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ANALYSIS: Bombardier plays down CSeries delay

Bombardier executives reassured investors that the delayed first flight of the CSeries family to June 2013 will stick, during an earnings call today.

The Canadian airframer announced earlier today that the flight would be delayed from this December, a timeline that industry participants almost universally agreed would slip due to supplier-related delays to assembly of the first flight test vehicle (FTV-1).

"Now it's very different than the other date," says Pierre Beaudoin, president and chief executive of Bombardier, during the call. It's really an individual commitment by the suppliers [as to] when they will come in."

"We have a lot more visibility over assembly and [supplier] commitments now," he adds.

Executives did not provide specifics on the delay during the call, however, assembly of the CSeries has faced a range of issues including ones with centre fuselage and wingbox supplier Shenyang Aircraft and the fly-by-wire flight control system that is being developed by Parker Hannifin Aerospace.

Beaudoin says that some suppliers would face penalties for the delays but that others were late because "we sent the schematics late". All of its suppliers have agreed to the new timeline, he says.

To keep with its new timetable, Bombardier will complete static tests on the first aircraft in April 2013, says Beaudoin.

The airframer says that it anticipates an entry into service of the 110-seat CS100 in June 2014. The 130-seat CS300 timeline is unchanged with an entry into service by the end of 2014.

"At least they've gotten through the inevitable hurdle of announcing it," says Richard Aboulafia, vice-president of analysis at the Teal Group, on the CSeries delay. "[But] they haven't resolved the issue of what they need to do to make it commercially appealing."

He recommends that either permanently replacing Shenyang or bringing the centre fuselage and wingbox fabrication in-house, as a solution to one of Bombardier's many "problems" with the CSeries.

It has been sourcing the critical components from Aernnova in Spain and Bombardier's Short Brothers division in Northern Ireland since earlier this year, as well as from Shenyang.

The delay is not anticipated to impact development costs of the CSeries family, say executives who put the investment at more than $2 billion to date. They say that Bombardier's business plan included contingencies for a three- to five-month delay.

The airframer also anticipates that it will face few financial penalties from CSeries customers, says Beaudoin. Buyers were aware that there could be some variation in the first flight timeline when they placed their order, he adds.

"From a customer basis, there won't be too much of an impact," says Walter Spracklin, a transportation equity analyst at RBC Capital Markets. "[However] it might also mean that new orders might be a little harder to come by."

This could be a more costly than any increase in development costs or customer penalties to Bombardier. The orderbook for the new narrowbody remains lacklustre, with only 138 firm orders, despite Bombardier management's continued confidence in the programme.

Including letters of intent and options, there are more than 300 commitments for the 110-seat CS100 and 130-seat CS300.

Beaudoin says that he is "very confident" of an additional order for the CSeries before the first flight.

"All new aircraft are delayed, even at Airbus and Boeing," says Spracklin.

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