Much of the extra time that was built into Bombardier Inc.'s CSeries development is used up, increasing chances that the program may not meet its end-of-2013 delivery date.
Guy Hachey, president of Bombardier Aerospace, told a morning meeting with analysts and reporters Tuesday at the National Business Aviation Association that he doesn't expect to miss the 2013 target and that the company still has some room to manoeuvre to finish the airliner on time.
"But we used up a lot of the contingency time we built in," Hachey noted.
"We're up against the wall in terms of schedule."
The company has long said that the 64 months it allotted to design and build the plane gave it enough of a buffer zone to accommodate the glitches and unforeseen developmental problems that are normal for a new aircraft introducing new technologies.
"I don't see a miss," Hachey said, "but we are under pressure."
He identified "five or six areas" that "we're watching carefully," including the flyby-wire system, an electronic system that directs flight controls, and the first full such system for Bombardier. Hachey added he is watching "to a lesser extent" avionics, the software for those controls, the electrical system, the advanced carbon-fibre composite wings and the fuselage sourcing from its Shenyang Aircraft Corp. partner in China.
He did not mention any specific problem, but added that "we're going through a learning curve."
He added there are some issues but no overriding problems with suppliers, unlike what happened with Boeing Co.'s 787 Dreamliner and Airbus's A380.
"What I'm most worried about, though," Hachey said, "is not the things we mentioned. It's the ones that we don't know about yet that will bite us.
"There are a lot of moving parts, and what worries me the most is what happens when you put these parts together.
"But we haven't run up against anything we can't manage yet."
Cameron Doerksen, an analyst with Montreal's National Bank Financial, said in an email that "it is pretty typical on a new program that some of the margin will get eaten into. I don't think it means a delay is assured, but that is always a risk."
Eventually, Hachey predicted, the CSeries will be "wildly successful."
He was also more explicit about the future of the company's regional-jet program than in the past.
Bombardier no longer produces the 50-seat CRJ100 and CRJ200s that launched it into the airline market nearly 20 years ago, but still makes the CRJ700 70-seater, CRJ900 90-seater and CRJ1000 100-seater at Mirabel.
"There's probably another decade's worth of good business there for us," he said, "but the market is getting crowded."
He told The Gazette in an interview later that "we feel there's enough demand out there because of the (1,200 50-seaters sold by Bombardier over the years that can be upgraded to larger CRJs).
"There's enough demand from emerging markets to keep the franchise going for another 10 years. After that the market says there's still demand, but I'm a bit skeptical.
"That why I'm saying yeah, 10 years, good run, still good for Mirabel. But after that, unless we re-invest, we're probably looking more at a wind-down. But that's a long way out."
Bombardier's cash flow will be negative for the year, Hachey said, due to the lack of sale of regional jets and Q400 turboprops.
"I would have liked to see a much, much better performance on the commercial aircraft side (so far this year)."
He conceded in the interview Bombardier has lagged in establishing itself in emerging markets, but said that it was rectifying that.
"Unfortunately, for whatever reasons, our strengths are in North America and Europe, and both those markets are very, very soft right now."
Embraer, Bombardier's Brazilian competitor, has been tapping emerging markets for longer and more effectively, analysts say.
"We got caught flat-footed in that regard, fine," Hachey said. "We're repairing that. You'll soon see a lot of orders coming from the emerging markets."
But that cost the company dearly, said David Tyerman of Toronto brokerage Canaccord Genuity.
"Low RJ and turboprop orders do hurt Bombardier Aerospace free cash flow," Tyerman wrote in an email, "both because of lower (cash) advances and slower production.
"And, of course, they are using a lot of cash on development programs. Cash investment is supposed to peak this year, but remain very high next year, too, and then start coming down. So this is not the best time for the RJ and turboprop businesses to slow."
Hachey said that the negative cash flow "will not be significant."
Eric Martel, Bombardier's new president for customer services, said that being present in international markets is "at the top of my list."
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