Bombardier beats out Embraer for $2.6-billion deal with Northwest Airlines

Canada's Bombardier (BBD.b)announced Monday it has landed a $2.6-billion deal to sell 75 of its popular regional jets to Northwest Airlines.

In securing the deal with Northwest, Bombardier beat out one of its main competitors, Embraer SA of Brazil.

Northwest has also taken options and purchase rights on an additional 175 aircraft.

The deal involves a 44-seat variation on Bombardier's 50-seat CRJ200. Northwest has an option to substitute the 50-seat jets instead of the 44-seat model.

"We are delighted to have been successful in this rigorous evaluation," Steven Ridolfi, the president of Bombardier Regional Aircraft, said in a release.

"We value Northwest's business and are very proud of their continued confidence in our company and in our products," he said.

Bombardier is slated to begin delivering the aircraft to Northwest in the third quarter of 2002, extending to 2005.

The aircraft maker said its orderbook, including today order from Northwest, now totals 2,510 524 delivered, 651 on firm order backlog and 1,335 conditional orders and options, Michael Graff, the president and chief operating officer of Bombardier Aerospace, said.

In February 1999, Northwest ordered 54 CRJ200 aircraft. Twenty of those aircraft have been delivered with the remaining 34 aircraft to be delivered over the next three years.

Bombardier's main competitor for the Northwest contract was Embraer. The two companies are locked in a long-standing feud over government subsidies.

Embraer is reported to have offered more than $1 billion in low-interest loans to Northwest in a bid to land the contract. Bombardier, in turn, sought money from the Canadian government to help it secure the deal.

Bombardier and Embraer's dispute has gone to the World Trade Organization, which ruled last month that Brazil's financing program, dubbed Pro-ex, is not in violation of international trade rules.

However, the WTO said the program is open to abuse when it comes to the sale of the regional jets. Some new conditions have been attached to the program, but challenges to the program are going to be judged individually.

"Both Bombardier and Embraer competed vigorously for this order and both provided Northwest with very favorable offers," Greg May, Northwest's vice president of aircraft transactions, said. "In the end, the Bombardier offer provided better overall value to the company," he said.

"Bombardier has arranged for lease financing to be provided for each of the aircraft on favorable terms," added Dan Matthews, Northwest's senior vice president and treasurer.

Northwest plans on subleasing the aircraft to one or more regional airline carriers, he said.