Canadian Manufacturing

Bombardier says cost of $3.5B CSeries program not affected by first flight delays

Flight tests expected in next few weeks; scheduled to be conducted for 12 months

MONTREAL—Bombardier Inc. says the estimated cost of its $3.5-billion CSeries jet program hasn’t been affected by delays of the first test flight for the new passenger jet, which will compete with some of the smaller planes made by Boeing and Airbus.

“Like we have said to our team, it’s not a question of rushing,” CEO Pierre Beaudoin told analysts on a conference call following the release of the company’s second-quarter results.

“We have to learn what we need to learn to get a good flight-test program. If it takes more time, it takes more time.”

The CSeries flight tests are expected in the next few weeks and are scheduled to be conducted for 12 months, Beaudoin said, adding the test delays haven’t been material to the company.

Bombardier recently delayed the maiden test flight for the third time because the last of a series of technical tests are taking longer than expected.

It had been aiming for the first test flight by the end of July after a June target that was, itself, later than an expected date at the end of 2012.

“For example, we’re doing a test and we discovered that wires were plugged in upside down. It’s not a big deal, but we have to go back and understand why it happened. It means what we have planned in a day sometimes takes three, four or five days and of course it delays first flight,” he said.

Bombardier has also said the CSeries has to be tested for high-speed runway taxiing and has software upgrades that need to be completed.

The commercial jet, which will use a new generation of aviation technology, will offer a longer range, a longer cabin, a new engine and key components made of composite materials.

As a result, the CSeries jets will offer more seating than Bombardier’s previous planes and have enough range to be used on some routes where airlines have typically used Boeing and Airbus planes.

RBC Capital Markets analyst Walter Spracklin said two key milestones in the CSeries he’ll be looking for in the next week or so will be ground vibration tests and high-speed taxiing, as well as obtaining Transport Canada flight permitting.

“Overall, it was a solid quarter for Bombardier and while there was nothing for us to get too excited about, we believe that is exactly the point,” Spracklin said in a research note. “As such, we think results will be met with relief by investors and at the same time, re-affirm the more positive conviction in the name.”

In its financial results, the Montreal-based aerospace and transportation company said its net income, before adjustments, rose to US$180-million or 10 cents per share from US$147-million or eight cents per share.

Adjusted earnings were US$167-million or nine cents per share in the second quarter of 2012.

Bombardier’s revenue was about US$300-million higher than last year, rising to US$4.4-billion, slightly better than the estimate of US$4.34-billion.

The company is the world’s largest manufacturer of passenger rail equipment and is the third largest maker of passenger planes after Boeing and Airbus.

Among Bombardier’s products are the CRJ line of jets and Q400 turboprop planes used by airlines for some of their routes and several brands of business jet.

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