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Bombardier’s Scott Says Fuel Efficiency Key to Airlines’ Profit

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Sept. 26 (Bloomberg) -- Global airlines must purchase new, more fuel-efficient planes to cut costs and increase profits if they are to survive, said Gary Scott, president of Bombardier Inc.’s commercial aircraft unit.

Airline earnings will shrink next year after peaking at $8.9 billion in 2010 as austerity measures and slower growth hamper demand, the International Air Transport Association said Sept. 21. Expected earnings for 2010 compare with global sales of $560 billion, meaning that profit margins are “razor-thin,” said IATA Chief Executive Officer Giovanni Bisignani.

“As a whole, airlines aren’t making any money,” Scott said today at a conference in Montreal sponsored by the International Civil Aviation Organization and McGill University. “That’s not sustainable. The industry is struggling just to reach 2 percent of revenue” in earnings, he said.

“Optimized fleets” of new aircraft “will drive airline profitability through cost savings and revenue growth, and help enable new business models,” Scott said. Bombardier is the world’s third-largest commercial planemaker after Airbus SAS and Boeing Co.

Montreal-based Bombardier is banking on its new CSeries single-aisle jet -- which the company said will burn 20 percent less fuel than competing models -- to capture part of the demand for more efficient aircraft. Bombardier predicted earlier this year that 6,700 planes of 100 to 149 seats will be sold globally in the next two decades.

Bombardier is sticking to its target of starting deliveries of the CSeries in 2013, Scott said. That contrasts with the delays that have hit the introduction of Airbus’s A380 aircraft and Boeing’s 787.

“We launched this airplane a little over two years ago, and we are on schedule,” Scott said. “We will deliver this airplane at the end of 2013. That will be a rare feat these days.”

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

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net

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