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Much of Bombardier Inc.'s stock-price revival in recent months has been pinned on hopes for the aircraft maker's C Series jets. But as the new plane sits stalled on the tarmac, the investors who climbed on board have grown justifiably restless by the flight delays.
Bombardier on Wednesday said that the mid-sized jet, touted as the regional-aircraft specialist's big chance to capture a new and bigger share of the jet market, won't take its long-awaited first flight in June as the company had promised. Now it's saying the end of July.
Investors, as well as potential buyers of C Series jets, have good reason to be losing faith. The first flight of the new plane was to have taken place late last year, before Bombardier pushed it back six months. Yet as recently as last week, at the Paris Air Show, Bombardier officials were still confidently insisting that the new aircraft would fly before the end of the month, as scheduled. Now, just a few days later, the schedule has been bumped back another month. Bombardier offered little in the way of explanation.
From the company's standpoint, it needs the first flight to be a success – the kind of success that will kick-start orders that have slowed considerably during the delays. (It has only announced one new firm order for C Series craft this year, a 32-plane commitment from Russia's Ilyushin Finance Co.) Bombardier has set its sights on selling 300 of the planes before the middle of next year, when the C Series is scheduled to go into service. But we're now five years since the C Series program was launched, and firm orders total 177 – less than 60 per cent of the target.
Buyers, who have been burned by delays from other big aircraft makers, look committed to sitting on their hands until they not only see the plane fly, but see if it can live up to the ambitious performance levels Bombardier has pledged. Indeed, that's the pivotal selling point for the C Series – that it will compete in the 100-to-160-seat class at a 15-per-cent lower operating cost and 20-per-cent lower rate of fuel consumption than its competitors.
But until the jet proves itself in the air, both the performance goals and the sales targets will remain in doubt. And while Bombardier understandably must be sure the jet can perform as promised when it does begin test flights, the fact that those flights keep being pushed back does raise the question of whether the plane is ready and able to deliver on those bold promises. It also raises questions about whether the planes can still come into service as scheduled – critical both for potential buyers of the jets and for investors trying to judge the company's likely growth trajectory.
And while the industry taps its toes and checks its watches, investors have begun eyeing the emergency exits. The stock has slipped 7 per cent in the past three weeks, as the lack of news on the C Series made Bombardier a dud at the Paris Air Show; the news of the delay sliced 2 per cent off the stock Wednesday. Until the C Series flies, Bombardier's share price may be grounded.
David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow him on Twitter at @parkinsonglobe .
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