Bombardier’s CSeries spurned again as United Airlines snaps up Boeing jets
by Ross Marowits, The Canadian Press
Company's sales drought continues while competitor pens 40-aircraft deal
Analysts had held United up as a possible buyer for the long-awaited jet. PHOTO: Patrick Cardinal, Bombardier
MONTREAL—The sales drought for Bombardier’s CSeries jetliner continues with the announcement that United Airlines has selected a Boeing plane over the Montreal-based manufacturer’s fuel-efficient aircraft.
In making public its decision Thursday, the large U.S. carrier said it would be acquiring 40 of Boeing’s 118-seat 737-700s, not Boeing’s new more fuel-efficient MAX version, for delivery in mid-2017.
The planes will replace some of the capacity operated by United’s regional partners as the carrier plans to cut by more than half the number of 50-seat planes in its fleet by 2019.
Bombardier has said it was targeting orders from large airlines to help ignite momentum for the CSeries, which seats between 100 and 160 passengers in various configurations. It has been stuck at 243 firm orders for nearly 16 months.
Spokeswoman Isabelle Gauthier said Bombardier is still focused on attracting “marquee customers” as it seeks to energize perception of the plane in the marketplace.
“We’re not stalled, we’re not slowing down, we’re focused and it’s worldwide,” she said in an interview.
United declined to say why it went with Boeing over rival bidders. However, officials told analysts that the price of fuel doesn’t impact its decisions on long-term fleet orders.
The airline, which has also purchased 40 Embraer E-175 regional jets and other larger Boeing planes, added that it continues to look at the CSeries and other aircraft as it prepares to place additional orders.
Walter Spracklin of RBC Capital Markets said the order loss is a disappointment for Bombardier.
“A flagship order from a major U.S. carrier would have helped build legitimacy for Bombardier’s foray into the narrow-body segment with the CSeries,” he wrote in a report.
The list price of United’s order was estimated at US$3.2 billion, but Spracklin believes Boeing was aggressive on pricing and opened production slots to accommodate the order.
Benoit Poirier of Desjardins Capital Markets said he thought the CSeries had a “solid chance” of beating Boeing, Airbus and Embraer for United’s business.
Meanwhile, he thinks order opportunities remain with Air Canada, Delta and British Airways.
The Quebec government has committed US$1 billion for a 49.5 per cent stake in the CSeries. Bombardier said the support would reassure potential customers who may have been concerned about the company’s financial ability to bring the jetliner to market. The federal government is considering its own financial participation.
Bombardier has begun to ramp up production of the CS100 as it prepares to deliver the first aircraft to Swiss Airlines by the second quarter.
In the meantime, Poirier expects the market will remain skeptical and believes there is a real risk that the CSeries could be cancelled if no orders materialize in the next six months. The company’s shares lost more than nine per cent to $1.09 on the Toronto Stock Exchange on Thursday.
