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2015-02-03_11-04-20Bombardier secured an order with Chorus Aviation, which operates Jazz, a Canadian regional airline based in Halifax, for 13 Q400 aircraft with options for an additional 10.  These aircraft will operate under a capacity purchase agreement with Air Canada as Air Canada Regional.

Combined with an order for 5+10 Q400s from GE Capital on December 31st, the backlog for the Q400 is increasing again, after reaching low levels in 2013 that had analysts speculating on the future of the program.  Backlog for the program has now extended for more than 30 months at current production rates from orders in the last 12 months alone. And this excludes a Russian production deal currently stalled because of political issues.  If that 100 airplane deal survives the current political firestorm over the Ukraine, that would further solidify the program in the short term.

The new order means that Air Canada, WestJet and Porter will all be significant operators of the Q400 in Canada, where the speed of the Q400 provides a significant advantage over the competing ATR-72.

Two new variants for the Q400 were introduced last year, the 86 seat higher density version and the 50-seat Combi aimed at developing country markets, appear to have given some new momentum to the Q400 program.  Nonetheless, the Q400 remains behind ATR in sales and market share, with ATR having a lead in its native Europe and in Asian regional markets, which tend to be shorter distances than in North America, where the Q400 has an advantage.

The economics of the Q400 and ATR-72 are quite close, and depending on how the aircraft is operated. The larger and faster Q400 has higher costs per aircraft mile, but achieves lower seat mile costs with its higher density 86 seat configuration, as shown in the table below.


The chart below provides a visual comparison of cost per aircraft mile between the Q400 and ATR-72.

Chart 2

The chart below provides a visual comparison of operating costs per seat-mile between the competing turboprops

Chart 3

The Q400 is a larger and faster aircraft than the ATR, and has a higher list price of $33.6 million versus $24.6 million.  When capital costs are added to the equation, the aircraft are very close economically.  The decision for an operator then comes down to mission and the requirement for speed.  For missions that require higher capacity or faster speeds, the Q400 has an advantage.  For those that do not, the ATR may be better suited.

Since 3 February 2014, Bombardier has gained 61 firm orders and 14 options for the Q400, which adds 30 months of backlog to the order book.  A program that once looked moribund is steadily resurrecting.

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President AirInsight Group LLC

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