Article from Canada’s Globe and Mail newspaper
Bombardier to launch 100-passenger CRJ
Canadian Press
MONTREAL — Its plans for the wider CSeries aircraft are still up in the air, but Canadian aerospace giant Bombardier Inc. is investing in a cost-efficient, 100-seat version of its popular regional jet to take on its chief rival, Embraer of Brazil.
The Montreal-based company said Monday it has received 38 firm orders, along with 23 conditional orders and options, for the new CRJ1000 plane.
“Our strategy is to deliver to our customers an aircraft that will give great operating costs and that’s our focus,” Bombardier Aerospace president Pierre Beaudoin said in a conference call.
Despite stretching the current CRJ900 jet to add three rows or 10 seats, the new model will be 11,250 kilograms lighter than Embraer’s 190, making it 15 per cent more fuel-efficient, he said.
Bombardier said Monday its aerospace division will build the 100-seat CRJ1000 regional jet, a follow-up to its previous CRJ700 and CRJ900 aircraft. (Bombardier)
It is based on the design of the 70-to-78 seater CRJ700 jet introduced in 1997 and the bigger CRJ900 that followed in 2000. But the aircraft’s overhead storage bins will be enlarged to handle regular-sized carry-on luggage, the windows will be larger and lighting will be improved.
While Embraer’s planes have earned a reputation for being more comfortable for passengers, Bombardier said its customers want better operating efficiency.
“It’s a question of striking the right balance between comfort and operating costs and we think that we have the right balance,” Mr. Beaudoin said.
Eight orders for the new aircraft have been placed by Air France subsidiary Brit Air, with options for eight more, worth about $371-million, or $768-million if options are exercised.
My Way Airlines of Italy has agreed to convert 15 of its 19 CRJ900 orders to CRJ1000 orders, increasing the value of that contract to $857-million from $702-million.
Bombardier said an unnamed customer has also placed a firm order for 15 CRJ1000s, with a conditional order for 15 more, in a deal worth up to $1.5-billion.
The CRJ1000 is scheduled to enter service in the fourth quarter of 2009. The company believes there is a market for about 400 of the planes over 20 years, primarily in Europe.
The plane is being designed for a niche market because pilot union rules prevent most North American-based airlines from flying regional jets with more than 76 seats.
The new model won’t have an impact on Bombardier’s decision about whether to proceed with its CSeries design, Mr. Beaudoin said.
“They are two very different markets,” he said. “CSeries is an opportunity for us to get into mainline, whereas this is an extension of our lines for regional carriers.
The new aircraft will be developed at relatively low cost, but Bombardier doesn’t appear to be making much money on its regional jets, said analyst Cameron Doerksen.
“Even if they launch a program and deliver lots of planes, it’s not going to have a huge impact on their bottom line,” said Mr. Doerksen of Versant Partners in Montreal.
Bombardier wouldn’t disclose the margin it expects to realize on the CRJ1000. But Mr. Beaudoin said the plane will help the company eventually achieve eight per cent pre-tax earnings.
The plane should be attractive to airlines motivated to fly more fuel-efficient models, he said. Although perhaps not as comfortable as Embraer models, the proposed changes in the CRJ1000 will make it ergonomically more appealing even if the seat width and head room don’t change, Mr. Doerksen added.
The new aircraft will be assembled in Mirabel, north of Montreal. Production was delayed a year so the company could complete studies of the technology and market, Mr. Beaudoin said.
The prospect for hirings depends on the market for business aircraft and other regional jets as of 2009, he said.
“It’s good for the overall Bombardier employee because it’s one more product in our line.”
Bombardier shares gained 24 cents, or 5.3 per cent, to $4.78 in midday trading Monday on the Toronto Stock Exchange.
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