Analysis: Bombardier gambles on big order payoff with new jet

Thu Jun 13, 2013 1:29pm EDT
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By Susan Taylor and Solarina Ho

TORONTO (Reuters) - Canada's Bombardier Inc (BBDb.TO: Quote) is hoping to carve a new niche in the cutthroat airplane market with a fuel-efficient, medium-haul jet that makes its first flight this month, but its all-new CSeries needs an avalanche of orders to stave off bigger rivals.

Bombardier's narrow-body CSeries, aimed at a gap in the market, offers a lightweight carbon-composite frame like Boeing Co's (BA.N: Quote) 787 Dreamliner, and new, fuel-saving Pratt & Whitney engines.

But there are two big challenges: Persuading the market there's room for a plane positioned midway between regional jets and bigger commercial planes, and tempting customers to abandon the big players who have dominated for years.

"You're going up against some serious entrenched competition and if you have the balance sheet to get through that, and gouge out a position in the market, there's something here," said Richard Aboulafia, vice president of aviation consultancy Teal Group. "If you don't, then you're jumping into a volcano with an armful of money."

Bombardier invested $3.4 billion to create the CSeries, which has between 110 and 130 seats, plus a tightly packed version that can seat up to 160.

It expects 300 firm orders worth $19 billion by the time the plane enters service in mid-2014, up from 177 at present.

Next week's Paris Air Show offers a chance to boost the still-slim order book, although the jet won't be on display. Its maiden flight won't come until the end of June, following a six-month delay that Bombardier blamed on supplier issues.

Bombardier insists its CSeries is now on schedule. "I'm very comfortable with the first flight, I'm very comfortable with the entry into service," said Mike Arcamone, president of its commercial aircraft division.   Continued...

A security guard looks on as Bombardier unveiled its CSeries aircraft at a news conference at its assembly facility in Mirabel, Quebec, March 7, 2013. REUTERS/Christinne Muschi