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Bombardier holding firm on price for new C Series

Bombardier CEO Pierre Beaudoin speaks to employees at Bombardier's manufacturing facilities in Toronto on May 29, 2012.


Bombardier Inc. could have a bigger order book for its new C Series airplane, but it's not prepared to "give away" the aircraft.

"I want to get the right customer at the right price; so we could get more if we focus only [on order]backlog and gave the product away, but there's no reason to give the C Series away," chief executive officer Pierre Beaudoin said in an interview Tuesday.

The Montreal-based transportation giant has come under fire from analysts for not offering deep enough discounts to fatten the order book, and from some C Series customers urging the company to boost sales.

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But Mr. Beaudoin said the ambitious $3.4-billion investment to move into the large commercial aircraft marketplace now dominated by Airbus SAS and Boeing Co. will pay for itself. Sales will pick up once the C Series makes it maiden flight, he said, which is scheduled to happen before the end of the year.

"We have to very often defend the lateness of Boeing and Airbus in their own programs," he noted. "The airlines say 'we won't pay the price because you will be late,' because they were late."

The list price on the smaller CS100 is $58.3-million (U.S.) and the larger CS300 has a list price of $66.6-million.

The Airbus A380 and Boeing 787 were several years late being delivered to airlines as the two manufacturers battled problems with suppliers and new technology.

As of Tuesday, Mr. Beaudoin said, the C Series was still on schedule for its first flight and delivery to customers a year later. He said he cannot pin down a date in part because the work that needs to be done in the next six months is as complex as everything Bombardier has already done since it announced in 2008 that it had revived a previously scrapped project.

"As far as I'm concerned, if we're three to five months in the window of when we had planned to fly, that's on time," he said. "The others, they were a few years late."

Bombardier has 138 firm orders for the plane, plus another 179 options, purchase rights or letters of intent. The plan is to have 30 customers with 300 orders by 2013, when it's scheduled to enter service.

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That's equal to two-and-a-half years of production, Mr. Beaudoin said.

Bombardier is marketing the C Series as a plane that burns 20-per-cent less fuel than existing aircraft in the 100-150 seat segments and offers 15-per-cent lower operating costs.

"If you look at the margins of the airlines, I don't know how they can pass on 15- to 20-per-cent operating cost [improvement]" he said.

One industry source, however, said recent decisions by some airlines to put off purchases indicate that airlines are beginning to hoard cash as they face soaring prices for jet fuel, lower bookings by passengers and lower air cargo shipments.

Mr. Beaudoin responded that airlines in emerging markets are still ordering plenty of planes.

The Bombardier CEO was in Toronto to celebrate the 20th anniversary of the company's purchase – in a joint venture with the Ontario government – of de Havilland Aircraft of Canada, the largest industrial employer in the city, which was in danger of closing when Boeing Co. put the factory up for sale in 1992.

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But the NDP government of then-premier Bob Rae took it over. Now Bombardier has more than 6,000 employees in Ontario, including about 4,000 at that plant, as well as others at a rail car and street plant in Thunder Bay, a water bomber facility in North Bay, and a research and development centre in Kingston.

In a speech to the Canadian Club, he called on government and business to work together to preserve manufacturing in Canada.

"If we decide to let Ontario's manufacturing sector tank, innovation and productivity in Canada will go down with it," he declared.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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