Bombardier Inc.’s (BBD/B) aircraft maintenance and spare-parts unit may double revenue to $3 billion annually in the next five to seven years as the planemaker expands in emerging markets such as Russia and China.
Annual sales in the business now total $1.2 billion to $1.5 billion, said Eric Martel, president of the unit. Montreal-based Bombardier, the world’s largest maker of business jets and third-biggest maker of commercial aircraft, had overall revenue of $18.3 billion last year.
Bombardier and rivals such as Embraer SA (EMBR3) and General Dynamics Corp.’s (GD) Gulfstream unit are vying to capture a growing share of an expanding market for aircraft and parts. Bombardier’s most recent forecast calls for 24,000 business jets and 13,100 commercial aircraft of 149 seats or less to be delivered by 2030. Bombardier plans to deliver about 180 business jets this year and 55 commercial planes.
“The installed base is increasing, there are more airplanes to be served, and there are markets today where we don’t capture our share,” Martel said in an interview at a Bombardier maintenance and operations conference in Montreal yesterday. “That’s why we think we can double our business globally in terms of service in the next five to seven years.”
Product Support Survey
Bombardier is expanding its service division -- which was created in 2008 and now employs about 5,000 people at maintenance sites, parts depots and call centers -- to address shortcomings in product support. The business also includes sales of amphibious aircraft, which totaled four last year, and pilot training operations. Bombardier trains about 6,000 to 7,000 pilots and mechanics annually, Martel said.
Bombardier has consistently trailed rivals such as Gulfstream and Textron Inc.’s (TXT) Cessna for service over the last few years -- though the gap is narrowing. The highest ranking by a Bombardier business jet in an Aviation International News survey of product support last year was sixth place. Ratings for Bombardier’s Challenger and Global models increased from their 2010 levels, Aviation International said.
“Service was a bit of a challenge for us a couple of years ago,” Martel said. “We were not pleased with some of the survey results, the perception that people had of our company. Today we have caught up on a lot of things. We are really getting there.”
‘Ways to Go’
Bombardier said in February it would open a service center in Singapore next year, its 10th such wholly owned facility globally and its first in Asia. The company also has more than 50 authorized service facilities in cities such as Doha, Qatar.
Regional service offices may also be opened in Russia, China and Africa in the next few years, Martel said. Bombardier will consider joint ownership with local investors, he said.
“We’ve seen year-over-year improvement in their customer- service scores, but it takes time to change customer perceptions,” said Chris Murray, an aerospace analyst at PI Financial Corp. in Toronto. “They still have a ways to go but the trend is positive.”
To ensure customers have faster access to parts, Bombardier has increased the amount of inventory it carries to about $1.5 billion, a 13 percent gain from 12 to 15 months ago, Martel said.
“We have built an infrastructure so that we can say yes all the time,” he said.
Round the Clock
Bombardier now offers round-the-clock assistance to jet owners who need immediate repairs by assigning staff to unscheduled maintenance operations at all times, Martel said. Unscheduled repairs represent about 40 percent of all maintenance work, he said.
“You invest in a business jet to get to where you need to be fast, so if the plane is not working, it’s critical,” said PI Financial’s Murray. “Any sort of delay in the maintenance would impact the manufacturer’s reputation.”
More than 6,700 planes built by Bombardier are in service globally, including about 4,000 business jets and about 2,700 commercial aircraft such as the Q400 turboprop.
Of Bombardier’s 4,000 business jets, about 60 percent are based in North America, Martel said. As recently as 2000, Bombardier sold about 80 percent of the planes within North America, he said.
Aerospace accounted for $8.6 billion, or 47 percent, of Bombardier’s revenue in the fiscal year ended Dec. 31.
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