MONTREAL — Bombardier downplayed the lack of new orders for its much-vaunted CSeries plane, but observers said Monday the Farnborough Airshow has begun on a very troubling note for the world’s third-largest aircraft manufacturer.
Richard Aboulafia of the Teal Group said the Montreal-based manufacturer has a small window of opportunity to boost its orders, with both strong airline traffic and high fuel prices working to its advantage.
Yet the market is betting on planes from Airbus and Boeing, which together announced 192 orders Monday worth about US$20 billion.
“They risk being marginalized and need to turn this around fast, before the big two launch new re-engined products,” he said of Bombardier in an email from London.
Expectations ran high before the show that Bombardier (TSX:BBD.B) would announce orders for its 110- to 149-seat aircraft, but so far those hopes have been dashed.
Bombardier’s shares closed down 6.54 per cent Monday, falling 31 cents to C$4.43 on the Toronto Stock Exchange.
The company blamed the trouble on its competitors Airbus and Boeing, which have wavered on whether to replace the engines on their popular A320s and 737 planes with newer ones that use more fuel-efficient technology. Bombardier said that has affected the buying decisions of their own potential customers.
“It does definitely delay some of the orders for the CSeries,” Gary Scott, president of Bombardier’s commercial aircraft division, said at the air show.
Ultimately, the buyers are likely to order planes that offer the best fuel-efficiency.
Guy Hachey, president of Bombardier Aerospace, said the manufacturer has talked with 65 potential buyers, including 11 that are well advanced.
So far, the CSeries has attracted 90 firm orders and 90 options.
Qatar Airways said it remains interested in the CSeries even though an expected order hasn’t yet panned out.
“We would have been happy to do something at the show, but unfortunately some issues have not been resolved,” Qatar Airways’ chief executive Akbar al-Baker told reporters.
The undisclosed issues involve Pratt and Whitney. Company spokeswoman Katy Padgett declined to disclose the nature of the impasse, but said all sides continue to seek “mutually agreeable terms.”
Instead, the Middle East-based airline ordered three business jets — two Global 5000 and a Challenger 605, added at the last minute. The deal is worth US$122 million at list prices, although airlines often negotiate substantial discounts.
Bombardier is under pressure to add to its list of customers for the CSeries, which was officially announced two years ago at the air show. Deliveries of the next-generation passenger jet are to begin in 2013.
John Saabas, president of Pratt & Whitney Canada, called the existing CSeries orders “big wins.”
“The key is patience,” he said from Farnborough.
Unconfirmed reports suggested Bombardier could still snag a CSeries order before the show concludes. Spokesman John Arnone said the manufacturer remains hopeful, but the process is complicated and that it doesn’t co-ordinate announcements with any particular air show.
“If it should happen that some of the more advanced discussions we’re having with airlines culminate with an order during the show that would be wonderful. If not, we continue with the active sales campaigns all over the world,” he said in an interview from London.
Arnone added that Bombardier isn’t disappointed by the lack of new orders.
“We have stated in the past and we continue to believe that the progress of our orders is good and the potential for additional orders remains strong.”
Bombardier said the plane has captured half of the net orders in the market segment over the last two years and continues to pass key development milestones.
In Belfast, Bombardier Aerospace completed load tests on the composite demonstrator wing that replicated 150 per cent of the most severe forces the wing is ever likely to experience in service.
Production of the wings is scheduled to begin early next year in a new facility whose construction is nearing completion.
The Chinese-built aluminum-lithium fuselage test barrel has completed 60,000 fatigue cycles since arriving nearly a year ago.
And wind tunnel tests have confirmed the CSeries aircraft’s overall performance. Detailed wind tunnel tests will continue throughout 2010 and final production wind tunnel tests will be conducted in 2011.
Construction of the test area in Mirabel, north of Montreal, is progressing on schedule. The building has been completed and the testing and rig infrastructure are being installed. The facility will test aircraft systems one year before the airplane’s first flight.
Industry Minister Tony Clement said Canada’s aerospace sector, is a cornerstone of the economy that employs 83,000 skilled professionals and has nearly $24 billion in annual sales.
“There is no question that Canada’s aerospace and defence industries are key drivers of innovation in Canada. Those that continue to innovate will lead us into the economy of the future,” he said in a speech at the air show.
Clement and Quebec Economic Development Minister Clement Gignac slated to make a funding announcement Tuesday about a Laval aerospace company.