Aggressive pricing by competitors and weakening demand in emerging markets are driving Bombardier to slow its deliveries of the Global 5000 and 6000 just two years after ramping up production to 80 aircraft per year, company executives say.
As the production rate for the two large-cabin, long-range business jets is reduced over the next 12 to 18 months, Bombardier is also withdrawing a timeline for delivering the first Global 7000 and 8000 jets.
Bombardier had previously released plans to deliver the first certificated Global 7000 in 2016 and Global 8000 in 2018, but is no longer offering a schedule, chief executive Alain Bellemare said during a 7 May earnings call.
The original schedule targeted delivery of the Global 7000 three years after entry into service of the first CS100, but delays to the CSeries schedule means delivery of the first small narrowbody airliner is overlapping with the business jet programme.
Meanwhile, Bombardier is slowing deliveries of the Global 5000 and 6000 after business jet operating margins contracted to 7% in the first quarter – about half those at the company’s competitors.
That performance is the first sign of weakness in a large-cabin sector that had previously been healthy for all manufacturers. In 2013, Bombardier responded to rising demand by increasing production rates by about 60%, with deliveries rising from about 50 to around 80 in 2014.
But sales have weakened in Russia, China and Latin America for Bombardier’s aircraft. “These markets have been softer than we’d like,” says Bellemare. “Our competitors are also aggressive out there.”
Source: FlightGlobal.com
