MONTREAL - A flourishing California business aviation company has helped Bombardier Aerospace notch its largest ever business contract, an order of up to 80 Challenger 300 jets worth $1.9 billion by the end of 2012.
Xojet has ordered 20 super-midsize Challenger 300s for $450 million, and has options for 60 more to be delivered over the next five years, the companies announced Tuesday.
"It's one of the largest, if not the largest business aviation deals ever,'' Xojet CEO Paul Touw said in an interview. "It's a pretty substantial order and we're pretty excited about it.''
Deliveries are scheduled to begin in the fourth quarter of fiscal 2008. Xojet will finance the purchases independently and not through Bombardier, Canada's only aircraft manufacturer and one of the biggest makers of business jets in the world.
The large order is not expected to have an impact on production rates or employment at the aerospace company, which employs thousands of Canadian workers at plants in Montreal and Toronto.
"The order creates a security for the backlog,'' Bombardier spokeswoman Danielle Boudreau said from Atlanta, where Bombardier is participating in a business air show.
"Since we've been in discussions with Xojet for over a year now, out of good faith we have allotted time slots within our production line already.''
The planes are assembled in Montreal after receiving the forward section of the fuselage, including the cockpit and primary flight controls from Bombardier operations in Montreal and the centre fuselage from Belfast. Company officials couldn't say how many employees work on the aircraft.
Other components are supplied by Mitsubishi Heavy Industries, AIDC of Taiwan and Hawker De Havilland of Australia.
Touw said he has been eyeing the Bombardier plane since it came into service three years ago. He has visited the factory floor in Montreal several times but knew he wanted the planes even before he spoke with company officials.
Xojet sought an aircraft designed to commercial airline standards because of the heavy use that is expected in the expanding business jet market in the United States.
More than 169 Challenger 300 aircraft have been built, with 144 in service worldwide. The backlog is full until early 2011.
There are more than 10,000 business jets in the skies, an increase from about 6,000 in 2000.
Xojet provides private jet ownership, leasing and on-demand travel for frequent business jet flyers.
Last year, the company completed more than 10,000 flight hours for Fortune 500 corporate customers, financial institutions and the super-rich.
Founded in 2001, it has been named one of the 500 fastest-growing private American companies and its revenues soared to US$36 million in 2006, up from $2.4 million in three years.
The company's business model allows it to offer service at a lower cost. Unlike fractional programs, Xojet's model only charges direct operating costs for the hours the jet is in use.
Most of its customers fly more than 300 hours per year.
Touw said he selected the Challenger 300 over competitors because of its superior track record, operational data and great ramp appeal.
"It's a great looking plane. People kind of joke at me about that but the reality is it is important that airplanes cosmetically look good, just like it's important to people that a car looks good or a boat or a yacht or a house.''
The eight to nine-seater cruises at about 850 kilometres per hour and can fly across the United States in five hours.
While slower than the two-seater Cessna Citation X's the company now has in service, it will be much roomier. Xojet's fleet of 12 planes will increase to 17 by the end of the year.
