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Bombardier Expects CSeries First Operator Among 2011 Orders

Bombardier Inc. (BBD/B), with no new orders for its CSeries jet in a more than a year, expects to announce an agreement this year for the airplane’s first operator, the company’s commercial-aircraft chief said.

The airliner, which is scheduled to enter service in 2013 after a first flight in the second half of next year, will attract more buyers for the world’s third-largest planemaker, said Gary Scott, president of Montreal-based Bombardier’s commercial-aerospace unit.

“The last thing I’m worried about is orders,” Scott said in an interview while in New York. “I know the number of customers I’m talking to. I’m more concerned about being able to provide enough airplanes as my customers would like.”

Signing up a launch customer, who agrees to be the airplane’s first operator, is important for planemakers, because it shows support for a new aircraft. Deutsche Lufthansa AG (LHA) was the first order announced, yet doesn’t plan to take delivery until sometime after the plane’s 2013 introduction.

The CSeries has received no new orders since Republic Airways Holdings Inc. agreed to buy 40 jets and took options for 40 more about a year ago. Some analysts have questioned whether that indicates a lack of demand for the aircraft, which will seat 100 to 149 passengers.

Scott said it’s not possible yet to say whether Bombardier would be able to announce new orders for the CSeries in time for the Paris Air Show next month. The company doesn’t try to time orders to the industry’s biggest gathering, he said.

‘Ramp Up’

“Today, among the very active discussions we have going, we have competing customers for that first airplane,” Scott said. “We will have more orders this year. And I fully expect one of those orders to include the first operator.”

“So we’re going to ramp up the CSeries as fast as we possibly can,” Scott said. Bombardier is preparing facilities to produce sections of the CSeries in countries including China, Canada and Ireland, Scott said. The goal is to produce one plane a day four to five years into production, he said.

The company is seeking the slice of the narrow-body airplane market for up to 149 seats, the smallest size in passenger capacity of the world’s biggest aircraft market.

That puts it in competition with planes in the smallest range of seat capacity from Chicago-based Boeing Co. (BA) and Toulouse, France-based Airbus SAS. Almost half of narrow-body planes in the air today, or 5,550 aircraft, are in that seat range with an average age of 13 years, according to research firm Ascend.

Boeing Plans

Boeing said yesterday the company may decide in the next nine months whether to build a successor to its narrow-body plane by 2019 that seats 150 to 220 people. That would leave the 100-seat to 150-seat category targeted by the CSeries unaddressed, Bombardier has said.

Boeing, the second-biggest commercial-aircraft maker, prefers building an all-new plane to offering new engines on the existing aircraft as larger rival Airbus did with its narrow- body A320. Airbus has said it plans to produce the smaller A319Neo next, then the A321 version, the largest.

Boeing, which still hasn’t committed itself to a narrow- body strategy, will make a decision on whether to build a new jet and what size it would be by the end of this year, sliding the decision beyond the Paris show, executives said yesterday. The smallest 737 sold now starts at 125 seats.

Airbus may not have a new narrow-body before 2027 as it doesn’t expect enough engine technology advances before then to warrant a $10 billion development program, Chief Operating Officer John Leahy has said.

Fuel Tradeoff

Neither planemaker has taken away expected orders from Bombardier’s planned aircraft, Scott said.

Potential CSeries orders from carriers such as Qatar Airways Ltd. were in limbo last year as airlines grappled with risking capital on a new plane while contending with volatile fuel prices as the industry recovered from the financial crisis.

Even if Airbus wins orders for its upgraded plane from a carrier like Lufthansa, which in March also ordered A320neos, it doesn’t mean Bombardier is losing ground, Scott said. That’s because those models don’t occupy the same routes that demand as many seats. The CSeries is designed to help airlines temper rising fuel costs by cutting fuel consumption than current smaller aircraft, such as the older MD80s.

“Fuel is the number one differentiator with airlines,” he said. “That’s the tradeoff they have to make.”

To contact the reporter on this story: Rachel Layne in Boston at rlayne@bloomberg.net

To contact the editor responsible for this story: Vivek Shankar at vshankar3@bloomberg.net

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