China Development Bank's leasing arm, one of China’s top leasing companies, has agreed to provide up to $3.85bn of customer financing to Bombardier. With the signing of a memorandum of understanding today, the Canadian planemaker hopes to expand its business in China and the Asia-Pacific region.

CDB Leasing (CLC) will offer pre-delivery payment financing, delivery financing and leasing to customers of Bombardier CSeries, Q400 and CRJ aircraft.

The funding will be available to both Chinese and overseas customers.

“The financial resources of CLC put Bombardier in a stronger competitive position to recommend financing and leasing solutions for potential customers in China and elsewhere,” said Gary R. Scott, president of Bombardier Commercial Aircraft.

The planemaker expects to win orders for the all-new CSeries in China this year, Bombardier chief executive Pierre Beaudoin said last week.

Challenging

With the CSeries, Bombardier is pushing into the single-aisle jets market, challenging the dominance of Airbus and Boeing by marketing the CSeries as a more modern and fuel-efficient alternative. The plane will seat 110 to 149 passengers and is scheduled to begin commercial flights in 2013.

Wang Chong, chairman of CLC, said: “The benefits of the memorandum of understanding are mutual, as both CLC and Bombardier are constantly looking to satisfy the needs of airlines and operators seeking optimised aircraft solutions, particularly those offered by Bombardier.”

China Development Bank, Bank of China and Industrial & Commercial Bank of China have stepped up their activities in aircraft financing as aircraft orders from Chinese carriers have risen while US and European banks, still reeling from the credit crunch, have reined in lending. For example, CLC struck a $4bn financing deal for Airbus SAS customers in January.

Bombardier has also signed up Chinese suppliers as it seeks customers in China. Shenyang Aircraft, owned by state- owned Aviation Industry Corp. of China, won a contract to build fuselage sections for the planned CSeries in July 2008.

Pushing for new rules

Construction of the facility that will build the fuselage for the CSeries mainline commercial jetliner has begun in Shenyang. Two other new CSeries aircraft installations are already under construction.

News of the Bombardier-CLC deal in China came as Airbus and Boeing are pushing for new rules on aircraft finance. They argue that government support in aircraft sales should be the same for all planes, regardless of their size.

Government guarantees for bank loans to support aircraft sales currently depend on the type of plane being financed. Restrictions are tighter on larger planes, with more leeway for regional jets and turboprops. Bombardier wants to have its CSeries designated as a regional plane.

“We want a one-size-fits-all agreement,” Nigel Taylor, senior vice president in charge of aircraft finance at Airbus told Bloomberg. “You can’t have one claiming it’s a regional plane and another saying it’s a big jet, when they market them for serving the same market range,” he said, referring to the CSeries.