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FARNBOROUGH (Reuters) - Bombardier launched a new 110-130 seat passenger jet, the CSeries, on Sunday in a Canadian bid to challenge industry giants Airbus and Boeing.
Announcing the long-awaited launch on the eve of the Farnborough Air Show, the Canadian company said it had selected Mirabel near Montreal as the site to assemble the planes, which will enter service in 2013.
Mirabel had been competing with Kansas City, Missouri.
German airline Lufthansa has provisionally ordered 30 planes with an option for 30 more, Bombardier said. It has not so far signed a firm contract.
The CSeries will sell for $46.7 million each.
Bombardier had previously indicated it was waiting for at least 50-100 orders before launching the aircraft, but orders were scarcer this year as high oil prices weigh on demand.
"We are engaged in active and very promising discussions with a number of airlines worldwide," Chief Executive Pierre Baudouin told a news conference.
Bombardier said the launch, coming at a time when rocketing fuel prices and a shaky economy have put the brakes on a boom in airline orders, would "revolutionize" the economics of the 100-149 seat segment due to fuel-efficient, green technology.
That is a slice of the mainstream airliner market that Bombardier's commercial aerospace chief Gary Scott believes is being neglected by Boeing -- the Seattle-based titan from which he defected to Bombardier four years ago.
"To our friends in Seattle, I say these airplanes are real and we are addressing a market space they have long ignored," he said, adding mockingly" "It's just a lousy half-a-trillion dollar market below 150 seats, we can leave that to Bombardier."
Boeing responded that airlines themselves were adding seats in this niche of the market, leaving slim pickings.
"We are not sure that this is a part of the market that we might necessarily pursue in the future. Our current market outlook predicts that airlines are likely to 'upgauge' in that part of the market," Boeing spokesman Charlie Miller said.
The build-up to the world's premier air show has so far been dominated by talk of capacity reductions because of high oil prices, leading to order delays or cancellations.
The five-abreast CSeries will compete with the smaller version of the single-aisle Boeing 737 and Airbus A320 families for new business or replacement of old planes like the MD-80.
Airbus and Boeing have a combined backlog of about 1,100 aircraft of the types Bombardier wants to poach business from, part of a 5,000-plane waiting list for single-aisle models that both jetmakers see viable until late next decade.
Besides Airbus and Boeing models, the CSeries will compete with the ERJ195 made by Brazil's Embraer, Bombardier's main rival in its existing markets.
A Bombardier executive said the CSeries family, containing two variants with 110 and 130 seats respectively, would burn 20 percent less fuel per trip than its nearest Embraer rival, reaching the "high 20s" against the Boeing 737-600 or -700.
The CSeries aircraft marks a branching out from Bombardier's current lines of regional jets and turboprops, which hold up to 100 or 80 passengers respectively.
The plane is powered by Pratt & Whitney engines.
Its wings will be built in Belfast, Northern Ireland, and the fuselage in China through a deal with the AVIC I state aviation company to invest $400 million in a new factory.
Bombardier said it would receive loans from Quebec and the Canadian government as well as Northern Ireland, and the British government is to fund a third of the research and development costs. A similar funding system in place for Europe's Airbus is being challenged by Boeing in a key U.S.-European trade dispute.
"We are confident that what has put in place is compliant with the World Trade Organization," Baudouin said.
Aviation researcher David Pritchard of the University of Buffalo said using the system that is at the heart of the world's potentially largest trade dispute could expose Bombardier to trade complaints.
"The U.S. will go after Bombardier next. Then Embraer will go after them," Pritchard predicted. But he said Embraer would likely focus its commercial rivalry on business jets rather than following Bombardier into the large airliner market.
Canada was embroiled in a lengthy dispute with Brazil over aircraft subsidies and has filed submissions as a third party to the WTO in the Airbus-Boeing dispute in order to try to uphold its own system of domestic support to aerospace.
"Everyone gets subsidies and is fighting everyone else. The only exception is China. Nobody will go after them because they are too strategically important," Pritchard told Reuters.
Editing by Quentin Bryar and Maureen Bavdek