â€śLe est mort enterrĂ©, selon ,â€ť proclaimed the May 31 edition of a Montreal newspaper. Translation: â€śThe CSeries is dead and buried, according to Airbus.â€ť
The headline was based on comments made by Airbus CEO Tom Enders to a French magazine about's fledgling 110-149-seat jet. Airbus executives have been claiming for months that their company's introduction of a new engine option (NEO) for the narrowbody voids the business case for the CSeries. Enders also wished Bombardier President Pierre Beaudoin â€śgood luckâ€ť working with his Chinese partners, who are slated to supply the CSeries fuselage and co-market the jet with Comac's new narrowbody.
So there must have been more than a little satisfaction at Bombardier's Montreal headquarters whenâ€”the very next dayâ€”the company announced an end to a 15-month drought in CSeries orders. Braathens Aviation, a regional aircraft operator in Sweden, has agreed to buy 10 of the five-abreast jets, bringing the program's total to 100 firm orders. Previous orders have come from, Republic Airways and Dublin-based Lease Corp. International. While the new deal is hardly a blockbuster, it gives the project some much-needed momentum as the industry heads for this month's Paris air show. â€śWe believe there is a strong likelihood of additional CSeries orders in Paris,â€ť says National Bank Financial analyst Cameron Doerksen.
They could not come soon enough. Doerksen notes that the company is only one-third of the way to its goal of 300 orders by the CSeries' scheduled service entry in late 2013 and 350 aircraft short of the sales he projects are required for the project to break even. Airbus officials make a good case with their argument that the A320NEO has nullified some of the CSeries' efficiency advantage. And the competition will grow even fiercer ifopts to offer a re-engined 737. â€śEverybody is expecting triple-digit A320NEO orders, as well as the possible launch of an A319NEO, at Le Bourget,â€ť says Teal Group analyst Richard Aboulafia. â€śParis might just be a repeat of last year's Farnborough show, where Bombardier was conspicuous for its absence of orders.â€ť
Bombardier executives say they are in advanced talks with 7-10 potential CSeries buyers. JPMorgan analyst Joseph B. Nadol, 3rd, believes that list includes large carriers in Europe, Asia and the Middle East. And while he is not sure those deals will be closed by the time the air show opens on June 20, Nadol believes demand will pick up. â€śThe CSeries is very well positioned from an operating cost standpoint,â€ť he says.
Ten orders from a little-known Swedish airline are unlikely to silence the skeptics. Even if Airbus and Boeing are unable to quash the startup program, Bombardier must still pull off the most advanced aircraft development it has ever launched. As for Paris, Bombardier Aerospace President Guy Hachey is coy when asked about the prospect for announcing further orders. â€śYou'll have to follow us closely,â€ť he says.
|Current||Previous||Fwd.||Tot. Ret. %||Tot. Ret. %|
|Company Name||Week||Week||P/E||3 Yr.||1 Yr.|
|ACE Aviation Holdings||11.89||11.84||4.8||-46.3||40.0|
|AerCap Holdings N.V.||13.39||12.87||7.3||-1.9||1.4|
|Alaska Air Group||65.52||67.50||9.0||237.2||31.2|
|Allegiant Travel Co.||43.51||45.52||17.7||115.4||-20.1|
|Atlas Air Worldwide Holdings||60.33||60.52||10.5||-1.6||13.5|
|BBA Aviation plc||3.57||3.53||12.2||82.3||19.4|
|B/E Aerospace Inc.||36.31||36.36||16.7||6.5||33.8|
|Copa Holdings SA||61.34||62.36||10.8||97.2||23.1|
|Deutsche Lufthansa AG||21.71||21.19||10.9||3.9||46.5|
|Hawaiian Holdings Inc.||5.40||5.55||11.4||-26.5||-25.4|
|Lines Co. Ltd.||58.52||57.53||7.2||19.3||-9.5|
|Lan Airlines SA||28.17||28.75||23.1||152.9||50.7|
|Republic Airways Holdings Inc.||4.67||4.81||33.1||-61.8||-17.2|
|â€śUnited Continental Holdings, Inc.â€ť||23.31||25.08||6.4||195.8||7.0|
|United Parcel Service Inc.||72.30||72.80||16.2||12.0||18.8|
|WestJet Airlines Ltd.||16.11||15.89||14.7||4.7||31.4|
|Zodiac Aerospace SA||80.14||77.03||12.8||78.1||39.2|
|Source of financial data: Standard & Poorâ€™s and Capital IQ Inc. (a Division of Standard & Poorâ€™s) U.S. dollars and cents. Forward P/E ratio uses S&P and Capital IQ forecasts of current fiscal year.|