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8 WINGS | March/April 2015 WWW.WINGSMAGAZINE.COM

THE LEAD

BOMBARDIER: WHAT

NOW?

Bombardier has hit the ultimate re-set

button. The blood-letting, which recently

included the departure of Ray Jones, the

marketing face of the CSeries jetliner,

and the layoff of 1,000 employees in the

United States and Mexico working on

the revolutionary Lear 85, now on hiatus,

has flowed up to the top office. In mid-

February, Pierre Beaudoin stepped down

as chief executive of the largely family-

controlled airplane and train-maker.

There are many late nights ahead for

his successor Alain Bellemare, a former

United Technologies (UTC) executive,

who once headed Pratt & Whitney Canada

and was most recently chief executive

of the Connecticut-based technology gi-

ant’s aerospace division. Beaudoin is now

executive chair of Bombardier and will

have influence over the direction of the

company, but it will be up to Bellemare to

disentangle the Gordian Knot of airplane

programs that has become tighter under

Beaudoin’s watch.

Bellemare will be wise to abandon

Bombardier’s recent British constable

response to industry and market concerns

over CSeries program delays, depleting re-

sources and plunging stock values: “noth-

ing to see here, please move along.”

The markets have lost faith in Bombar-

dier. On the day Beaudoin announced he

was stepping down, the company finally

confirmed their concerns. Delays in the

CSeries program have cost Bombardier

the two-year advantage the airframer had

over the Airbus re-engined A320 aircraft.

That was known. It has also cost the

airframer an additional $1 billion in de-

velopment expenses, pushing the ground

breaking airplane to the $5.4 billion mark

and obviously starving the business jet

division of needed resources.

Bombardier doesn’t need to break out

the begging bowls, but it is proactively

easing cash-flow problems, raising $2.

billion by issuing $600 million in new

shares while borrowing the rest. There

are questions over the terms the wounded

transport company can wring from the

money markets, but the larger question

might be how much this great Canadian

enterprise will remain intact years from

now. The company split into four divisions

last summer and has since sold bits of its

portfolio such as the military flight-train-

ing business to Montreal neighbour CAE

Inc for just under $20 million to raise

cash. All the while denying that the larger

pieces such as business aircraft or com-

mercial aircraft units are on the auction

block. That appears to have changed. On

the day Bombardier announced an execu-

tive shake up, it admitted that “industry

consolidation” (market speak for acquisi-

tions, or in this case a merger or takeover)

was on the table.

Over the short term, with the Paris Air

Show on the immediate horizon, Bombar-

dier has to scrabble over recent setbacks

to pull out the impressive win the CSeries

is positioned to deliver but has been un-

able to do so, likely because Bombardier’s

cash crunch has handicapped it from of-

fering the sweet spot terms that customers

for Airbus and Boeing’s re-worked A

and 737 jets have been able to negotiate.

A minor gain might already be in place.

Bombardier has secured a launch customer

for the CSeries when it finally enters ser-

vice, still expected at the end of this year.

That should also be atop Bellemare’s ‘to

do’ list; ending the frustration of custom-

ers and markets by announcing a realistic

date when the CS100 and CS300 (sched-

uled to make its first test flight by April)

will enter service.

Swedish regional airline Malmö Avia-

tion was largely tipped to be the CS

launch customer, although Bombardier

denied that was ever set in stone. The

Wall Street Journal had reported that

Bahrain’s Gulf Air was a tentative launch

customer, but dropped those plans in

2013.

Bombardier refuses to say who the

launch customer will be, or whether it

is a new customer. There are orders for

243 CSeries aircraft, including 180 for

the larger CS300. The CSeries is reported

to be the preferred aircraft for Austrian

Airlines, a subsidiary of Lufthansa Group,

to replace its ageing fleet of Fokker re-

gional jets, but no decision has been made

and the airline is said to be frustrated by

repeated delays. Swiss International Air-

lines, another Lufthansa subsidiary, has

orders for 30 CSeries.

Bombardier remains a family business,

which often suffers from generational

disease and clouds decision making.

The corporate decision this year to deny

the annual share dividend may help to

sharpen the family’s focus, including get-

ting chronic delayed airplane projects out

the door. Even the rich have pocket book

issues. In the meantime, the aircraft divi-

sion is readying for Paris and has some

tough and cynical questions to answer.

PHOTO: BOMBARDIER

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11 COMMERCIAL

12 BIG NUMBERS

With a number of setbacks in 2014 behind it, Bombardier is focusing on moving ahead its CSeries

program.