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Bombardier Sees No Slowdown In Business Jet Orders
Published on 31/01/2008 08:56

© Javier González
Bombardier Aerospace does not see signs of slowing demand for business jets, despite worries that a US recession could hit corporate orders, the company's president said on Tuesday. Pierre Beaudoin, who takes over from his father Laurent on June 4 as president and chief executive of parent company Bombardier, said economic worries have not hit the business jet order book. "On the contrary, we see demand that continues to rise. The order level is very good," Beaudoin told reporters after a luncheon speech. Bombardier's firm order book backlog for business jets amounts to about three to four years of production, Beaudoin added. Cameron Doerksen, an analyst at Versant Partners, said he expects Bombardier to deliver 230 business jets in the current fiscal year, ending January 31, and 250 in fiscal 2009. "Even if deliveries stay flat, progressively better pricing on jets being delivered should boost margins," Doerksen wrote in a research report. Beaudoin said the order book for regional aircraft, which includes turboprops and jets, stands at 2-1/2 to three years. Beaudoin acknowledged that prospective mergers in the US airline sector may slow orders for new aircraft, including regional jets, but he expects fleet renewal plans will include Bombardier's 70 and 90-seat jets. "They need more efficient aircraft. They need to retire the older aircraft that burn a lot of fuel," Beaudoin said. Bombardier, which has 27,000 employees, annual revenues of about USD$8 billion and 5,700 aircraft in service, is the world's third-largest civil aircraft maker. Beaudoin said Bombardier is sticking with its plan to make a definitive decision this calendar year on whether to proceed with the USD$2 billion development of its proposed 110- to 130-seat CSeries airliner. "The market conditions are good. We have set ourselves objectives to reach and we will make a decision this year," Beaudoin said. A 2008 launch, which some analysts speculate might come at the Farnborough International Airshow in mid-July, would bring the CSeries into service in 2013. It would take another four or five years for the airliner to be profitable, Beaudoin said. Bombardier already has government funding promised for the CSeries from Canada, the province of Quebec and Britain. The company is seeking customers for the CSeries and forging alliances with business partners for production of the jet. It has an agreement with state-owned China Aviation Industry Corp I (AVIC 1) under which AVIC 1 would invest USD$400 million in the CSeries and build its fuselage. Bombardier would invest USD$100 million in the development of AVIC 1's ARJ21-900 passenger jet. Pratt & Whitney would provide a new engine for the CSeries aimed at reducing fuel consumption by 20 percent. Beaudoin said he does not think the CSeries would compete directly with next generation narrow-body airliners that might replace the Boeing 737 or Airbus A320 because those aircraft would be bigger than the Bombardier jet. The new Boeing and Airbus jets, which have not yet been put into production, would also probably come into service later than the CSeries, he added, something analyst Doerksen agrees with. "If Bombardier does proceed with the CSeries, its first-mover advantage in offering a 100-plus seater will be more pronounced," Doerksen wrote.  (Reuters)
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