September 17, 2013 / 12:49 AM / 5 years ago

Bombardier says cost of CSeries rose to $3.9 billion

Bombardier employees look at the CSeries aircraft, after its first test flight in Mirabel, Quebec, September 16, 2013. Bombardier Inc's CSeries jetliner successfully completed its first flight on Monday, a key step in a $3.9 billion program to develop the first all-new narrow-body plane of its size in decades. REUTERS/Christinne Muschi

MIRABEL, Quebec (Reuters) - Bombardier Inc (BBDb.TO) said on Monday that the cost of developing its CSeries jetliner had climbed to about $3.9 billion from its previous estimate of $3.4 billion.

Michele Arcamone, president of Bombardier Commercial Aircraft, said at a news conference that the figure had gone up as the development progressed and the costs became more clear. He said the aim is to keep the cost below $4 billion. The updated figure came on the day the new aircraft made its first flight.

Arcamone said the company had always targeted costs at “less than $4 billion”, and told reporters after the news conference that $3.4 billion remained the official estimate, and that costs fluctuate due to suppliers, materials and other factors.

A Bombardier spokesman later said the higher total included amortized interest, required under International Financial Reporting System accounting rules. Canada adopted the rules in 2011, after the CSeries program was launched.

“When we launched the program in 2008, we estimated the value at $3.4 billion, and that’s still the case,” said Marc Duchesne, public affairs director at Bombardier Commercial Aircraft. “But now, under the new (IFRS) accounting rules ... we need to add the interest” of about $500 million. “That increases the overall amount to $3.9 billion.”

(This story was fixed to correct when Arcamone told reporters about program cost targets in paragraph 3)

Reporting by Solarina Ho in Mirabel and Alwyn Scott in Seattle; Editing by Gerald E. McCormick, Carol Bishopric and Stephen Coates

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