Bombardier, the Montreal-based aerospace company, continues to get bombarded with bad news. Yesterday it was announced that delivery of the long anticipated C-Series jets will be halved this year, from 15 to 7. The reason is beyond its control as engine supplier, Pratt & Whitney, is having problems at its end of the delivery chain.
The beleaguered CSeries program was already 2½ years behind schedule and more than $2 billion over budget, as the company manouvered through several challenges.
Ian Lee, associate professor at the Sprott School of Business in Ottawa, says there is good news, however, in the reviews the jet is now garnering. Lufthansa, which invested in thirty CS100’s for its Swiss Global Air Lines division, is singing the praises of the two currently in operation.
Listen“This new plane has met their expectations and it seems to suggest that they’ve exceeded their expectations, so I think this is very good news because it’s coming from a third-party called the customer, the user.”
“15 to 20 per cent cost saving, which is what this new plane is generating… in the airline business that is just extraordinary.”
Lee says the maximization of fuel economy is the winning feature. “I don’t trivialize noise reduction but the fuel economy is even more important”
He says fuel averages 30 per cent of total cost, in the airline industry, to fly the plane. “When you can get a 15 to 20 per cent cost saving, which is what this new plane is generating, thie new Bombardier plane, in the airline business that is just extraordinary.” He says “it can mean the difference literally between making money and losing money for airline.”
According to Bombardier spokeswoman Marianella de la Barrera, this recent delay will not affect its workforce or the CSeries sales efforts. She said the company has 370 firm orders and 380 options and expressions of interest.
In the meantime, the federal government is also playing a waiting game to commit to a $1 billion dollar US funding request, that Bombardier made almost 12 months ago.
Lee says the government is hoping more orders will negate the need for the financial support. And there is talk about guarantees that both the jobs and the head office will remain in Montreal.
The Quebec government issued the final instalment of its US$1-billion investment in the CSeries. Bombardier announced in June that the province would own 49.5 per cent of a new limited partnership with all the assets, liabilities and obligations of the CSeries aircraft program after the investment was completed.
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