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Bombardier CEO Beaudoin Downplays Widebody Regionals
Does Bombardier regret its decision to bail out of the widebody
regional jet market? Pierre Beaudoin, president and CEO doesn't
think so, based upon remarks he made at Monday's press conference.
This is despite recent success enjoyed by archrival Embraer with
its 170/190 jetliners and plans by China's AVIC 1 and Russia's
Sukhoi to throw their hats into the widebody ring with the ARJ-21
and RRJ.
"Our CRJ700 and 900 are light weight and efficient. In order
to play in the 100-seat market, it would take a paradigm shift
for us to bring a product to market that would save operators
10% to 20 % on costs. This isn't a good market for us unless we
can bring about significant advantages," Beaudoin said.
But only a few years ago, Bombardier planned to be a major player
in the next generation of wider fuselage regional jets. They witnessed
passenger enplanements aboard regional aircraft grow more than
12 % annually from 1978 and accelerate to nearly 20 % when their
first 50-seat CRJs entered service.
But, then Bombardier got cold feet. The investment was too risky
for a firm dominated by accountants and stock analysts. Better
return on investment could be achieved by stretching the CRJ into
70- and 90-passenger variants, evolutions that involved far less
risk. When Fairchild-Dornier went belly-up and dreams of the 728JET
widebody RJ evaporated, Embraer became the sole firm to continue
development of the widebody regional jet, helping to validate
Bombardier's decision to stay the course.
And now, especially in light of the slumping world economies,
the market has gravitated towards two distinct segments, according
to Steven Ridolfi, president of Bombardier regional aircraft unit.
Low passenger yield, high traffic operations, mastered by air
carriers such as easyJet, jetBlue and Southwest with 150-seat
aircraft and high-yield, low-traffic-density markets served by
regional air carriers operating 50- to 90-seat aircraft.
In Europe, for example, Bombardier's research shows a 31% growth
in low-cost carrier seat capacity, plus a 97 % increase in regional
jet seat capacity in the past three years. While traditional narrowbody
air carriers have suffered losses, in large part due to their
low occupancy rates, low costs have squeezed out a 10% profit
because they consistently fill 80% of their seats.
Regional jet operators made 13% on sales even though they filled
only 60 % of their seats, Ridolfi asserted. Bombardier now is
positioned to fill in the gaps between those extremes with its
Dash 8 Q400 that's designed for low-traffic, low-yield markets
and its CRJ-700 and 900 that specialize in higher-traffic,
higher-yield operations. The growth in 70- and 90-seats regional
jets has been "accelerated" by relaxation of SCOPE clauses
in pilot contracts, Ridolfi noted. The firm has 400+ orders and
options for the 700 and 900 and has delivered 100 units,
including three 900s with Mesa in America West livery.
Bombardier's business jet division also has embraced evolutionary
derivatives to help expand its product offerings from less than
two-thirds of the market segments today to virtually all levels
of the business jet market in the future. Making their Paris debuts
are Learjet 40, a sportier, truncated version of Learjet 45, and
Bombardier Global 5000, a foreshortened and shorter-range derivative
of Global Express. But, Challenger 300 (aka Continental) is a
clean-sheet design intended to compete in the rapidly growing
super mid-size market. Challenger 300 has created as much excitement
among business aircraft operators as any new business jet in recent
years.
By Fred George
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