Bombardier announced a series of preliminary agreements in Russia, including a potential order for 100 Q400 turboprops from Rostec, Russia’s state owned Rostechnologii aviation company, as well as a joint venture for final assembly work on Q400 aircraft in Russia.

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The Q400 has been lagging its competitor ATR in sales this year, with a dwindling backlog of aircraft.  This order will provide provide Bombardier some breathing room and cash flow until the CSeries aircraft begin deliveries.

The Russian market has become quite important to Bombardier, which has placed 120 aircraft in Russia and surrounding countries, and has a large CSeries order from Ilyushin Capital.  This order for 100 aircraft, half of which will be supported by Ilyushin Finance, and half by Rostec’s Avia Capital Services, will finance aircraft for operators in the region.

More importantly, a joint venture agreement has been signed that will see final assembly of Q400s in Russia by Rostec.  The work performed in Russia would be incremental to the work currently performed in Toronto, and be for Russian customers.  Mike Arcamone, President of Bombardier Commercial Aircraft, said that “developing local roots in strategic markets is at the core of Bombardier’s strategic framework, and we have identified Russia as being key to our growth and sustainability.”

The companies are working toward a definitive agreement that will be completed in 2014, subject to internal, government, and third party approvals.  Alexy Fedorov, Managing Director of Rostec’s aviation project, said “the implementation of this project with our potential partner, Bombardier, will contribute to the fleet renewal of our airlines, as well as to improve flight safety and reduce fares on our regional routes.  We are entering an important stage of validation towards formalizing the creation of this joint venture that will lay the foundation for the future of Russian turboprop aviation.”

While the agreements have not yet been finalized, when completed the Q400 orders would be valued at $3.39 billion at list prices.

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