MONTREAL, Jan 31 (Reuters) – Bombardier Inc. (BBDsvb.TO: Quote, Profile, Research) said on Tuesday it could not find enough customers to launch its planned 110- to 130-seat CSeries jet, and would redirect resources from the $2 billion project to its regional aircraft program.
“Without launch orders, we could not make a launch decision,” Pierre Beaudoin, president and chief operating officer of Bombardier Aerospace, told reporters during a conference call.
Beaudoin said the CSeries program was on hold, but not abandoned, as it would continue to seek firm orders for the airliner.
“We believe the market is there. It’s too early to say one way or another,” he said.
Beaudoin also suggested that Bombardier was considering stretching its CRJ900 or developing a larger turboprop that would seat 80 to 100 passengers.
“It is possible that you would see a new regional aircraft before you would see a CSeries,” he said.
Beaudoin said Bombardier had discussions with potential partners about the CSeries, including Russia’s Sukhoi, but he declined to comment on a report the Canadian company was interested in joining the Russian regional jet program.
Bombardier said it will redeploy 300 workers from the CSeries project to other projects, including business jets, as it focuses on the regional airline market for 80- to 100-seat jets.
A team of 50 employees will remain with the CSeries program, with emphasis on including other partners, the company said.
Bombardier’s class B shares fell 12 Canadian cents, or 4 percent, to C$2.86 on the Toronto Stock Exchange shortly after the open on Tuesday before climbing back to C$2.96, off 2 Canadian cents.
MAY STRETCH CRJ900
The decision to shelve the CSeries will bring questions about Bombardier’s ability to add new jets to its regional aircraft product line as it faces brisk competition from Brazil’s Embraer (EMBR4.SA: Quote, Profile, Research) and Russian and Chinese manufacturers.
Production of Bombardier’s original 50-seat CRJ 200 jet has been suspended because of weak demand, and the company is focusing on its CRJ700 and CRJ900 stretch versions of the jet.
Harry Nourse, analyst at Bank of America Securities, said in a research note that he was concerned about Bombardier’s strategic direction in aerospace.
He said a reported four-seat stretch of Bombardier’s 95-seat CRJ900 may only be a stop-gap measure.
The CSeries was designed as a new aircraft rather than a further stretched version of Bombardier regional jets.
Bombardier said it has spent some $100 million on the CSeries project and expected to spend another C$20 million in the fiscal year that begins on Wednesday. No charges to earnings are expected from Tuesday’s annoucement, Beaudoin said.
Bombardier, the world’s third-largest civil aircraft maker and the globe’s No. 1 manufacturer of trains, had lined up government funding for the CSeries project from Ottawa, Quebec City and London, but none of those funds have been allocated or spent.
Bombardier was looking both for launch customers for the jet and for commercial partners for the project. United Technologies Corp. (UTX.N: Quote, Profile, Research) unit Pratt & Whitney was designing a new engine to lower the aircraft’s fuel costs and increase efficiency.
Northwest Airlines Corp. (NWACQ.PK: Quote, Profile, Research) had been a potential launch customer, but the carrier’s fleet plans are being modified as it grapples with restructuring under Chapter 11 bankruptcy.
Taken from
By: fightingirish - 1st February 2006 at 11:15
Bombardier to ditch CSeries in favour of RRJ participation
Bombardier to ditch CSeries in favour of RRJ participation
Canadian manufacturer opens talks on Russian Regional Jet involvement and briefs airlines on CRJ900 stretch
Bombardier is on the verge of shelving its proposed CSeries airliner project and has opened talks with Sukhoi over joining the Russian Regional Jet (RRJ) programme, say industry sources close to the Canadian project.
As part of this dramatic development, Bombardier is also understood to be negotiating an agreement with Finmeccanica’s Alenia Aeronautica division. Finmeccanica is expected to decide in February whether to take a 25% stake in the RRJ programme for around $250 million. In the meantime, Bombardier is also briefing airlines on an interim solution, a four-seat stretch of the CRJ900, dubbed the -900X, which could be available from 2008 powered by uprated General Electric CF34-8 turbofans.
The RRJ move, if confirmed, comes at the end of a frustrating period for Bombardier which as recently as December said it was still in “advanced negotiations” with potential CSeries launch customers worldwide. The planned launch of the CSeries was put off several times last year, and Bombardier says: “Right now we are in a number of discussions with our partners, and until these are concluded we will not be in a position to decide whether to launch the programme.”
Sources say mounting concerns over the estimated costs of the venture, added to the uncertain market demand for the 110- to 130-seat aircraft, appear to have killed off the CSeries and prompted Bombardier to consider a collaboration with Sukhoi on the RRJ, which, ironically, closely resembles the former’s long-abandoned BRJ-X airliner project.
The RRJ, meanwhile, appears to be alive and well. Aeroflot Russian Airlines signed a deal in December with Sukhoi for 30 RRJ-95s for delivery from November 2008. The carrier plans to acquire about half the 86-seaters on finance lease and half on operating lease, but funding has yet to be finalised.
The proposed amalgamation of Bombardier with the RRJ, while expected to add credibility to the Russian-led project, is also certain to open up a mass of new questions over the already well-advanced final configuration of the aircraft, the final engine type and the possibility of long-term strategic links with Boeing, which aided in the initial design.
The RRJ is baselined with the NPO Saturn/Snecma SaM146 engine, while Pratt & Whitney Canada had been preparing to develop a new engine for the CSeries based on its PW800 demonstrator. The Bombardier move therefore raises questions about a possible new engine competition.The CSeries airliner project was well capitalised and had secured multi-million dollar development loans from the Canadian and UK governments with the signing of letters of intent with Bombardier on 13 May, including a C$400 million ($320 million) research and development loan from Canada and a C$100 million commitment from the UK.
A further C$350 million was being contributed by the Quebec government as part of an estimated $700 million government commitment that Bombardier says was essential for the CSeries programme to proceed.
GUY NORRIS / LOS ANGELES
Source: Flight International
I knew, that the shelving of the CSeries would happen!
Bombardier is working together with Sukhoi, other airline manufacturs might work together with China.
Maybe a B737/A320 sucessor will be built in China.
By: murph - 1st February 2006 at 09:42
Fokker was too early, but wouild the proposed Rekkof come in just at the right time?
By: allmcc - 1st February 2006 at 09:38
I’ve heard through the grapevine that a stretch of the Q400 is being considered – one wonders if that airframe can sustain a further stretch!
By: tenthije - 1st February 2006 at 06:34
Beaudoin said the CSeries program was on hold, but not abandoned, as it would continue to seek firm orders for the airliner.
By this time I think we can say that “on hold” is lawyerese for “forget it”.
“We believe the market is there. It’s too early to say one way or another,” he said.
Fokker was too early. Dornier was too early. Bombardier is too late. Embraer has already taken a strong hold on the market with second hand F100s filling the gaps.
Beaudoin also suggested that Bombardier was considering stretching its CRJ900..
Yeah why not stretch a plane that is already stretched beyond the needs of airlines. Please remind me how popular the CRJ900 has been?
…or developing a larger turboprop that would seat 80 to 100 passengers.
With rising fuel costs this could be a smart move. However, will airlines commit to it knowing the recent history of cancellations of new projects.
as it focuses on the regional airline market for 80- to 100-seat jets.
Stretching the CRJ900 with “4 seats” will not get it into the 80-100 seats range. So another new project?
The decision to shelve the CSeries will bring questions about Bombardier’s ability to add new jets to its regional aircraft product line as it faces brisk competition from … Chinese manufacturers.
What planes are made in China that could compete with a CRJ?
He said a reported four-seat stretch of Bombardier’s 95-seat CRJ900 may only be a stop-gap measure.
Just like the highly profitable B757-300 and B767-400 where?
Bombardier, the world’s third-largest civil aircraft
Third? Aren’t they fourth after Airbus, Boeing and Embraer (alfabetical order).
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February 1, 2006 at 2:03 am