Bombardier looks for C Series lift at Paris air show
Tags: Bombardier
BOMBARDIER BStock data delayed up to 20 minutes
$2.48
$0.01
0.4%
chart type: 1year, Comparative
Bombardier Inc. (BBDb.TO 0.4%) is playing down expectations it will announce a swell of new orders for its new C Series airliner at the Paris air show next month as market skepticism lingers over the company’s existing order book for the plane.
The Montreal-based manufacturer also confirmed it will weigh whether to build a third C Series model larger than the existing two models in the aircraft family – one that would compete more squarely against the bread-and-butter single-aisle airliners by Boeing and Airbus. The company stressed however, that it is not working on an analysis of such a plane at the moment and that it’s premature to talk about the specifications of the jet.
Industry watchers are zeroing in on the one-week Paris event, the aerospace sector’s largest annual trade show, as a crucial opportunity for Bombardier to rebuild confidence in its plane-making business over all after it was forced to suspend its Learjet corporate jet program earlier this year and reported its first annual loss in nearly a decade. Consultants such as Rolland Vincent, based in Plano, Texas, and a former Bombardier executive, say the company faces a “dark week” if it stumbles through the June 15 show without unveiling any significant orders, particularly for the C Series. Bombardier, however, rejected suggestions it’s a make-or-break event.
“I don’t think the future of the company is dependent on a single air show,” Bombardier’s new commercial aircraft boss, Fred Cromer, told The Globe and Mail on Friday. “Negotiations [with buyers] are going to take the time they’re going to take. To sort of force everything to be complete by Paris is not always the best strategy.”
Bombardier’s big bet to fuel revenue over the next decade, the C Series, is more than two years late to market and some $2-billion over initial budget. Despite the setbacks, company executives are enthused by the way the aircraft flies, saying it is meeting or beating a number of performance markers. The 125-seat CS100 model is now advancing through flight testing with regulatory certification expected by the end of 2015. The larger CS300, which can accommodate as many as 160 passengers, is expected to follow later.
Mr. Cromer came to Bombardier barely five weeks ago in the aftermath of a senior leadership change at the company that saw Pierre Beaudoin cede the chief executive role to aerospace veteran Alain Bellemare in February. Mr. Cromer’s career path includes a six-year stint at the world’s biggest aircraft lessor, International Lease Finance Corp. Before that, he held executive positions in finance and fleet planning at several U.S. airlines including ExpressJet and Northwest, which merged with Delta Air Lines.
As an airline and leasing executive, Mr. Cromer said he “always hated” being pressured by aircraft manufacturers to finalize a potential plane sale so they could announce it at a big air show. Now he’s on the other side of the table.
“Obviously we would love to get as much attention as we can with a lot of order activity but at the same time I think we’re as focused on highlighting where we are in [the C Series] program,” he said. “Paris really for us is an opportunity to showcase the planes.”
Bombardier will have both current C Series models on hand in France, with one jet flying and the other on the ground to demonstrate various interior configurations. Although the company has held invite-only viewings for the first flights of both C Series models, it will be the first time it shows the plane to a wider audience.
The plane maker has booked 243 firm orders for the C Series but needs to generate new business from well-established airlines to build credibility in the program for both customers and investors, National Bank Financial analyst Cameron Doerksen said in a May 21 note. Questions remain over Bombardier’s existing order book for the aircraft with at least one customer, Russia’s Ilyushin Finance Co., warning in April that it is reconsidering its existing order for 32 CS300s over Canada’s refusal to help finance the purchase as part of economic sanctions against Russia.
Questions also persist about whether Bombardier will move to build a larger version of the C Series, possibly a 160-seat to 180-seat plane called the CS500 that would more directly rival current and upcoming models in Boeing’s 737 and Airbus’s A320 families. A CS500 would most closely compete with Boeing’s current 737-800 model, which seats 189 people in one-class layout, said Canaccord Genuity analyst David Tyerman.
“The economics of stretching an airplane have been pretty attractive, such that [manufacturers] have pursued that strategy,” said Mr. Cromer. “We’ve got a pretty strong platform. Maybe it’s a possibility in the future.” He said the company needs to do more testing on the two existing models to establish the opportunities for a larger model.
Having a larger plane gives Bombardier an opportunity to address the needs of airlines more completely by offering them three jets spanning 100 to 180 seats, Mr. Tyerman said. That in turn could make airlines more willing to consider the C Series as it addresses carriers’ desire for fleet commonality.
“Bombardier historically has avoided the model 500 discussion because it puts it in direct competition with the heart of the Boeing and Airbus model lineup and I think they felt that might be very difficult to compete with,” said Mr. Tyerman. “There are all new people there now. So maybe we’re getting a change of view on that topic.”
The Montreal-based manufacturer also confirmed it will weigh whether to build a third C Series model larger than the existing two models in the aircraft family – one that would compete more squarely against the bread-and-butter single-aisle airliners by Boeing and Airbus. The company stressed however, that it is not working on an analysis of such a plane at the moment and that it’s premature to talk about the specifications of the jet.
Industry watchers are zeroing in on the one-week Paris event, the aerospace sector’s largest annual trade show, as a crucial opportunity for Bombardier to rebuild confidence in its plane-making business over all after it was forced to suspend its Learjet corporate jet program earlier this year and reported its first annual loss in nearly a decade. Consultants such as Rolland Vincent, based in Plano, Texas, and a former Bombardier executive, say the company faces a “dark week” if it stumbles through the June 15 show without unveiling any significant orders, particularly for the C Series. Bombardier, however, rejected suggestions it’s a make-or-break event.
“I don’t think the future of the company is dependent on a single air show,” Bombardier’s new commercial aircraft boss, Fred Cromer, told The Globe and Mail on Friday. “Negotiations [with buyers] are going to take the time they’re going to take. To sort of force everything to be complete by Paris is not always the best strategy.”
Bombardier’s big bet to fuel revenue over the next decade, the C Series, is more than two years late to market and some $2-billion over initial budget. Despite the setbacks, company executives are enthused by the way the aircraft flies, saying it is meeting or beating a number of performance markers. The 125-seat CS100 model is now advancing through flight testing with regulatory certification expected by the end of 2015. The larger CS300, which can accommodate as many as 160 passengers, is expected to follow later.
Mr. Cromer came to Bombardier barely five weeks ago in the aftermath of a senior leadership change at the company that saw Pierre Beaudoin cede the chief executive role to aerospace veteran Alain Bellemare in February. Mr. Cromer’s career path includes a six-year stint at the world’s biggest aircraft lessor, International Lease Finance Corp. Before that, he held executive positions in finance and fleet planning at several U.S. airlines including ExpressJet and Northwest, which merged with Delta Air Lines.
As an airline and leasing executive, Mr. Cromer said he “always hated” being pressured by aircraft manufacturers to finalize a potential plane sale so they could announce it at a big air show. Now he’s on the other side of the table.
“Obviously we would love to get as much attention as we can with a lot of order activity but at the same time I think we’re as focused on highlighting where we are in [the C Series] program,” he said. “Paris really for us is an opportunity to showcase the planes.”
Bombardier will have both current C Series models on hand in France, with one jet flying and the other on the ground to demonstrate various interior configurations. Although the company has held invite-only viewings for the first flights of both C Series models, it will be the first time it shows the plane to a wider audience.
The plane maker has booked 243 firm orders for the C Series but needs to generate new business from well-established airlines to build credibility in the program for both customers and investors, National Bank Financial analyst Cameron Doerksen said in a May 21 note. Questions remain over Bombardier’s existing order book for the aircraft with at least one customer, Russia’s Ilyushin Finance Co., warning in April that it is reconsidering its existing order for 32 CS300s over Canada’s refusal to help finance the purchase as part of economic sanctions against Russia.
Questions also persist about whether Bombardier will move to build a larger version of the C Series, possibly a 160-seat to 180-seat plane called the CS500 that would more directly rival current and upcoming models in Boeing’s 737 and Airbus’s A320 families. A CS500 would most closely compete with Boeing’s current 737-800 model, which seats 189 people in one-class layout, said Canaccord Genuity analyst David Tyerman.
“The economics of stretching an airplane have been pretty attractive, such that [manufacturers] have pursued that strategy,” said Mr. Cromer. “We’ve got a pretty strong platform. Maybe it’s a possibility in the future.” He said the company needs to do more testing on the two existing models to establish the opportunities for a larger model.
Having a larger plane gives Bombardier an opportunity to address the needs of airlines more completely by offering them three jets spanning 100 to 180 seats, Mr. Tyerman said. That in turn could make airlines more willing to consider the C Series as it addresses carriers’ desire for fleet commonality.
“Bombardier historically has avoided the model 500 discussion because it puts it in direct competition with the heart of the Boeing and Airbus model lineup and I think they felt that might be very difficult to compete with,” said Mr. Tyerman. “There are all new people there now. So maybe we’re getting a change of view on that topic.”
No comments:
Post a Comment