Bombardier Aerospace says new CSeries on track

Bombardier's new CSeries aircraft is not facing any major production delays that should prevent it from making its maiden flight by year-end, the Quebec-based plane and train maker said Tuesday.

"Yes, the CSeries program is on track," said Mike Arcamone, president of commercial aircraft, adding that Bombardier has found no serious problems that would thwart delivery of the first CSeries aircraft by the end of 2013.

Arcamone also said he's satisfied with orders to date.

"We are exactly where we want to be with 11 customers and 317 orders," he said.

Arcamone said Bombardierwould like to have 20 to 30 customers from around the world by launch, including more leasing companies.

His remarks came at a conference for the media and industry analysts ahead of the Farnborough International Airshow in July.

Bombardier expects several structures for the first plane will be completed by September to meet the timing for the first flight.

Bob Saia of Pratt & Whitney said that its new geared turbofan engine which will be used in Bombardier's new CSeries is on track for final validation by Transport Canada in the next three to four months. The engine has already undergone about 1,500 hours of testing.

"We are well on track to certify our engine later this year, and deliver our first engine, so we're very well pleased with our overall results," Saia said.

He added that the engine's fuel efficiency is slightly better than promised.

Assembly for the Bombardier engine will be completed in Mirabel, north of Montreal. But Saia said Pratt hasn't yet decided where to assemble the engine that will be used in the Airbus A320/A319 NEO.

Walter Spracklin of RBC Capital Markets said the key risks for the CSeries are the engines, fly-by-wire systems and Chinese-made fuselages.

He said assurances provided Tuesday minimize those potential problems.

"The key takeaways is that we got good affirmation and conviction that this is going to be an on-time project," he said in an interview.

The positive outlook lived up to his expectations.

However, Bombardier did nothing to manage expectations, as other manufacturers' have done, about meeting its production schedule, though being on time would also minimize any potential cost overruns, he added.

Firm cuts forecast

Earlier, Bombardier said it was decreasing its 20-year industry forecast for deliveries of small- and medium-size commercial aircraft due the global economic slowdown that has tempered the aerospace recovery.

The world's third-largest aircraft manufacturer expects deliveries in the 20- to 149-seat category will fall by 2.3 per cent to 12,800 planes, worth $630 billion US.

The main driver behind the decrease of 300 units is reduced growth in global gross domestic product, Bombardier said.

The Quebec-based manufacturer said more than 70 per cent of the demand in the next two decades is expected to come in the 100- to 149-seat category, which includes its CSeries.

Deliveries of those aircraft are expected to be worth $449 billion between 2012 to 2031, with demand increasingly shifting to emerging markets.

Still, Bombardier believes it will capture half of the available 100- to 149-seat market. It expects more than half of the current global aircraft fleet to be replaced over the next 20 years, a slight increase from last year.

"Overall, market drivers show positive trends both in the most recent past and over the 20-year period," said Mairead Lavery, Bombardier's vice-president of strategy, business development and structured finance.

The latest market forecast includes oil price estimates of $126 per barrel, up 18 per cent from last year's forecast. Fuel is the largest cost for airlines and a threat to their profitability.

The company said China will be the world's second-largest market with 2,200 deliveries through 2031, topped only by the United States, which will lead with 4,730 expected deliveries.

'We continue to be surprised by the upside in the Chinese market.' Mairead Lavery, Bombardier VP

Europe and Russia will trail with 2,240 units.

The forecast for business jets is unchanged from last year at 24,000 units worth about $648 billion.

Bombardier is the world's largest business jet manufacturer with a 38 per cent market share.

It expects 9,800 deliveries worth $266 billion over the next decade and 14,200 deliveries worth $382 billion between 2022 and 2031.

The large-cabin business jet market, for which Bombardier has several products in development, is expected to remain strong.

North America is expected to take 9,500 business aircraft through 2031, followed by Europe, with 3,920 aircraft.

China will become the third-largest market for business jet deliveries, with 2,420 planes. Bombardier said.

"We continue to be surprised by the upside in the Chinese market," Lavery said.

However, the one downside risk is the financial crisis in Europe, where there is a large installed base for business aircraft.