PARIS – Philippine Airlines placed a firm order for 7 Bombardier Q400 turboprops at the Paris Air Show Monday, growing its order book for the 86-seat regional plane to 12 aircraft in all.

The order is a conversion of purchase options taken by Philippine Airlines when it placed its initial Q400 order in December 2016 and is worth roughly $235 million at the Q400’s current list price. Philippine Airlines is yet to take delivery of any of its Q400s on order – the first dual-class Q400 will be delivered in July 2017.

“As we position ourselves for growth, we are pleased to be adding more Q400 to our fleet,” said Jaime J. Bautista, President & Chief Operating Officer, Philippine Airlines. “We are thrilled about the opportunities that lie ahead, and we look forward to offering more capacity and improving connectivity in the region with comfortable, fast and efficient regional aircraft like Bombardier’s 86-seat turboprops.”

“The Q400 aircraft have helped airlines around the world expand their networks, and capture new opportunities,” said Fred Cromer, President, Bombardier Commercial Aircraft. “We are delighted that Philippine Airlines is growing its fleet with more Q400 aircraft, and are confident that the airline will benefit from the aircraft’s outstanding economics and performance.”

Bombardier faces down lukewarm turboprop market

The order from Philippine Airlines will maintain the Q400’s backlog at 27 aircraft by the end of Q2 2017. This stands in marked contrast to ATR, which has a backlog of more than 250 aircraft after purchases from Chinese customers for the ATR 42-600  are taken into account and the expected announcement of an order for 50 ATR 72-600s from Indian ULCC IndiGo.

Purchase options stand at more than 400 for ATR against less than 10 for Bombardier. Bombardier is barely a player in the turboprop market today, mainly winning orders from existing Q400 customers. Meanwhile, ATR continues to win blockbuster orders like the one from IndiGo.

At present production levels, Bombardier has just a year’s worth of Q400 sales left and no clear customers left in the pipeline. The problem for Bombardier is the lukewarm market for turboprops combined with its own cost inefficiencies relative to the ATR 72.

In an environment of high fuel prices, the cost savings of the Q400 relative to regional jets make it attractive to customers. But when fuel prices are low, customers’ natural dislike for turboprops pulls sales away. The few turboprop customers that remain will all tend to prefer the lower acquisition and operating costs of the ATR 72.

Bombardier at this point is a one-plane company. The CRJ program is soon to be lapped by Embraer’s re-engined E175-E2 and Mitsubishi’s MRJ and is left hoping for a scope clause triggered redesign for those two programs to win incremental orders for its CRJ-900.

The Q400 as outlined above is functionally dead. So what’s left is the CSeries small mainline jet, and given the recent trade action in the United States that could threaten a fifth of Bombardier’s CSeries backlog, Bombardier should be very, very worried about that state of affairs.