Even though Bombardier has just won its biggest CSeries contract from Delta Air Lines for up to 125 jets, it is still looking for $1 billion (U.S.) in financial assistance from the federal government.

The jet program’s future is not dependent on cash from Ottawa, but Bombardier says the money would give it financial flexibility.

“We have done the plan using a conservative approach. It does not include any support or investment from the federal government,” said Bombardier president and CEO Alain Bellemare during a conference call with analysts on Thursday.

The order from Delta Air Lines Inc. gives Bombardier a badly needed stamp of approval for its 100- to 150-seat jet which is years behind schedule and billions over budget.

“This is a real big deal for us. It’s a turning moment,” said Bellemare at a joint news conference with Ed Bastian, Delta’s incoming CEO, in Montreal. “It’s a major endorsement for the CSeries.”

Based on list prices, the firm order of 75 planes is worth $5.6 billion (U.S.), although analysts have speculated that Bombardier offered Delta a steep discount, possibly half off or more.

“I suspect they got a great deal,” said George Ferguson, senior airlines and aerospace analyst at Bloomberg Intelligence, who called Delta a shrewd negotiator.

He corrected himself and said, “I know they got a great deal.” Ferguson pointed to Bombardier’s decision to take an “onerous contract” provision of $500 million (U.S.) special charge next quarter related to 127 new plane orders from Delta, Air Canada and Air Baltic.

“It tells me that Bombardier sold the CSeries for $4 million on average per plane less than what it costs to make,” Ferguson said.

But for Bombardier, the key was winning a firm order from a well-known U.S. carrier, in the hopes the order will spur others to consider the fuel-efficient jet, though it will eventually have to start charging more to make money.

Finding another Delta, which is willing to operate different aircraft fleets, and in need of many jets, would be hard to find, so that’s why this was a must-get for Bombardier, Ferguson said.

He added that many carriers are already locked into Boeing or Airbus planes and may be reluctant to switch to a new plane. That would have added training costs for pilots and mechanics, as well as capital costs for spare parts.

Ed Bastian, Delta’s incoming CEO, told reporters that the CSeries will fit nicely into the airline’s plans to replace aging smaller regional jets with larger planes. It could exercise its options for 50 more planes including the larger CS300 jets, which could replace its MD-80s.

Calling it a “capital efficient” deal, Bastian said pricing is always a very important part of any aircraft decision, given the planes will be used for 20 to 30 years. “The game changer for us on pricing and the economics was when we were able to get the price point that we could afford the operating characteristics,” he said.

In recent fleet renewal campaigns such as at United Airlines, Bombardier has repeatedly lost out to Boeing and Airbus for orders – the two enjoying a duopoly.

“This decision by Delta, in our opinion, brings Bombardier as a third competitor into the mainline aircraft marketplace with Boeing and with Airbus,” Bastian said. “We’re thrilled to be able to have that choice.”

The Delta order helps Bombardier reach an internal target of 300 firm orders by the time the CS100 jet begins commercial service, now slated for mid-July with Swiss Air Lines, a division of Lufthansa Airlines.

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Bastian said Quebec’s decision to invest in the CSeries program – $1 billion (U.S.) committed last October in exchange for a 49.5 per cent stake – helped to reassure the airline that the jet will be around for the long haul.

“It’s very important for us that Bombardier be here to continue to invest in the development of this aircraft,” he said, adding Delta is interested in the larger version of the aircraft and holds options to order more.

“We are thrilled with the fact that the Quebec government is an investor. It gave us a lot of confidence to be able step forward and make the decision,” he said.

“Because the last thing you want to do is take a financial risk around a big investment that we are making as a company, not just the manufacturer is making.”

Quebec Premier Philippe Couillard and Ontario Premier Kathleen Wynne have urged the federal government to invest in the CSeries program, though the federal Liberals have not tipped their hand yet.

Bellemare said discussions are continuing with the federal government, but “we haven’t found the right solution, but I’m hopeful we can find a win-win solution going forward.”

The talks have been going on for months with some news reports suggesting that Ottawa wants to attach conditions including changes to the dual class structure that gives Bombardier and Beaudoin family less influence.

Transport Minister Marc Garneau refused to weigh in on the state of talks saying only discussions are still ongoing, with Innovation Minister Navdeep Bains in charge of the file.

But he also congratulated Bombardier on the deal, and reiterated that he feels the CSeries is the best aircraft in its class.

“The discussion is still going on between Mr. Bains and Bombardier. It’s an active discussion and Mr. Bains will comment on it when a final decision is taken,” Garneau told reporters outside Parliament Thursday. “But I’m celebrating today a fantastic piece of news. This is a beautiful example of Canadian innovation (and) I couldn’t be happier for Bombardier.”

With files from Alex Boutilier

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