Airlines are taking a “wait and see” approach to the new C Series plane that Bombardier Inc. is gearing up to produce, putting in jeopardy the company’s target of having 300 orders for the jet by the time it enters service in 2013.
That’s the conclusion of RBC Dominion Securities after it conducted a survey of 26 global airlines to determine how interested they are in the plane that will vault Bombardier into direct competition with Boeing Co. and Airbus SAS in the narrow-bodied segment of the commercial airplane market.
The airlines surveyed have a favourable view of the plane and the 20 per cent reduction in fuel consumption that Bombardier is promising, but are wary of the costs of adding a new type of aircraft to their fleets, concerned about price, and cautious about whether the C Series will meet its performance targets and be ready for delivery in 2013.
The most serious concern Bombardier has to overcome is airlines’ reluctance to add aircraft from a new manufacturer to their existing Airbus, Boeing and other fleets, RBC analyst Walker Spracklin said in a report that outlined the results of the survey.
“Several airlines explained that introducing a new aircraft like the C Series would involve added efforts and costs for training as well as replacement parts and maintenance, whereas upgrading to new engines from Airbus or Boeing would be a faster and simpler process,” Mr. Spracklin wrote.
Both Airbus and Boeing have announced plans to put new, more fuel-efficient engines on their A320 and Boeing 737 planes, which dominate the narrow-bodied market, but will also face competition from other airplane makers in addition to Bombardier.
Airbus is offering a choice of the same Pratt & Whitney engine that Bombardier is offering on the C Series or an engine developed by CFM International, a joint venture of General Electric Co. and Safran SA of France. Boeing is offering a variation of the CFM engine on its Boeing 737 Max.
Another engine maker, Rolls-Royce Holdings PLC, said on Thursday that it expects to be offered an opportunity to build a new engine for another new narrow-bodied plane. Rolls-Royce did not identify the manufacturer but Embraer SA of Brazil is expected to join the competition in the segment, which is the largest slice of the commercial aviation market.
Bombardier has won firm orders for 133 planes, 119 options and 10 purchase rights.
It was in the running for a Delta Air Lines Inc. order for 100 planes, but Delta said this week that it is putting off an order for planes seating between 100 and 150 passengers after reaching a deal with Boeing earlier this summer to buy 100 larger narrow-bodied airplanes. The Delta delay underscores how airlines are cautious about the plane, in part because they’re worried about the health of the U.S. and European economies.
“The C Series aircraft program is tracking well – both in orders and in its development,” Bombardier spokesman John Arnone said Thursday. “[This year] has seen significant momentum for C Series with 43 firm orders so far this year.”
Separately, Bombardier said Thursday that final assembly of its Global 7000 and Global 8000 business jets will be done at its factory in Toronto.
With a file from Bloomberg