and in 2016 intends to start the production of airframe components in Russia. The Russian plant’s capacity will be 24 aircrafts per year. According to Rostec, Russian and CIS airlines before 2030 will need about 250 aircrafts of this type. Q400 is a turboprop plane with a capacity of up to 78 seats. Its range is 2.5 thousand kilometers. The plane’s catalogue price is about $30 million.