Bombardier Sees CSeries Quest Tilting to Europe, Americas

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  • `Confident' can add `significant' customers over next 2 years
  • Getting close to goal of 300 firm orders by next year's debut

Bombardier Inc. is refocusing the sales campaign for its tardy CSeries jet on established airlines, a shift away from reliance on lessors and small carriers.

In its quest for 300 firm orders by the time the plane enters service next year, "mature markets" such as Europe and the Americas "are looking the most promising," said Colin Bole, senior vice president of sales at Bombardier Commercial Aircraft.

"We have activity in the Americas. We have strong activity in Europe. We have more simmering early activity in the other parts of the world,” Bole said in an interview after a CSeries presentation in Toronto Thursday. “I’m very confident that over the next two years we are going to be able to add significant customers in each region."

As Bombardier’s most-expensive plane project dragged out to more than two years behind schedule, some initial enthusiasm from customers faded and Bombardier has had to change tack after netting only one carrier among the world’s top 20 by passenger traffic: Deutsche Lufthansa AG. Bombardier last signed a deal for the CSeries in September 2014 when a unit of Australia’s Macquarie Group Ltd. agreed to buy 40 of the jets.

Investors are signaling more optimism this week about Bombardier, the worst-performing Canadian industrial stock this year. Buoyed by the company’s prediction of finding “marquee” airline customers and the prospects of unlocking billions of dollars in an initial public offering for the rail unit, the Class B shares surged 28 percent Thursday, the most since 1988, to C$1.88. That followed a 24 percent surge on Wednesday.

"Bringing in some marquee customers would definitely strengthen the order
book," said David Tyerman, an analyst at Canaccord Genuity in Toronto. "It’s still a giant open question as to whether the company can book enough orders to make this plane a financial success. Not only will they need to get enough orders, but they will need to get good enough prices."

Sales Pitch

Bole, who became chief plane salesman in May, has had to seek new customers for the CSeries and convince others to hang on. Qatar Airways Ltd. got tired of waiting seven years and gave up on a planned order for 20 of the planes, while Ilyushin Finance Co. said earlier this year it was re-evaluating an order of more than 30 jets.

Russia’s Ilyushin is a "customer that’s extremely important to us, facing its own challenges,” said Fred Cromer, president of Bombardier Commercial Aircraft. “We’re staying very close to them figuring out if there’s ways for us to support them.”

Bombardier still expects Republic Airways Holdings Inc. of the U.S. to take delivery of the CSeries, though the Montreal-based manufacturer has alternatives if the deal were to be canceled, Cromer said. Republic said in May 2014 that it was considering whether to take the planes after a change in airline strategy.

"I’ll continue to support whatever it is they want to do,” he said. “If they decide to move in a different direction, that frees up room in the firm deliveries for me to go off with those positions someplace else. While I’d love to have Republic, it’s really up to them to decide if this plane makes sense for them. If it doesn’t, then we’ll respond. We have a backup plan."

‘Growing Momentum’

Bombardier has 243 firm orders for the CSeries and 360 options. Cromer said the company is seeing “growing momentum” in its talks with potential buyers.

"We’re getting close" to a new order for the CSeries, Bole said. "Fred is re-emphasizing the goal of getting to 300, and I’m very confident we will be there."

Bole declined to identify target airlines, citing commercially sensitive information.

“We’re getting to that point where there is a significant pickup, and those key marquee customers are beginning to see the benefit of the aircraft and how it fits into their fleet plan,” Bole said. “The level of interest is just what we need, both in terms of quantity and quality."