Bombardier eyes new CSeries win after Air Canada deal
Reuters
Published Feb 18, 2016 06:54AM ET
Bombardier eyes new CSeries win after Air Canada deal
By Tim Hepher
SINGAPORE (Reuters) - Bombardier (TO:BBDb) is in talks with more potential buyers including United Airlines (N:UAL) after winning a lifeline $3.8 billion order for its struggling CSeries jet from Air Canada (TO:AC), its sales chief said on Thursday.
Visibly relieved after landing the first tentative CSeries order in 16 months, and the first from a top flag carrier since 2011, Bombardier basked in attention at the Singapore Airshow as larger rivals drifted home with a handful of orders.
Bombardier announced the 45-aircraft order in Montreal on Wednesday, sending its shares up as much as 30 percent and overshadowing plans to cut 7,000 jobs.
"The competition has been fierce but the fact is, CSeries is a reality," said Colin Bole, senior vice president for sales and asset management at Bombardier Commercial Aircraft.
"It can no longer be dismissed as an orphan aircraft (as) we have heard from our competitors. It is there, it has customers and customers will draw customers," he said in interview.
Once finalised, the deal will leave Bombardier 12 planes short of its target of 300 firm orders by the time the delayed CSeries enters service, due in the second quarter.
That goal has long appeared elusive as Bombardier met delays, technical problems and nervous buyers.
It remains in talks with United Airlines (N:UAL) after losing a recent contest there to Boeing (N:BA), Bole said.
It is talking to other major U.S. carriers and has its sights on another win before the Farnborough Airshow in July.
"I certainly hope so...it is the goal," Bole said, asked about getting a new deal by the UK show, adding "we have a number of transactions close to finalization."
NO SLAM DUNK
Bole said it was too early to say how the Air Canada deal would be financed but dismissed suggestions by some analysts that it marked hidden support from the Canadian government.
"There is no government subsidy or funding whatsoever. It is a perfectly normal commercial deal," he said.
"I can assure you Air Canada is no slam-dunk customer."
Bombardier's home win follows a tough four-way competition against Airbus, Boeing and Brazil's Embraer, each of which have aircraft in Air Canada's portfolio.
It reflects a planned assault by a team of former leasing executives brought in by Bombardier to reinvigorate marketing.
"It has been tough. We were always confident.. but it was a matter of getting out of the starting blocks and I think this is exactly it," Bole said.
Although announced elsewhere, it effectively made Bombardier the clear air show winner, but analysts said it would not remove challenges for a plane which has struggled to break into the main jet market dominated by bigger players.
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The 110-130-seat CSeries sits between the 106-seat Embraer 195 and the main 150-160 seat models of Airbus and Boeing.
Critics say the CSeries is undersized but Bombardier says it is addressing a gap in the market deliberately played down by Airbus and Boeing, which make better margins as airlines trade up.
"Airbus and Boeing have been pretty successful in brainwashing airlines to think they need larger aircraft," Bole said.
While insisting jet markets remain robust, he said Bombardier could benefit from any downturn because it would encourage airlines to buy less risky, smaller models.
But Airbus and Boeing say the market has voted in favor of their upgraded narrowbody models, selling in the thousands.
Bole said the CSeries was not suffering engine problems seen on the Airbus A320neo, even though they share similar engines from Pratt & Whitney (N:UTX). Criticism of Pratt & Whitney from Qatar Airways dominated this week's air show, but the engine maker said current teething problems were being resolved.
Written By: Reuters
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