The Latvian flag-carrier airBaltic has signed a deal to buy 10 of Canadian manufacturer Bombardier’s new CS300 planes, with an option to double the number ordered.
The accord follows July’s signing of a letter of intent at Britain’s Farnborough air show, a major event in the aviation industry calendar. Based on the list price of the CS300 airliner, the firm order contract is worth approximately $764 million (Dh2.8 billion) and could increase to $1.57 billion should state-controlled airBaltic exercise its right to purchase 10 more planes.
“A modern and efficient fleet is one of the fundamentals of the airline business and this order is a progressive and exciting move forward for us,” airBaltic’s German chief executive Martin Gauss told reporters in Riga.
The first Bombardier CS300 aircraft are due to enter service in late 2013, though airBaltic’s first delivery will not arrive until late 2015. The 130-seat fuel-efficient plane aims to compete with similar upgraded single-aisle aircraft being produced by Bombardier’s main rivals, Boeing and Airbus.
To date, Bombardier has booked firm orders for 138 CSeries airliners, with clients including Korean Air and the German carrier Lufthansa. Latvia’s airBaltic, which operates flights from its Riga hub to more than 60 destinations worldwide, is in the process of restructuring.
It recorded a loss of €100 million in 2011 and expects to lose another €50 million this year, but says its shake-up should return it to profitability by 2014.
Its current fleet comprises two Boeing 757s and 14 Boeing 737s, as well as eight Bombardier Q400s and 10 Fokker 50s. The airline was founded in 1995, four years after Latvia regained independence from the crumbling Soviet Union.
Since the nation of two million joined the European Union in 2004, airBaltic has won a reputation as a low-cost regional force. In December 2011, the state raised its stake to 52 percent to 99 percent to save the airline from possible insolvency following the collapse of two of its main creditors, Baltic banks Krajbanka and Snoras.