Development costs of Bombardier's CSeries commercial aircraft have climbed by $1 billion to $4.4 billion following a previously-announced delay of the flight-testing programme, the company announced.
Executives speaking 13 February during the company's 2013 earning call say that at the end of last year Bombardier had spent $3.3 billion on CSeries development.
But the company expects to spend an additional $750 million in tooling costs and $300 million in capitalised borrowing costs by the time the larger CS300 reaches certification.
Initially Bombardier had pegged development costs at $3.4 billion, but in September last year announced that under International Financial Reporting System standards the cost would be $3.94 billion, including about $500 million in amortised interest expenses.
It is unclear if the new estimates include the $500 million, and Bombardier did not immediately respond to requests for clarification.
The cost increase follows the January 2013 announcement a new delay in the flight testing programme of up to 15 months. With that delay, the 110-seat CS100 will enter service in the second half of 2015, with the 135-seat CS300 following six months later, Bombardier said.
Earlier the company had predicted certification one year after the first flight, which occurred on 16 September of 2013, more than nine months behind the original schedule.
To date, Bombardier has completed roughly 100 flight hours out of an estimated 2,400h flight test programme. according to the company.
Executives say during the earnings call that the most-recent delay was due partly to timing of the aircraft's "software drops", including software used to control the CSeries' fly-by-wire system.
The executives declined to say how the cost overrun could affect the company's return on its CSeries investment, or how many aircraft it must now sell to break even.
Officials did, however, say they remain confident in the viability of the programme.
"The business case for CSeries will be met," the company says. "We feel very good that we are making progress towards entry-into-service on the schedule we announced."
Bombardier reported on 13 February that its aerospace division brought in revenue of $9.4 billion in 2013, up 8.8% from $8.6 billion in 2012.
The majority of that revenue — 59% — was from North American customers.
During 2013 the company delivered 238 aircraft, including 180 business aircraft, 55 commercial aircraft and three amphibious aircraft.
Bombardier closed the year with an order backlog worth $37.3 billion, 13% higher than the previous year.
In addition to CSeries delays, executives also touched briefly on delays with the Learjet 85 programme.
The company says those delays are due partly to systems integration and "making sure all of the systems in the aircraft are responding the way that they should."
Bombardier, Learjet's corporate owner, is now "very close to presenting" Learjet 85 test aircraft to the US Federal Aviation Administration for permission to begin flight testing, the company says, adding that first flight will likely follow a few days or weeks later.
Bombardier initially expected the Learjet 85 to enter service by the end of 2013, but in February 2013 announced a six- to nine-month delay. The company then missed its goal of a first flight by the end of the year.
Following Bombardier's earnings release, Moodys downgraded Bombardier's corporate rating slightly to Ba3 from Ba2.
"The downgrade of Bombardier's ratings is driven by its higher than expected cash consumption in 2013 and our view that the company's negative cash flow and elevated leverage will persist longer than we previously expected", says Moody's report. "The rating also incorporates Moody's view that execution risks will remain elevated through the 12-18 month rating horizon as the CSeries entry-into-service approaches."