June 6, 2018 / 7:25 AM / 2 months ago

Air Baltic's hurry for Bombardier CSeries deal foreshadows jet selling spree

SYDNEY, June 6 (Reuters) - Latvia-based AirBaltic hastened a deal for Bombardier CSeries planes before Airbus formally takes over the Canadian planemaker because it was worried about securing the right delivery slots, the carrier's chief executive said on Wednesday.

Airbus agreed to buy a majority stake in Bombardier's troubled CSeries jetliner program in October last year after the high-tech plane failed to win enough buyers.

While the Airbus backing gives the CSeries financial stability, most industry sources have said potential customers are waiting for the deal to close before placing orders.

But Air Baltic's move to buck the trend suggests some assume Airbus will speed up sales once the deal closes.

"We could have waited, but we were of the opinion that we better buy them now to secure these (delivery) positions, not to risk that after the takeover somebody else takes (them)," Martin Gauss told Reuters at a CAPA-Centre for Aviation conference.

"That was, for us, the rationale to say, 'Let's close it now,' because we need the first two aircraft at the end of 2019."

Air Baltic's firm order for 30 CS300 aircraft, announced last week, is part of a strategy to move to a harmonised fleet and boost traffic and revenue by 2025.

The order included options for a further 30 aircraft, potentially taking the fleet to 80 jets by 2025.

"If Airbus sells more in the future then they would have maybe wanted to sell the slots which we have now secured for ourselves," Gauss added, referring to the expected pick-up in orders once the takeover is completed.

One issue for the CSeries' second largest customer is that Air Baltic doesn't know what the plane will be called after the takeover. Industry sources say Airbus is considering renaming it the A200, although a decision has not been reached.

"I have no idea what our aircraft will be called next week. They said they will send stickers to Riga," Gauss told CAPA delegates.

The carrier mainly flies Bombardier Q400 turboprop planes and Gauss said that on routes such Riga to Brussels, operating costs are 57 percent lower with the C Series, as it can carry more passengers, fly faster and has more efficient engines.

Air Baltic has not yet decided how to finance the planes.

"As it is now, it will be a mixture of financed aircraft on the balance sheet and sale-and-leaseback," he said. "We will decide as we go along." (Reporting by Victoria Bryan; Editing by Tim Hepher and Clarence Fernandez)

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