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Bombardier signs preliminary deals in Russia for Q400 NextGen

Published: 11:11 28 Aug 2013 EDT

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Bombardier (TSE:BBD.B) shares were on the rise Wednesday after the company's aerospace unit signed a series of preliminary deals in Russia to boost its presence in that market. 

Moscow-based leasing company, Ilyushin Finance Co., has signed a letter of intent to acquire 50 Q400 NextGen airliners. Should a definitive purchase agreement be reached, and based on the list price of the Q400 NextGen airliners, a firm contract for would be valued at approximately US$1.695 billion.

The airliners are intended to be assembled in Russia under a joint venture that would be created by Bombardier and Russian industrial and space conglomerate Rostekhnologii (Rostec) should potential industrial cooperation between these two parties, under a preliminary agreement announced earlier today, lead to the establishment of a Q400 NextGen final assembly line in Russia. 

The 50 airliners, together with further aircraft to be acquired by Rostec, make up a total of 100 Q400 NextGen aircraft that would be built in Russia for Russian customers, according to the release. A firm order for 100 Q400s, which were developed in Toronto, would be valued at about $3.39-million, Bombardier said.

"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,"  said director general of IFC, Alexander Rubtsov.

"We look forward to working with Bombardier and Rostec to reach a firm agreement for the aircraft in the near future."

All of the agreements were finalized during the 2013 International Aviation and Space Salon, the companies said, known as the MAKS 2013 Air Show held at Moscow's Zhukovsky Airport. 

President of Bombardier commercial aircraft, Mike Arcamone, added: "The LOI signed with IFC today is a testimony to the Q400 NextGen aircraft's suitability as well as its increasing diversity of customers and capacity to open new markets."

"We look forward to working with IFC and Rostec to help develop a modern aerospace cluster in Russia."

Shares of Bombardier, which has been stepping up Q400 sales efforts in Russia since winning certification there last year, climbed 1.3 per cent on Wednesday, to change hands at $4.63 in Toronto.

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