Can CSeries Show and Tell Quell the Critics?

As Bombardier prepares to show the first CSeries airliner to the media today (March 7), the program's lack of sales is again making headlines - just 148 firm orders since its launch in mid-2004. Bombardier's strategy of necessity is to go slow and steady and hope that a first flight by the end of June will spark enough interest to meet its target of 300 orders by entry into service in mid-2014.

Photo: Bombardier

In the past, Bombardier prided itself in being first to market and moving fast - into production, through development and into service. This worked with the original CRJ. But the desire to get the production line moving as quickly as possible has led to problems. With the Learjet 45, beginning production while testing was still under way led to a large inventory of aircraft needing modifications before delivery. With the Q400 and CRJ700 it led to reliability issues after entry into service.

Speaking at the JP Morgan Chase Transportation Conference earlier this week, Bombardier CFO Pierre Alary painted a different picture for the CSeries program. For a start, there is the six-month delay to first flight, forced on Bombardier by delays in assembly of the complete-airframe structural-test article and first flight-test vehicle, FTV-1. Then there is, in his words, the "very, very slow ramp up" in production rate.

As the original December 2012 deadline for first flight approached, and major sections of the aircraft still had not arrived at the Mirabel, Montreal, assembly line, Alary says it became apparent that a "little delay" of 5-6 months in a 5-year program "would not have significant impact." And he may be right. as customers have not exactly been knocking down the doors to get the CSeries.

More significant is the production ramp-up, which is distinctly un-Bombardier-like: 30 aircraft in the first full year after entry into service, 60 the next year and the full 120-a-year rate in the third year. If Bombardier hits its mid-2014 target for the initial, smaller CS100, that will mean just 15 deliveries in 2014, rising to 45 in 2015, and so on. "It is really a gradual ramp-up," says Alary.

The Bombardier CFO says this plan will avoid building up a lot of inventory before certification, and avoid the time and cost of having to rework those aircraft with flight-test changes before delivery (think 787). It will also give Bombardier and its suppliers more time "to set up manufacturing to be as efficient as possible as quickly as possible," he says.

For Bombardier, that last part is important because it is promising shareholders that revenues and margins at its aerospace business - hard hit by the collapse of the regional-jet market - will improve dramatically after 2015 once the CSeries is in profitable full-rate production.

As for those missing sales, Alary says airlines hold back from placing orders for a new aircraft for several reasons including development risk, uncertainty on timing of certification and the need to see how the aircraft performs. "Risk gets eliminated as the program progresses," he says. "First flight is a milestone towards retiring development risk and could be a catalyst for orders. There are customers waiting," he says.


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