June 17, 2013
Once three CSeries test aircraft are flying and consistently meeting their performance specifications, Bombardier expects to be able to overcome the “787 tax”—that is, customer skepticism engendered by Boeing’s development delays that the Canadian manufacturer blames for airlines’ reluctance to place orders for the new narrowbody.
Because of the highly publicized problems with the Airbus A380 and Boeing 787 development programs, and the fact that the CSeries is its largest-ever all-new aircraft, Bombardier believes it has to overcome a series of premiums—or hurdles—before the aircraft will be taken seriously.
The first of these is to fly the aircraft, now planned for the end of this month. “We have got to get rid of the program execution premium, then the performance premium, then the entry into service premium” by having a smooth introduction into revenue service, says Chet Fuller, senior vice president-commercial for Bombardier Commercial Aircraft.
“The next premium to get rid of is liquidity,” he says, which will be achieved by producing the CSeries profitably once full-rate production is reached in 2017.
Bombardier has firm orders for 117 CSeries aircraft from 13 customers, plus conditional orders that would take the total over 200 if confirmed, but it remains short of its target of 300 orders for the initial 110-seat CS100 variant by the planned entry into service in mid-2014.
The Airbus A320NEO and Boeing 737 MAX, in contrast, have amassed thousands of orders and are a year or two from first flight. But Fuller argues there are no similar premiums to be overcome for these programs because they mainly involve re-engining proven aircraft.
Bombardier also is aiming for a gradual ramp-up to a relatively modest production rate of around 120 CSeries a year, compared with around 500 a year each for the A320NEO and 737 MAX. This lower output level puts a limit on the likely backlog the company could accumulate.
“If an airline wants to take 25 aircraft at two a month, the first two-a-month position I can offer is November 2016,” he says. “We have 3-4 open slots in 2015 and a dozen in 2016.” Existing customers have options that could be exercised beginning late next year. “We have to reserve slots for the options through 2018.”
For now, Fuller says he is happy with the customer, geographic and customer-type mix of the CSeries orderbook “and we are going to continue to focus on geographic and operational diversity as we add customers.”