Aeromexico mulls C Series order as Delta faces tariffs

Bloomberg

Grupo Aeromexico SAB is considering an order of Bombardier Inc. C Series jets, taking aircraft that would be available next year if US tariffs thwart deliveries to Delta Air Lines Inc., people familiar with the matter said.
Mexico’s largest carrier is also considering short-range planes from Brazil’s Embraer SA and Japan’s
Mitsubishi Aircraft Corp. instead, said the people, who asked not to be named because the talks are private. There’s no guarantee the discussions will lead to an aircraft order.
Landing Aeromexico as a customer would be a boon to Bombardier, which has struggled to find buyers for its marquee jetliner. A deal would also help the Canadian planemaker fill gaps in its production schedule after the Trump Administration imposed 300 percent tariffs on the C Series in a trade case initiated by Boeing Co. Delta has vowed not to pay the duties on the aircraft it was due to start receiving next year, preferring to wait for a US-made version.
While Delta owns 49 percent of Aeromexico, the US carrier isn’t driving its partner’s fleet plans, the people said. The Mexico City-based airline is interested in the C Series regardless of what happens with Delta’s order. Aeromexico is also studying the
E195-E2 from Embraer, which currently provides the carrier’s regional jets, along with Mitsubishi’s MRJ aircraft, they said.
Aeromexico, Delta as well as the three aircraft manufacturers declined to comment.

Travel Demand
The size of Aeromexico’s potential order remains uncertain, ranging from as few as 15 planes to as many as 60, one of the people said.
The carrier is looking to receive the first planes by late 2018 or early 2019, and would use them to replace its
Embraer E170 regional jets and fuel growth in the region, the person said. That timetable would be ahead of the first delivery of Mitsubishi’s MRJ, slated for 2020.
Mexico’s air traffic is expanding as Aeromexico competes with discount carriers such as Volaris and VivaAerobus, which fly Airbus SE planes.
Mexico’s air passengers climbed11 percent through the first 10 months of 2017 after a 10 percent gain in 2016, according to government data.
Adding a C Series order from Aeromexico would extend a recent string of successes for Bombardier since it agreed in October to cede control of the aircraft programme to
Airbus in exchange for the European planemaker’s marketing heft and manufacturing expertise.
Bombardier also agreed to
help fund a second final assembly line for the jets in Mobile, Alabama,
where Airbus manufactures narrow-body planes.
Bombardier in November 2017 announced that EgyptAir Airlines Co. had signed a letter of intent to buy at least 12 aircraft. The manufacturer also reached a 31-plane pact with an unidentified European customer.
Before that, Bombardier hadn’t sealed a major C Series sale since Delta ordered 75 planes in April 2016, a $5.6 billion deal that was later contested by Boeing.

Airbus Opening
One C Series deal with Aeromexico would provide Airbus’s sales team with an opening at a carrier that has long favoured Boeing. Aside from the Embraer aircraft it operates, Aeromexico exclusively flies a Boeing lineup that includes the 777 and 737-800. The Airbus-Bombardier partnership is expected to close in late 2018.
If the tariffs remain in place, Delta intends to take C Series jets built in the US, Greg May, Delta’s senior vice president of fleet strategy, said at an International Trade Commission hearing. That makes the deliveries a longer-term prospect. Airbus isn’t expected to begin work on the new Alabama facility until the joint venture gains regulatory approvals.