August 28, 2013
Bombardier and Russia’s Rostekhnologii execute series of agreements at MAKS 2013 Air Show
Bombardier and Rostekhnologii (“Rostec”), a state corporation controlled by the Russian Federation, signed a series of preliminary agreements that include a letter of intent (LOI) for the sale of 50 Q400 NextGen aircraft; and a Market Development Agreement reached with Rostec and its aircraft leasing subsidiary, Avia Capital Services, that will provide an opportunity to place at least 50 additional Q400 NextGen aircraft in the region. The parties also concluded a memorandum of understanding (MOU) to validate the opportunity to set up a Q400 NextGen final assembly line in Russia. The LOI, Market Development Agreement and MOU were signed at the 2013 International Aviation and Space Salon, known as the MAKS 2013 Air Show, held at Moscow’s Zhukovsky Airport. Should definitive agreements be reached, based on the list price of the Q400 NextGen airliner, a firm-order contract for 100 Q400 NextGen aircraft would be valued at approximately $3.39bn.
The establishment of a Q400 NextGen aircraft final assembly line in the Russian Federation, as outlined in the MOU, is a key commercial requirement of both the LOI and the Market Development Agreement. Under the MOU, Bombardier and Rostec will validate the opportunity to set up a Q400 NextGen final assembly line in Russia that would be managed by a joint venture between the two parties. Should definitive agreements be reached, a Q400 NextGen aircraft final assembly line in Russia would produce aircraft for Russian customers and would be incremental to Bombardier’s current Q400 NextGen aircraft production operations in Toronto, Canada. Bombardier and Rostec are working towards definitive agreements to be concluded in 2014, subject to obtaining the required internal, governmental and third-party approvals, as well as other usual conditions.