Bombardier continues to express confidence in the appeal of its CSeries to aircraft leasing companies, saying a lack of early CSeries leasing placements highlighted by a top aircraft lessor reflects Bombardier's early focus on sales directly to airlines.
Three aircraft leasing companies have ordered 80 of the aircraft, but the largest lessors have so far avoided the 100-150 narrowbody aircraft family.
"The initial focus has been on establishing the credibility of the CSeries on the market with leading airline operators, and this has been achieved with the likes of Swiss, Air Baltic, Korean Air, Delta Air Lines, and Air Canada," Bombardier senior vice-president of commercial aircraft Colin Bole tells FlightGlobal,
"Those airlines have initially put emphasis on their own direct order with the OEM in order to establish a critical sub-fleet size and establish a direct contractual relationship with the OEM," Bole adds. "It could be possible that they would want to expand their CSeries fleet at a later stage through an operating lessor… or by entering into sale and leaseback agreements".
Bole's comments come several days after executives from Los Angeles-based Air Lease Corporation, one of the world's top aircraft leasing companies, discussed the CSeries.
Air Lease executive chairman Steven Udvar-Hazy says he is "watching very carefully" the lessors who have already ordered both CSeries and Embraer's E-Jets E2.
"But until today we've only seen a very small handful" of placements of those aircraft, he says. "In fact, I got more fingers than number of those types of aircrafts that been placed by lessors that order the CSeries or the E2."
He made his comments during Air Lease' 2016 earnings call on 23 February.
Air Lease chief executive John Plueger added that his company would consider CSeries if customers demanded it.
"Suffice to say, if we were getting a lot of requests for the E2, a lot of requests for the CSeries… we would be acting upon them," Plueger says.
However, he notes Air Lease is not known for aircraft in the CSeries size category. Between 2010 and 2014, the company placed several orders for E-Jets and ATR turboprops, but Air Lease has since shifted its portfolio nearly entirely into large Boeing and Airbus aircraft, Plueger says.
"Our mindset here, unless proven otherwise, or unless we can see a very compelling case for going outside that mainline [space], is to stick more with the Airbus and Boeing profile," says Plueger. "The fact that we are not getting a lot of those requests…. We're not known for being in that space."
Bombardier delivered the first CSeries to Swiss in July 2016, and by the end of 2016 had delivered seven aircraft, including five CS100s to Swiss and two CS300s to Air Baltic.
The company has not yet delivered any CSeries in 2017, but insists it will meet a goal to deliver 30 to 35 of the aircraft this year.
Bombardier has outstanding orders for another 353 aircraft, of which nearly 270 – about 75% – are from airlines and their affiliates, according to Flight Fleets Analyzer.
The most-notable airline orders have included Air Baltic's order for 20 CS300s, Air Canada's order for 45 CS300s, Delta Air Lines' orders for 75 CS100s and an order for a mix of 30 CS100s and CS300s from Swiss and its parent Lufthansa Group.
Bombardier has also received CSeries orders from Gulf Air, Iraqi Airways, Korean Air, Odyssey Airlines, SaudiGulf Airlines affiliate Al-Qahtani Aviation and Braathens Regional Airlines' affiliate Braathens Leasing.
US regional carrier Republic Airways Holdings also ordered 40 CS300s, though that deal remains uncertain amid Republic ongoing bankruptcy reorganisation.
To date, three aircraft leasing companies have placed orders for a combined 80 CSeries.
Those include 40 CS300s ordered by Australia's Macquarie AirFinance, 20 CS100s/300s ordered by Dublin-based Lease Corporation International and another 20 CS300s ordered by Moscow-based Ilyushin Finance Company (IFC), Fleets Analyzer shows.
Few of those aircraft, however, have been placed, and IFC has already reduced its CSeries count (the company initially ordered 32 aircraft).
The IFC order could also be influenced by political forces. The company placed the order in 2013 when United Aircraft Corp, a large IFC shareholder, was headed by president Mikhail Pogosyan, who favoured improved relations with western manufacturers.
Since then, relations between the West and Russia have soured, and Yuri Slyusar succeeded Pogosyan with a promise to make the company less dependent on external suppliers.
Still, Bombardier expresses confidence.
"Given our industrial ramp up, all our early deliveries have been allocated to airline customers rather than to operating lessors, which explains why there have been limited operating lessor placements at this early stage in the programme," Bole says. "We certainly feel good about our current operating lease content, and while we have discussions with most of the world’s major operating lessors, our near-term focus will remain on diversification of our airline customer base."
Bole adds that Bombardier will look to expand leasing sales "when the time is right."
"We are convinced that the CSeries will prove to be a highly attractive alternative investment for lessors," Bole says.
Indeed, all the CSeries scheduled to be delivered this year will go to airlines, with deliveries to the three leasing companies scheduled to start in 2018, Fleets Analyzer shows.
And the existing 270 airline orders could keep Bombardier's production line running for several years.
Richard Aboulafia, vice president at consultancy Teal Group, describes the lack of widespread CSeries placements to date as unsurprising, but potentially not a permanent condition.
And he thinks more leasing orders are possible. "If [Bombardier] can execute on Delta and Air Canada and Lufthansa, and make those first year customers happy, then they still have a shot" at a major lessor, he says.