August 29, 2014 / 11:14 PM / 3 years ago

Swedish carrier backs out as first Bombardier CSeries operator

3 Min Read

TORONTO, Aug 29 (Reuters) - Bombardier Inc's troubled aerospace business faces more upheaval as a Swedish carrier backed out as the first customer to start commercial flights with its new CSeries jet and the Canadian firm said more senior aerospace executives will be laid off.

Malmo Aviation, owned by Sweden's Braathens Aviation, was slated to be the first CSeries customer to take delivery of the new jet in the second half of 2015, but the airline said on Friday that will no longer be the case. It cited worries about further delays after a May engine failure grounded the jets.

"It has subsequently emerged that this may cause another delay to the CSeries introduction," Braathens said in its second-quarter 2014 report.

"We have informed Bombardier that we will not assume the role of formal launch operator of the aircraft type."

Bombardier shares closed down 3.2 percent on the Toronto Stock Exchange.

Braathens said due to the increased uncertainty, it was in discussion with Bombardier about other possible changes to the delivery schedule. The Swedish firm has ordered 10 CSeries aircraft.

"Per the original contract the first CS100 should have been delivered by now - mid 2014," Geir Stormorken, a spokesman for Braathens, said in an email.

Bombardier spokesman Marc Duchesne said Malmo notified the company of its intentions several days ago.

Bombardier hopes the CSeries, which claims superior operating and fuel efficiencies, will win a sizeable portion of the 100- to 149-seat jet market, but many airlines are taking a wait-and-see stance as it undergoes flight tests.

The Montreal-based plane maker has restructured its aerospace division recently to cut costs and help address delays in the CSeries jet program.

"You can anticipate that a few other (aerospace) leaders will also be let go," Isabelle Gauthier, Bombardier's senior aerospace spokeswoman, said.

The ambitious multibillion dollar CSeries program gives the Canadian plane and train maker a foothold in the larger commercial jetliner segment, pitting it against the smaller planes made by Boeing Co and Airbus Group.

Bombardier has said test flights would resume "in the coming weeks" without giving a specific time frame. Some analysts and industry experts expect the test planes to fly in early September.

Duchesne said the engine incident would not defer deliveries and that the CSeries was still on track to go to customers in the second half of 2015, the current entry-into-service time frame.

But with the planes grounded and only a modest number of flying hours under its belt, speculation has increased that it could be closer to the end of 2015, possibly early 2016. (Reporting by Solarina Ho; Editing by Lisa Shumaker)

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