airBaltic takes a bold step with its new jet aircrafts

21.08.2012, 16:33

The Latvian national carrier airBaltic has announced which jet aircraft it plans to buy for its fleet renewal project, reports news2biz LATVIA.

Faced with a choice between Airbus and Boeing, it has decided to go for the Canadian manufacturer Bombardier Aerospace. It has signed a letter of intent to purchase ten Bombardier CS300 planes and take purchase rights on ten more aircraft.

The ten planes have list value of USD 764m, and if the airline purchases additional ten planes, the contract would reach USD 1.57bn, although the contract price would be lower than that. airBaltic would also be able to receive funding for the new planes: up to 85% through Canada's export credit agency Export Development Canada (EDC).

The airline's choice has already drawn criticism because of one important detail: the Bombardier CSeries planes are still in the development stage, with the first flight planned for December 2012.

Sceptics have raised doubts whether the new airplanes can indeed deliver all the promised fea-tures. Since the aircraft is still in development, the delivery time also is quite long: the planes would enter service in airBaltic's fleet in late 2015. The airline has stated that it plans to return to profits in 2014, and fleet renewal with modern and economical airplanes has been cited as one of the key elements of this plan. Moreover, the airplane project has already faced some delays: its first flight has been moved from second half of 2012 to December 2012.

Aircraft's specifications have also been questioned. It is a medium-range aircraft with maximum range of 5463 km. Although the range is adequate for airBaltic's current des-tinations, this would mean that airBaltic cannot grow beyond a regional airline.

On the plus side, the fact that CS300 is a completely new aircraft means that it has many advanced features which could give airBaltic an edge over its competitors. Although specifications could change, the aircraft currently is planned to weigh 5443 kg less, have 15% lower maintenance costs and 20% lower fuel consumption than other comparable aircraft.

airBaltic is not the only one to trust Bombardier: airlines like Lufthansa and Korean Air have also booked CSeries airliners.

airBaltic already operates eight Bombardier Q-400 NextGen aircraft. The new planes are called to replace its aging Boeing aircraft, a total of 14 planes.

Earlier this month, airBaltic also announced its operational results for the first half of 2012. Its turnover reached LVL 104.7m, a 6% drop y-o-y, and its losses stood at LVL 23m. airBaltic has cut its flights by 15% and carried 11% less passengers.

As July and August are the best months for airline business, the airline believes that it will be profitable in these months. It would return to losses during autumn and winter.
Even though the losses are still large, the airline points out that they are smaller than initially planned.

It now estimates that its 2012 losses will reach LVL 33m, not LVL 38m as initially planned. This would be a huge improvement from the LVL 83.6m loss in 2011.