Bombardier launches new C-Series jet

Bombardier launches new C-Series jet July 14, 2008: FARNBOROUGH, England — Germany's Lufthansa propelled Bombardier's long grounded, $3.3-billion C-Series jet into the air Sunday morning with a 30-plane order that will eventually create 3,500 jobs in the Montreal area. The deal, announced the day before the opening of the Farnborough air show, was smaller than many analysts had expected. But there were strong rumours, not denied by Bombardier, that the week-long show might produce many more orders for the C-Series. ”We are engaged in active discussions with a number of airlines worldwide,” Pierre Beaudoin, Bombardier's CEO, said at the news conference. The leading potential customers for the 110- to 130-seat plane are Qatar Airways and International Lease Finance Corp., the world's largest aircraft lessor. ”Qatar and ILFC are almost certain,” said Toronto analyst Jacques Kavafian of Research Capital, who is at Farnborough. ”The show's far from over yet. They'll get more.” The Bombardier C-Series: Lufthansa placed a 30-plane order Sunday that will eventually create 3,500 jobs in the Montreal area. The new plane Bombardier CSeries 130- Seats: 120 to 145- Range: 4,074 km- Max. weight: 59 tonnes- Wings: made in Belfast- Fuselage: made in China- Engine: TBA - Rear fuselage, cockpit: made in Saint-Laurent, Que.- Final assembly: Mirabel, Que. - Expected delivery: 2013 The rivals Embraer- Model: Embraer 195- Price: NA - Seats: 108 to 122- Range: 4,074 km- Max. weight: 48 tonnesAirbus- Model: A318- Price: NA- Seats: 107- Range: 5,950 km- Max. weight: 59 tonnesBoeing- Model: Boeing 737-600- Seats: 110 to 132- Range: 5,648 km- Max. weight: 66 tonnes on takeoff.Sources: Chris Hannay, company documents Lufthansa, Europe's second biggest airline, after Air France-KLM, is a loyal Bombardier customer. It was the first buyer of Bombardier's CRJ regional jet, the flying mini-van that went on to dominate the short-haul market. The 30-plane order is not guaranteed, as it is still in the ”letter of intent” stage. But Nico Buchholz, the senior vice-president of the 530-plane Lufthansa fleet, gave every indication letter would be converted to a firm order later this year. ”It's a paperwork issue,” he said. The German carrier was attracted by the 20-per-cent fuel savings over comparable aircraft promised by the new plane. Lufthansa also agreed to take an option on 30 additional aircraft. If all 60 planes are bought, the sale would be worth about $2.8-billion (U.S.) at current list prices. The price of the aircraft is $46.7-million, before any incentives and discounts. Bombardier has ambitious plans for the C-Series, a single-aisle, twin-engine plane that conceived four years ago and shelved in 2006, when the company's sinking order book and financial turmoil gave it neither the confidence nor the financial firepower to take on a bet-the-company project. Aided by booming sales for trains, Bombardier has since reversed its fortunes and is taking on new projects. Gary Scott, the former Boeing executive who is president of Bombardier's commercial aircraft division, said the company estimates the global aviation market will absorb 6,300 aircraft in the 100- to 149-seat range over the next 20 years. ”We expect to take 50 per cent of that market,” he said. In spite of Bombardier's confidence in the jet, it is laying much of the project risk on governments and suppliers. Bombardier plans to spend about $2.6-billion (U.S.) in research, development and engineering, then $700-million in working capital, taking the total to $3.3-billion. Of the $2.6-billion, roughly equal portions will come from Bombardier, suppliers (such as Pratt & Whitney, the maker of the engine for the C-Series) and governments. The Canadian government will put in $350-million, the Quebec government $118-million and the governments of Northern Ireland and Britain £155-million ($311-million Canadian). Northern Ireland and Britain put up the money to secure the right to build the plane's composite wings, a project that will create 800 jobs. The governments' assistance was described as ”repayable loans.” The governments will receive a royalty on each plane produced. If the plane is a sales dud, they will lose money. If it sells well, they will receive all their money back, and possibly more. The Quebec government was thrilled about the launch of the C-Series because of the jobs it will create – 1,000 during the research and development phase, and a total of 3,500 when production gets rolling. Final assembly will take place in Bombardier's plant at Mirabel, north of Montreal. A Saint-Laurent factory will make the aft fuselage and cockpit. Some components will be made in China, although Bombardier is waiting until Tuesday to provide details. ”This [the C-Series] is a good sign of viability across the aerospace industry,” said Claude Lajeunesse, the CEO of the Aerospace Industries Association of Canada. He said total direct aerospace employment, which now stands at 82,000, more than half of which is in Quebec, took a dip after Sept. 11, 2001 terrorist attacks. The launch of the C-Series should push the figure higher, he said, as parts suppliers set up shop in Canada. While the C-Series would compete with the Boeing 737, the Airbus 320 and their variants, Bombardier is apparently emboldened by lack of plans by either manufacturer to replace the small jets with more efficient models in the near term. Boeing did not comment on the C-Series on Sunday. But Boeing's Commercial Airplanes marketing chief, Randy Tinseth, suggested in a conference call on Wednesday that the Bombardier plane may not offer the savings that small jet customers are seeking. He said Boeing is watching the market for short-haul aircraft "very closely.”