Forging Ahead

Bombardier Aerospace’s CS300 airliner achieved lift-off on Feb. 27, 2015, climbing into a clear blue winter sky at Montreal’s Mirabel Airport. As it rose into the air on its maiden flight, the CS300 was undoubtedly carrying the manufacturer’s hopes with it, following what Charles Dickens would probably describe as “the best of times and the worst of times” for the OEM.

At the positive end of the scale, Bombardier has achieved notable milestones over the last year and a half. On Sept. 16, 2013, the smaller CS100 climbed into history when it logged a highly successful first flight. As CSeries testing has continued, the company has made inroads with several other aircraft programs, recording some sizeable orders for its new Q400 turboprops and CRJ900 Next Gen airliners, as well as continued interest in some of its key business jet programs, notably the Global and Challenger lines.

On the flip side, however, Bombardier’s Learjet 85 and 415 waterbomber programs have been officially “paused.” The company also announced a pending sale of its military aviation training arm to simulation giant CAE Inc. in late January, relinquishing its long-standing involvement in the NATO Flying Training in Canada (NFTC) program.

Tepid demand for the Learjet 85 forced that program’s suspension in January, with 1,000 layoffs resulting in Wichita, Kan., and Querétaro, Mexico. It was a “difficult decision,” according to then-CEO Pierre Beaudoin, who was subsequently appointed executive chairman in mid- February. He was replaced by Alain Bellemare, who formerly led the aerospace division at United Technologies Corp., which includes Pratt & Whitney Canada (PWC).

However, the Learjet decision does enable Bombardier to focus on its Global 7000 and 8000 long-range business jets, which are set to debut in the next two years, as well as the much-delayed CSeries family of commercial jets. Beaudoin, the grandson of company founder Joseph-Armand Bombardier, stressed during a company conference call that the Lear 85 program is not being abandoned. “When we say pause, we mean pause,” he said, citing the program’s more than 75 test flights.

Bombardier launched the Lear 85 in 2007, but the ensuing global recession undercut demand for aircraft in that class. “Right now, we don’t see it [the market] picking up at the rate that we anticipated,” said Beaudoin. “So, we say it’s a good time to take a pause. Let’s see how the market behaves and then we can build this great aircraft and take it to market.”

As for the 415—the latest turboprop version of the 1960s-era piston-engined CL-215 amphibian inherited after Bombardier took over Canadair Ltd. in 1986—it, too, has suffered from a lack of orders, due mainly to its relatively high cost and its operational longevity at home and abroad. In February, a company representative said there had not been any layoffs at the 415 plant in North Bay, Ont., but “depending on the duration of the pause, we will readjust manpower as necessary.”

Bombardier is banking on the CSeries—which is some US$2 billion over an initial $3.4-billion budget estimate when it was unveiled a decade ago—to fly it into the fiscal black over the next two decades.

“The plane is an engineering marvel,” enthused Addison Schonland, an analyst with AirInsight, a Baltimore, Md.-based commercial aviation consultancy. “The difficulty has been Bombardier’s resource constraints. It’s the capital and the people—getting the job done, that’s slowed them down.”

In an earlier report on the CSeries, AirInsight said that although Bombardier was pursuing a narrow market segment, it was “hardly inconsequential,” given an estimated market for more than 6,000 aircraft over two decades, due to traffic growth and retirements of current fleets.

A clean sheet approach to the CSeries makes it “the only 100 per cent new family of airliners” in their class. The CS100, for which the company has 563 firm orders, can be configured with up to 125 seats; while the CS300, for which it has 243 orders, can be configured with up to 160 seats. They are said to burn 20 per cent less fuel than current production aircraft in their size range, while offering widebody comfort and a significantly reduced noise footprint from their PWC PurePower geared turbofan PW1500G engines.

Bombardier said it had $2.4 billion in cash and access to a further $1.4 billion of credit at the end of 2014, but facing the prospect of having to spend at least $2 billion this year, it resorted to a C$750 million share offering, coupled with US$1.5 billion in long-term debt and a dividend suspension. Despite some market analysts’ skepticism, demand for the share offering was so positive that it was increased by 25 per cent.

The CSeries is being counted on to yield some US$8 billion in yearly sales within a few years, as annual production is ramped up from an initial 120 aircraft, expected to begin later this year. That is predicated on carriers responding to growing demand for direct city-pair service, rather than through hubs.

The challenge now is for the company to hold on to current CSeries customers and prove to potential new ones that the two aircraft can deliver on Bombardier’s promised operating edge.

It evidently can count Air Canada CEO Calin Rovinescu among its fans. After a recent speech in Montreal, he told reporters that the airline is considering the CSeries as a replacement for its remaining 25 Embraer 190 narrow-body medium- range jets after 2020.

“When those Embraers come out, for sure the Bombardier CSeries will be an alternative, 100 per cent,” said Rovinescu, predicting that Bombardier would emerge from its fiscal turbulence. “I certainly would not be concerned if I was in the market for airplanes today, and I don’t think that that will be an issue.”