Farnborough: Bombardier's new jet has difficult take-off

Bombardier CS100 passenger jet Test flights of Bombardier's C-Series aircraft were halted in May after an engine fault

Another airshow, and another question mark over Bombardier's ambitious new passenger jet.

At last year's Paris show, Bombardier was triumphant about imminent test flights of its long-awaited C-Series aircraft. But the test schedule had to be pushed back a few months.

At Farnborough, the questions have been about what caused a C-Series engine failure during a ground test in May.

Test flights have yet to restart, despite the company saying it hoped to have the aircraft airborne again by the end of June.

The $4bn (£2.3bn) aircraft programme is supposed to be a game-changer for the Canadian company, taking it into a market for longer-range aircraft.

Designed from scratch, the all-new C-Series, with its claimed superior fuel and operating efficiencies, will compete in the market for 100-149 seat aircraft.

The company, known for producing smaller aircraft and corporate jets such as Lear (as well as trains), is now nibbling at the heels of industry giants Airbus and Boeing.

Nigel Cassidy on Bombardier, a challenger to the global might of Boeing and Airbus.

'Back in the air'

But along the row of Bombardier aircraft displayed here at Farnborough, the C-Series is conspicuous by its absence.

Start Quote

It's a new-technology aircraft and it fits into a whole new category in the sector”

End Quote Mark Hughes Falko

"It would have been great to have had the plane here," says Guy Hachey, the company's president and chief operating officer.

"We had a problem with the engine. We've found the root cause and are doing modifications. We are confident we will be back in the air in a few weeks."

There is a mock-up of a C-Series cabin at the show - and very impressive it looks, too. But it is not what potential customers hoped to see at the year's most important aviation trade fair.

Mr Hachey told the BBC that Bombardier remains on course to deliver its first aircraft in the second half of 2015, to Malmo Aviation. However, the C-Series was initially scheduled to enter service last year.

A model of a Bombardier C-Series jet is pictured among promotional balloons following a press conference at the Farnborough Airshow The real C-Series was conspicuous by its absence at Farnborough

The longer the delays continue, the greater the risk that Bombardier's first-mover advantage is eroded as its competitors catch up.

Farnborough orders

The engine problems related to the oil system, says Mr Hachey. And if, as claimed, the changes require a modification rather than an engine overhaul then the resumption of test flights in weeks, not months, seems reasonable, analysts say.

But the C-Series needs to pass another 2,000-plus hours of test flights before it gets air certification. And no air certificate means no customers.

Significantly, though, the engine problems do not seem to have caused a wave of cancellations.

A mock-up of a Bombardier CS100 in Malmo Aviation livery Sweden's Malmo Aviation will get the first CS100 in 2015

Five new customers have been announced at Farnborough, although these have been mainly letters of intent rather than firm orders.

Start Quote

The target is to secure 300 firm orders by the aircraft's entry into service next year”

End Quote Guy Hachey President, Bombardier

Zhejiang Loong Airlines became the second Chinese company to want the jets, and Jordan's Petra Airlines also announced an intent to buy.

Falko Regional Aircraft, a UK-based leasing company, also signed letters of intent for 24 C-Series 100 jets. The company already has Bombardier's regional jets and turboprops in its leasing portfolio.

"It's a new-technology aircraft and it fits into a whole new category in the sector," says Mark Hughes, Falko's executive vice-president of corporate finance.

"We are confident about its future and positioning in our core marketplace. As we begin a period of worldwide growth and expansion with a strong pipeline of acquisitions, the C-Series aircraft will figure prominently in our plans."

CS airliner interior Bombardier is confident it can win a significant share of the market for this type of passenger jet
'Achievable targets'

Mr Hachey refuses to be downcast about the fact that Air Canada, the national carrier in Bombardier's home country, has yet to place an order. The airline recently finalised an order for 61 Boeing 737 Max aircraft, with between 162-180 seats.

Start Quote

Bombardier is in a challenging position”

End Quote John Strickland Aviation consultant

"These aircraft are designed for a different purpose," Mr Hachey says. "It does not mean Air Canada won't buy the C-Series."

Nor is there disappointment about the C-Series order book. It currently stands at 203 firm orders, from 19 customers.

Mr Hachey says: "The target is to secure 300 firm orders by the aircraft's entry into service next year." Achievable? "It will be achieved," he insists.

He sees the market for aircraft in the C-Series segment as being some 7,100 planes over the next 20 years. "We think we can take the lion's share," he says. "We've been studying this area for several years."

However, that demand estimate implies average annual sales of 355 aircraft - far below the average for the past few years.

The logo of Brazil's aircraft manufacturer Embraer Bombardier faces increasing competition from manufacturers like Brazil's Embraer
'Long gestation'

"The market segment is under-served right now," Mr Hachey says. "We decided to optimise an aircraft for this segment." In other words, the C-Series will grab a bigger share of a bigger pie.

Analysts, though, are more cautious. "Bombardier is in a challenging position," says aviation consultant John Strickland.

"The C-Series has been through a long gestation. Other companies are competing now. The field is becoming more crowded, and airlines also want to squeeze manufacturers for a good deal."

Luckily for Bombardier, although Airbus and Boeing reach the lower end of the market segment with their A319 and 737, these planes are not competition for the C-Series. Nor do the two majors look like they will offer anything new.

But it is critical for Bombardier that the C-Series succeeds. Compared with Boeing and Airbus, Bombardier is a minnow. The smaller the firm, the bigger the execution risks.

It doesn't help that other parts of Bombardier are under pressure, such as the CRJ regional jet order book. Also, Brazil's Embraer, Japan's Mitsubishi and planemakers in Russia have a pipeline of competing products.

However, Damien Lasou, aerospace expert at consultants Accenture, says Bombardier is in a stronger position than some competitors.

"They (Bombardier) have a bit more diversity in the product range. And now they've decided to go up the scale. I think that puts them in a better place."

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    HOUSE PRICES 10:32:
    A chart showing house price growth over 10 years

    As this chart from the ONS shows. House price growth across the UK in percentage terms is nearing levels seen in the run up to the financial crisis. In six English regions - the South East, East Midlands, the East, the West Midlands, the South West and London - house price growth has now gone beyond pre-financial crisis levels suggesting the recovery in the property market has widened significantly this year.

     
  2.  
    MARKET UPDATE 10:23:

    The FTSE 100 has added to early losses, now down 0.5%.

     
  3.  
    HOUSE PRICES 10:10:
    Kentish town

    If London were removed the national statistics, average house prices would have risen by a more modest 7.9% in the year to July, the ONS says. In London house prices are now a staggering 39.7% higher than their previous January 2008 peak. The average price paid for a property in London in July was £514,000, the figures show.

     
  4.  
    INFLATION REACTION Via Email Ben Brettell, Senior Economist, Hargreaves Lansdown

    emails: "With inflation at a five-year low, it is difficult to see why the Bank of England should even consider raising interest rates at present. We are faced with uncertainty around the Scottish referendum, and there are signs the economy is slowing somewhat, with UK manufacturing activity growing at its slowest rate in 14 months in August."

     
  5.  
    HOUSE PRICES 09:45:
    A view of houses in north London

    The average UK house price rose 11.7% in the year to July to £272,000 official figures show, up from 10.2% in June. On a seasonally adjusted basis the ONS says house prices rose by 1.6% month-on-month. As usual house price growth has been driven by the capital where the average property increased in value by 19.1% in the year to July.

     
  6.  
    INFLATION 09:35:
    Chart showing falling inflation

    Food prices actually fell 1.1% on the year, according to the Office for National Statistics. ONS statistician Richard Campbell told BBC News that a price war among supermarkets and a good growing season are factors behind lower food prices. Falling petrol and diesel costs were the next biggest contributor to lower inflation.

     
  7.  
    INFLATION Breaking News

    Consumer Price Inflation for August fell to 1.5% from 1.6% a month earlier, official figures show. The biggest contributor to the slowdown in the rate came from food and drink prices, the Office for National Statistics says.

     
  8.  
    INFLATION 09:19:

    We await UK August inflation numbers due at 09:30. In July Consumer Price Index (CPI) inflation fell to 1.6% from 1.9% a month earlier. However average wage growth was just 0.6% in the three months to June.

     
  9.  
    PHONES 4U COLLAPSE 09:11: Radio 5 live
    Phones 4U shop

    Phones 4U founder John Caudwell is back this time on Radio 5 live. He says that Phones 4U would never have pushed the network operators so hard in negotiations that they would have been forced to walk away. It would have made no sense to have alienated their only suppliers, he argues. But he concedes that he doesn't know the facts of the matter.

     
  10.  
    HIGH STREET VACANCIES 09:00:
    Charity shops

    Overall high street vacancy rates have fallen in the first-half of the year, according to The Local Data Company (LDC). On Radio 5 live Matthew Hopkinson of LDC says there are lots more charity shops, pound shops and also independent retailers. He also says that vacancy rates in the North West are double that of London (16.9% versus 7.8%).

     
  11.  
    ASOS SHARES SLUMP 08:46:

    ASOS shares are almost 13% lower so far this morning. The online fashion retailer warned that profits would not grow in the current financial year. Sales rose 15% in the three months to the end of August, but that was a sharp slowdown from the previous quarter when sales accelerated 25%. ASOS shares are down more than 60% over the last six months.

     
  12.  
    PHONES 4U COLLAPSE 08:30: BBC Radio 4

    The former chief executive of the Office for Fair Trading John Fingleton tells Today it is "highly unlikely that Vodafone and EE colluded to reduce high-street competition by cancelling their contracts with Phones 4 U." Mr Fingleton, who was head of the OFT from 2005 until 2012, says there is "no evidence" of collusion and rejects any call for an investigation into the matter.

     
  13.  
    PHONES 4U COLLAPSE 08:23: BBC Radio 4

    As well as condemning the network firms, Mr Caudwell also dishes out criticism for the BC Partners, the private equity firm that owned Phones 4U. He says it took £200m out of the business. "I don't like the fact they did it because they left the business much more vulnerable but it was manageable," he tells Today.

     
  14.  
    HEADLINES
    • Inflation rate falls to 1.5% in August
    • Phones 4U 'assassinated' by networks claims Caudwell
    • Calpers withdraws $4bn from hedge funds
     
  15.  
    PHONES 4U COLLAPSE 08:09: BBC Radio 4

    The "ruthless actions" of mobile phone networks were behind the demise of Phones 4U says founder John Caudwell , who sold the business in 2006. It was an "unprecedented assassination" of the company by the networks which had partnered the firm for 20 years he said on the Today programme. The idea the Phones 4U managers "dug their heels in" during negotiations is "preposterous", he says adding "I simply don't believe Vodafone".

     
  16.  
    THOMAS COOK 07:56:
    The logo of travel agency Thomas Coo

    UK holiday operator Thomas Cook says it expects full-year earnings to the end of September will be in the range of £315m to £335m putting it broadly in line with analyst expectations. It added weaker prices, which it first warned about in May, continued but it had offset that impact by speeding up its cost-cutting programme.

     
  17.  
    CALPERS DUMPS HEDGE FUNDS 07:41:

    US pension giant Calpers is withdrawing all of its investments in hedge funds, blaming their expense and complexity. That's a cool $4bn (£2.4bn) leaving 30 hedge funds. Calpers, which stands for the California Public Employee's Retirement System, is the biggest public pension fund in the US.

     
  18.  
    Via Twitter Nick Bubb, retail analyst

    tweets: "Ouch....Q4 sales at ASOS weren't quite as bad as feared (+15%), but ASOS warn that there will be no profit recovery in y/e Aug 2015"

     
  19.  
    MAURICE LEVY 07:30:
    Mauricy Levy

    Maurice Levy, one of the most influential figures in advertising and in France, is to stand down as chairman of advertising giant Publicis in 2016. He is credited with turning Publicis into one of the world's biggest advertising agencies.

     
  20.  
    ASOS TRADING 07:18:
    ASOS

    Asos says that a fire at its Barnsley distribution centre in June resulted in lost sales of between £25m and £30m. But the online fashion retailer expects annual profit to still be in line with market expectations. Total first quarter sales rose 15%.

     
  21.  
    SCOTTISH INDEPENDENCE 07:05: BBC Radio 4
    pound coins

    What will happen to the currency on Friday it Scotland votes in favour of independence? George Godber of the fund manager Miton tells the Today programme that he can see "a very significant fall" in the value of the pound, maybe as much as 10% over about a week. That's because the UK's status as the fastest growing Western economy and a safe haven will be put in jeopardy, he says.

     
  22.  
    RUSSIA GAS 06:49: BBC Radio 4

    Europe could cope if Russia were to interrupt gas supplies in retaliation to European sanctions, says Malcolm Bracken of stockbrokers Redmayne Bentley. Norway can increase oil and gas production and gas reserves are in a pretty healthy shape, he says. Vladimir Putin needs money from the West more than he's letting on so we shouldn't be too worried about the effect of sanctions, says Mr Bracken on Today.

     
  23.  
    BUSINESS RATES 06:43:

    More than 100 of the UK's biggest companies, including Tesco and Marks & Spencer, have called for an overhaul of business rates. In an open letter to the Daily Telegraph they say business rates "are no longer fit for purpose for the 21st century". The tax brings in £25bn for the Treasury annually.

     
  24.  
    OIL PRICES 06:35: BBC Radio 4

    Brent Crude fell below $97 a barrel on Monday for the first time in two and a half years. Malcolm Bracken of stockbrokers Redmayne Bentley explained the fall on the Today programme. "There's been a slowdown in China, cars are becoming more efficient, the war premium is falling, sanctions haven't really had an effect on oil production in Russia and money is tightening," he says.

     
  25.  
    ALIBABA SHARE SALE 06:20: Radio 5 live
    Alibaba head office, Hangzhou

    Alibaba has raised the price range of shares in its US stock market debut and could now raise $25bn (£15.4bn). The funds will allow the Chinese internet company "to make its mark" in the US market place says BBC Business presenter Rico Hizon on Wake Up to Money. Company executives are on an international road show to market the shares. Today there are in Singapore, tomorrow London.

     
  26.  
    SCOTTISH INDEPENDENCE 06:12: Radio 5 live
    Scottish flag

    The leaders of the three main parties at Westminster have signed a pledge to devolve more powers to Scotland, if Scots reject independence. On Wake Up to Money Colletta Smith, the Economics Correspondent for BBC Scotland says it amounts to an "agreement to make some kind of agreement". Details will have to be worked out after the vote, she says.

     
  27.  
    PHONES 4U COLLAPSE 06:02: Radio 5 live
    Phones 4U

    "I'm not surprised it fell over," says fund manager, George Godber in reference to the failure of Phones 4U over the weekend. On Wake Up to Money Mr Godber says the company did "not have any room for financial manouevre" because its private equity owners had recently loaded it with £250m in debt. Phones 4U founder John Caudwell will be on Radio 5 at around 08:45.

     
  28.  
    06:00: Matthew West Business Reporter

    Morning folks as always you can get in touch with us here at bizlivepage@bbc.co.uk and on twitter @bbcbusiness.

     
  29.  
    05:59: Ben Morris Business Reporter

    Good morning. It's shaping up to be a busy morning with inflation figures due at 09:30 and we'll see what John Caudwell has to say about the demise of the company he founded, Phones 4U. Stay with us.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.