Bombardier to Reassess CSeries Service Entry After Flight

Bombardier Inc. (BBD/B) signaled that it may need to push back the timeline for the commercial debut of its CSeries aircraft, its largest model ever, after postponing the jet’s first flight for a third time last week.

That delay means the planemaker will have to reconsider the goal of getting the CSeries in service with airlines within a year of its maiden flight, said Philippe Poutissou, vice president of marketing at Montreal-based Bombardier’s commercial aircraft unit.

“We are basically a few weeks away from flying the aircraft,” Poutissou said yesterday in a telephone interview. “Once we get the aircraft up in the air, we will also reassess where it is we are with respect to the entry into service.”

Resetting the schedule for commercial flying would add to the reverses for the CSeries after an inaugural flight once set for December 2012 slid to June, then to July and now to August. The latest shift was to allow time for reviewing flight systems and integrating software, Bombardier said July 24.

“It’s a hugely complex program, and they’re running into snags,” David Tyerman, an analyst at Canaccord Genuity Inc., said today in a telephone interview from Toronto. “All of these aircraft programs are complicated. Things can go wrong.”

‘Many Activities’

Poutissou, asked whether Bombardier wants to wait for the first prototype to fly before confirming the timetable for entry into service, said: “Absolutely. We stick by our program schedule, but of course we have many activities to get through before we can deliver the airplane, and we are going to make sure we do them right.”

Bombardier’s widely traded Class B shares fell 3.3 percent to C$4.96 at the close in Toronto, their biggest decline since Feb. 21. That pared Bombardier’s year-to-date advance to 32 percent.

The company may face fresh questions from analysts about the status of the $3.4 billion CSeries program when it reports second-quarter results tomorrow. Excluding some costs and gains, profit is projected to be 9 cents a share, the average estimate in a Bloomberg survey of 21 analysts.

Chief Executive Officer Pierre Beaudoin is counting on the CSeries as a catalyst for almost doubling annual revenue during the next decade. Designed to carry as many as 160 passengers in the largest variant, the plane is a step up in size from Bombardier’s signature regional jets and seeks to crack the Boeing Co (BA).-Airbus SAS duopoly on narrow-body airliners.

Order Tally

The delays in getting the jet airborne aren’t the only challenge. Bombardier has amassed only 177 firm CSeries orders, typically for handfuls of planes at a time instead of the hundreds or scores of jets common for established Boeing and Airbus models.

Bombardier is targeting 15 CSeries deliveries in 2014, rising to 45 in 2015, Chief Financial Officer Pierre Alary said at a conference in New York in March.

Tyerman said he now expects Bombardier to start delivering the jet in 2015’s first quarter, six months later than his original assumption. Pushing out shipments to 2015 “wouldn’t necessarily be a huge deal but if things really start to drag on, then at some point that increases the chance that they’ll have to pay out late delivery penalties,” he said.

Bombardier needs to get the plane in the air “relatively soon” so flight-test data can be shared with prospective buyers, Peter Arment, a New York-based analyst for Sterne Agee & Leach Inc., said today in a note to clients. “There are a few larger campaigns that would like to see the CSeries data before signing off on new narrow-body orders.”

Arment rates Bombardier as buy, as does Canaccord Genuity’s Tyerman.

The CSeries will cost about 15 percent less to operate and burn about 20 percent less fuel than existing competitors, Bombardier has said. The plane will feature composite materials and the new geared turbofan engine from United Technologies (UTX) Corp.’s Pratt & Whitney.

To contact the reporter on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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