Bombardier to use resources freed from shelved airliner programme to recover lost ground in regional market
Bombardier is looking at a new large regional aircraft, and stretches of its Q400 turboprop and CRJ900 jet, after deciding not to launch the CSeries small airliner (Flight International, 31 January–6 February). Blaming market dynamics for its failure to secure launch orders for the 110- to 135-seat CSeries, the Canadian manufacturer must now move quickly to recover ground lost to other competitors in the 80- to 100-seat market.
From a 350-strong engineering team spending $10 million a month, Bombardier is scaling the CSeries programme back to a group of 50 people who will spend $20 million over the next year rethinking the business plan for the airliner. “We are not cancelling the programme. We continue to invest, but current market conditions do not allow us to launch,” says Bombardier Aerospace president and chief operating officer Pierre Beaudoin.
The small CSeries team, still led by new commercial aircraft programme president Gary Scott, will revise the business plan and “explore new partnerships in high-growth international markets” says Beaudoin, citing China, India and Russia. He confirms Bombardier has had discussions with Russian Regional Jet (RRJ) developer Sukhoi, “and other potential partners”.
Some of the resources freed up by putting the CSeries on hold are being diverted to studying opportunities in the 80- to 100-seat regional aircraft market, ranging from stretches of the CRJ900 and Q400 to a new platform – which could also be the product of an international partnership. “It is possible you will see a new regional aircraft before you see the CSeries,” says Beaudoin.
He confirms Bombardier is studying a CRJ900X, saying customers have asked the company to look at a stretch of the 86-seat jet in the 100-seat category. “It’s a very economic aircraft,” he says. The company is also studying a stretch of the 70-seat Q400 in the 80- to 100-seat category, he says. Pratt & Whitney Canada, supplier of the Q400’s PW150 engines, has previously said India in particular is interested in a larger turboprop.
“The turboprop market is seeing growth because of the cost of fuel, and will continue to grow,” Beaudoin says. While any Q400 stretch would seem to compete with the CRJ900, Bombardier has been successful selling the 50- and 70-seat Q Series turboprops alongside its CRJ200 and CRJ700.
“There is potential for turboprops as well as regional jets,” Beaudoin says. “We will look to strike the right balance between comfort and economics. It is too early to tell what our strategy will be.” A decision to stretch either aircraft has not been taken yet, he says.
Meanwhile, the CSeries is not dead – at least not yet. Instead, Beaudoin says, the team has been given more time to develop a business plan to launch the aircraft that includes discussions with manufacturers in China, India and Russia “to see if a partnership is possible”. Pratt & Whitney Canada, selected to supply a CSeries engine based on its PW800 demonstrator, “will also study how to put the business plan together”, he says.
The fellow Canadian company came to Bombardier’s rescue when neither CFM International nor International Aero Engines would commit to developing a powerplant able to deliver the 15% operating cost reduction targeted for the CSeries.
For a time it looked as if P&WC was struggling to meet the target, but Beaudoin says the engine manufacturer reached its goals. He also says P&WC will have an opportunity to compete to power any new regional aircraft.
Bombardier was able achieve its objectives for CSeries performance and financing, but unable to meet its third condition for launch – firm orders – because of market timing, Beaudoin says, noting that four of the company’s major airline customers are in Chapter 11 bankruptcy protection – including Northwest, the only significant publicly acknowledged potential customer for the aircraft.
The manufacturer had hoped to launch the $2 billion CSeries programme in June last year, and as the date slipped was investing heavily to protect the planned 2010 entry into service while it tried to secure orders from airlines with other, more immediate concerns. “2010 was too far out in the future for some customers,” says Beaudoin. “And without a launch that date was increasingly difficult to meet.”
Northwest had not made a final decision, he says, but to hold the 2010 service-entry date without a launch order would have required Bombardier to begin investing more than the $10 million a month the CSeries was already costing the company.
Launch aid committed by the Canadian, Quebec and UK governments was tied to the go-ahead of the CSeries programme, and no government money was among the $100 million already spent, he says.
Bombardier will have new discussions with the governments, Beaudoin says, adding: “We put together a very solid financing programme for the CSeries. We will have to see what happens.” The company will also have to reopen negotiations with the machinist union at its Montreal plant, which had agreed concessions to secure final assembly of the CSeries. “We hope to maintain the winning conditions negotiated with the union,” he says.
Shelving of the CSeries is the latest twist in Bombardier’s efforts to grow beyond business jets and regional airliners to larger commercial aircraft. In 2000, the company shelved the all-new 90- to 115-seat BRJ-X in favour of being first to the 90-seat market by stretching the CRJ700 to produce the CRJ900.
Two years later, Bombardier was offered the partially developed 70/90-seat 728/928 family by bankrupt Fairchild Dornier, but declined, saying the programme did not meet its investment standards. Then, in 2004, the company surprised the industry by unveiling plans to develop a 110- to 135-seat airliner aimed at mainline, and not regional, carriers. In doing so, it leapfrogged the 100-seat market then only beginning to emerge.
“Is the market developing for larger regional aircraft? We are discussing that with customers,” says Beaudoin. While the BRJ-X, which was scheduled to enter service in 2003, would have been too early, its shelving left Bombardier with a gap in its product line that has yet to be filled. “We do not compete in the 100-seat market, so we are looking at that,” he says.
Bombardier’s new strategy has two tracks: continue to work the business case for a mainline jet at the lower end of a 110- to 149-seat market estimated at 6,000 aircraft over 20 years; and study options for regional aircraft in an 80- to 100-seat market projected at 1,000 units over the same period. Decisions on both tracks are expected later this year. “We expect to fully exploit opportunities in these two markets,” Beaudoin says.
He provides no insights into what role international partners might play in either or both tracks. On the potential for Bombardier involvement with Sukhoi Civil Aircraft in its 75- to 95-seat Russian Regional Jet programme, possibly through Finmeccanica company Alenia Aeronautica’s planned 25% stake in the programme, Beaudoin says: “We are looking at partnership possibilities. These may include Sukhoi. It is too early to say.”
Alluding to reciprocal involvement by international partners in the CSeries, Beaudoin says the growth markets of China, India and Russia could be “very big” for such an aircraft. International involvement could result in some features of the design being revisited. “We want to see what other shape the CSeries might take,” he says. “It could be revived in a different form.”
Meanwhile, with CRJ200 production suspended because of the collapse of the 50-seat regional jet market, Bombardier is relying on sales of the CRJ700/900 and Q Series. The company produced 72 CRJ700/900s in the year ended 31 January, and plans to produce a similar number this year. But the business jet market is booming, and some of the people released from the CSeries programme will shift to developing business jets.
GRAHAM WARWICK / WASHINGTON DC
Source: Flight International
