Bombardier Delays CSeries
The Entry-into-Service for CS100 is now predicted for second half of 2015. Implications include possible lay-offs.
In a press release dated January 16, Bombardier confirmed that which had been long speculated - the CSeries entry-into-service date is delayed. The CS100 size aircraft is now expected in the second half of 2015, while the CS300 will be six months later. According to the press release, the company said “…based on the thorough review of the CSeries program after the first flight of the CS100 on September 16, 2013, the flight test phase will require more time than originally anticipated to ensure, amongst other things, that the aircraft has the overall system maturity to support a successful entry-into-service.”
Bloomberg News (1/17, Tomesco) reported that some analysts thought this delay was “inevitable,” and also warned the program’s budget is likely to increase. “…program costs have climbed to $3.9 billion, 15 percent more than projected”, according to the Bloomberg report. The article also quotes Peter Arment, a Sterne, Agee & Leach analyst as saying the program may rise an additional $1 billion. The article also reported that Bombardier is planning 2,400 hours of test flights for the CSeries, with more than 20 flights completed so far, according to Bombardier spokesman Marc Duchesne. The jet’s second prototype took off for the first time on Jan. 3.
Reuters (1/17, Ho) reports that Nils Haupt, a spokesman for DT Lufthansa, said that his company is not pleased by the news, but this has happened before with new planes like the Dreamliner and A380. Meanwhile, Cameron Doerksen, an analyst with National Bank Financial, said that while the delay is not surprising, the length of it is.
Aviation Week (1/17, Warwick) notes that Bank of America Merrill Lynch Global Research expects even more delays in the future, placing the first entry into service into 2016.
Other news outlets subsequently reported layoffs.
The AP (1/22) reports that Bombardier plans to lay off 1,700 people from its aerospace division because it claims it needs to save money to deal with delays with the CSeries as well as issues with the Learjet 85 jet. “About 1,100 of 22,200 Bombardier Aerospace employees in Canada are affected by the pending layoffs, about 80 percent in Montreal. In the United States, another 600 of 5,700 positions are affected.” The article notes that this comes after Bombardier delayed the entry of the CSeries to 2015.
Reuters (1/22) reports that Richard Aboulafia, vice president of the Teal Group, said that Bombardier would not be laying off this many people unless it was having issues financing the CSeries. Another analyst also linked the layoffs with concerns about cash. Meanwhile, Roland Kiehne, president of the Unifor local that represents workers at Bombardier, said employees were shocked by the announcement because they thought they were proceeding apace at the company.
In later reporting, Bloomberg News (1/23, Schatzker, Wall) reports that Bombardier Chief Executive Officer Pierre Beaudoin says the company has enough funds to complete the CSeries following the company’s decision to delay the CSeries’. Beaudoin said that while he is “disappointed” by the delay, the CSeries is still doing “very well.” He also called the new development schedule “quite reliable.”
Published Date : 2/3/2014