Lion Air CEO eyes new Bombardier jets, says airline could launch largest model

MONTREAL – The head of a growing Pacific Rim airline, which already describes itself as the world’s largest low-cost carrier, is interested in becoming the launch customer for Bombardier’s CS300 aircraft, the larger of the two fuel-efficient airplanes being developed by the Canadian aircraft manufacturer.

The CEO of Indonesia’s Lion Air said Thursday that he was pleasantly “surprised” by the aircraft after visiting the test plane in Mirabel, Que., and meeting with senior Bombardier (TSX:BBD.B) executives.

Rusdi Kirana said the plane was “beyond my expectations” and an aircraft of the future.

“This is making a big quantum leap for Bombardier, which normally makes quite normal aircraft, but this one was very special,” he said during a news conference with Indonesia’s transport minister.

The head of the private company said he could place a large order at the Farnborough Air Show in England next summer for deliveries beginning in 2015 or ideally in 2016. He said the CS300, which can be configured for between 135 and 160 seats, would fill a void between its 72-seat ATR turboprops and larger, 189-seat Boeings.

Bombardier spokesman Marc Duchesne confirmed the meeting but wouldn’t say if Lion Air could become the aircraft’s launch customer.

“We don’t disclose the production output or the delivery schedule publicly,” he said in an interview.

Backed by a growing middle class and plans to operate airlines in Indonesia, Malaysia and Thailand, Lion Air has more than 700 Boeing and Airbus aircraft on order valued at US$46.4 billion to join its fleet of more than 120 planes.

Kirana said the low operating costs and short runway capabilities of the CSeries make it ideal to service his vast and disparate island archipelago as well as neighbouring countries.

He asked Bombardier to send a team to Jakarta to work on which routes the plane could service. The two sides didn’t discuss the potential purchase price, but Kirana said he expects a good discount if the order is large enough.

Lion Air is already the global launch customer for Boeing’s 737-900 ER and 737 Max. It also has 234 Airbus A320 and A320neo planes on order.

Kirana didn’t want to directly criticize Bombardier but suggested that the company missed an opportunity to sell the Q400 before it chose to buy 60 ATR turbos and more recently to push the CSeries.

Bombardier refocused its sales efforts a couple of years ago to better compete in emerging markets that are expected to support the growth of global aviation over the next 20 years. Duchesne said Lion Air’s visit to Bombardier’s test centre was the result of contacts from its sales office in Asia.

“Definitely we’ve been in touch with them,” he said.“We are definitely present in the emerging markets and our strategy is to capture these emerging airlines that are serving these emerging markets.”

Bombardier’s smaller CS100 aircraft had its maiden flight last week. The company plans to test the aircraft over the next 12 months before it begins deliveries. The CS300 is expected to enter into service about six months later.

The manufacturer expects to have 300 firm orders by the time the first aircraft is delivered. It currently has 177, including 114 for the CS300. The largest customers are Republic Airlines, with 40 firm orders, and Russian leasing company Ilyushin, with 32.