Bombardier's C Series Jet Earns Praise From Delta's Chief

  • Jet is `competitive' at the right prices, Anderson says
  • Planemaker hasn't logged new C Series order in 16 months

Bombardier Inc. got an unexpected boost when Delta Air Lines Inc. said it is taking a “serious look” at the Canadian company’s C Series model, signaling new prospects for a jet mired in a sales drought.

“At the right price, it’s quite a competitive airplane, particularly given the engine technology,” Delta Chief Executive Officer Richard Anderson said on an earnings conference call. Bombardier brought the C Series to the airline’s Atlanta base before Christmas, Anderson said Tuesday. The airline said a C Series order isn’t imminent.

Bombardier surged 9.4 percent, the biggest intraday gain since Dec. 18, following the comments from Anderson, often an industry bellwether. The Delta CEO triggered a sell-off in planemaker stocks in the past quarter when he suggested that the market may be glutted with some wide-body aircraft models. Bombardier’s shares closed up less than 1 percent at C$1.18 in Toronto as North American stocks pared earlier gains.

The C Series is Bombardier’s largest commercial jet, with 100 to 150 seats, but has been slow to catch on with major carriers as it battled delays and market leaders Boeing Co. and Airbus Group SE. The $5.4 billion development program for the aircraft is more than two years late and at least $2 billion over budget. The Montreal-based company has been seeking government aid to right itself.

“If they got a flagship order from a company like Delta, that’s a big deal,” said Chris Higgins, an analyst at Morningstar Inc. “That’s a stamp of approval on the C Series, and they need that.”

Bombardier is moving toward full production of the marquee jet. The planemaker expects to assemble 15 to 20 C Series planes this year, then speed output to about 120 aircraft annually by decade’s end.

Oil Prices

The jet hasn’t logged a new order since September 2014, and Bombardier recently signaled it was willing to price the C Series aggressively in an attempt to lure customers away from Boeing and Airbus, which dominate its segment. The sharpest selling point of the C Series -- its 20 percent fuel savings, thanks to a composite fuselage and cutting-edge engines -- has been dulled by the collapse in oil prices, Higgins said.

“I’m very, very encouraged by all the feedback we’re getting every time we show the airplane, especially from some of the larger airlines that have multiple fleet types from many manufacturers,” Fred Cromer, president of Bombardier Commercial Aircraft, said in an interview. Even at $30 a barrel, fuel represents a significant cost to airlines, he said. 

“If they have the opportunity to save 20 percent, that’s still going to be attractive,” Cromer said.

New Engine

Delta’s CEO praised the aircraft’s geared-turbofan engines, made by United Technologies Corp.’s Pratt & Whitney division. The new engine is the industry’s biggest innovation since Boeing pioneered a carbon-composite fuselage airframe with its 787 Dreamliner jets last decade, Anderson said.

Fleet decisions by Delta are closely watched in the industry because the second-largest U.S. carrier has a reputation for spotting hidden value in aircraft. United Airlines also is studying the jet, as well as models from Boeing and Embraer SA.

Delta is considering the C Series and other narrow-body models as it replaces small 50-seat aircraft flown by its regional affiliate airlines, said Delta spokesman Trebor Banstetter.

Delta last month said it would buy 20 Embraer E190 jets, which also seat around 100 people, along with 20 of Boeing’s largest current 737 models. The carrier earlier scrapped an order from the planemakers after pilots voted down a tentative contract agreement. That planned order had been intended to encourage pilots to approve the pact.

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