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 A longer-than-expected test phase was the cause for the nine-month
delay of the smaller CS100 jet, Bombardier said on Thursday. The
news sent shares down more than 6 percent to their lowest level
since early May.
The Montreal-based planemaker now sees the larger CS300's
entry-into-service about six months after the CS100.
The highly anticipated CSeries is built using lightweight composite
materials and other technologies designed to make them burn less
fuel and lower operating costs for airlines.
But at least one airline that has signed up as an early customer
said it was talking to Bombardier about the consequences of the
delay.
"Of course, we are not amused," said Nils Haupt, a spokesman for DT
Lufthansa <LHAG.DE>, the parent company of launch customer Swiss
International Air Lines.
Haupt said compensation is usually part of the contract between
airlines and manufacturers in the event of such delays, but did not
elaborate on its contract with Bombardier. He said the airline had
contingency plans.
"Think about the Dreamliner, think about the A380. We have always
seen in the last years, delays in delivery. Of course, we wouldn't
hope for that. ... Now it's happened, we have to deal with it," he
said. "It is not the end of the world."
The CSeries, which saw its inaugural flight delayed three times
before taking off four months ago, was ambitiously scheduled to go
into service a year later, though analysts had expected entry into
service to be pushed back to early 2015.
"It is no surprise that the EIS date has been pushed to the right,"
said Cameron Doerksen, an analyst with National Bank Financial, in a
client note.
"However, the new date is even later than our expectation and
certainly beyond the consensus view that we think was for EIS in Q1
2015."
Doerksen, who did not anticipate order cancellations, speculated the
delay could add several hundred million dollars to the C$3.4 billion
program due to engineering and testing.
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Separately, Bombardier announced a deal worth up to $2 billion on
Thursday with Saudi Gulf Airlines to buy 16 CSeries jets with
options for 10 more.
FIGHTING INDUSTRY GIANTS
The delay is the latest setback for the world's fourth largest
planemaker's ambitious plan to dominate the growing 100- to 149-seat
market, pitting itself against the smaller aircraft made by industry
giants, Boeing and Airbus.
The planemaker says the CSeries will have a 15 percent cash
operating cost advantage, 20 percent fuel burn advantage and will be
significantly quieter than competing single-aisle jets.
The CSeries' projected improvements prompted Airbus and Boeing to
launch in recent years new versions of their older single-aisle
models, with similar new, fuel-efficient engines.
Bombardier had previously said flight tests were going according to
plan but would provide an update on the aircraft program's
entry-into-service schedule early this year.
Bombardier shares were down 6.6 percent to C$4.22 in mid-morning
trading on the Toronto Stock Exchange.
(Additional reporting by Euan Rocha in
Toronto and Ashutosh Pandey in Bangalore; editing by Sofina Mirza-Reid
and Stephen Powell)
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