More news about Bombardier's new 90 seat jet...apparently, orders are already in the bag!
Bombardier close to launching a new
90-seat Regional Jet program
MONTREAL (CP) - Bombardier Aerospace (BBD.A, BBD.B) is getting close to the official launch of a
90-seat Regional Jet, chief executive Robert Brown said Tuesday after the annual meeting of parent
company Bombardier Inc.
Brown said the final decision will be made "within a couple of months." That means the go-ahead
could well be announced at this summer's major aviation event, the air show in Farnborough,
England, July 24 to 28.
The CRJ900 would be a further stretched version of the highly successful 50-seat Canadiair Regional
Jet, and the CRJ700, a 70-seat model under production. The first deliveries of CRJ700 are scheduled
for next December or January.
"We're talking to customers and we're taking orders," said Brown, refusing to say how many letters of
intent have been received.
The projected 90-seat aircraft was mentioned in an order for the first time two weeks ago as part of a
150-aircraft CRJ order worth $1.3 billion US from GE Capital Aviation Services, which specified 10
CRJ900s.
Brown said the unusual mention of an aircraft not officially launched was at the request of the
customer. "They really want that plane," he said smiling, adding that it can be converted into orders
for smaller versions if the CRJ900 does not go ahead.
Analyst Ron Schwartz at CIBC World Markets is not aware of 90-seat programs from competitors
Fairchild Dornier or Embraer.
He said Embraer recently announced a delay in its 70-seat aircraft, for deliveries now to begin in
mid-2003, about 18 months behind Bombardier.
"We are certainly seeing the regional market step up in size from 50 to 70 and now potentially to 90
(seats), just because a lot of the route structures that the 50-seaters opened up have become bigger."
GE Capital also ordered 100 of the 70-seat aircraft, equally from Fairchild Dornier and Embraer.
"If leasing companies didn't think they could make a buck on this they certainly wouldn't be buying
these aircraft," said Schwartz, "so it points to the strength of the marketplace right now."
Fairchild Dornier has forecast a market for 2,867 jets with 50 to 110 seats in the coming 10 years.
Production at Bombardier's aircraft plant continues to ramp up, with 100 Regional Jets to be
completed this year, 135 next year and 150 in the following year, fiscal 2003. The Regional Jets are
produced in Montreal, where Bombardier Aerospace employs 12,800 people.
Aerospace accounts for 60 per cent of Bombardier Inc. revenues, which reached $13.6 billion in the
year ended Jan. 31. The big industrial company also makes the Dash 8 turboprops in Toronto, and a
range of business aircraft.
The other main divisions are transportation, including rail and subway coaches and railcars,
recreation products like the Ski-Doo snowmobile and watercraft, and the Bombardier Capital
financing unit.
After losing $45.5 million in fiscal 1999 the recreation division is on a turnaround with new products
like an all terrain vehicle. It earned $18 million before taxes in the last year on revenues of $1.5
billion.
The transportation division is booming in North America, where Bombardier is the market leader, with
recent large orders announced for the Long Island Railroad and Vancouver's Skyway.
In Europe, however, Bombardier has laid off a large number of workers in a much more competitive
environment including giants like Siemens and Alstom.
The European industry is going through a consolidation, and Brown said "I think there will be some
kind of shakeout."
He said Bombardier however won't be shaken out. "We're there for the long term, not a quick flip."
Brown said Bombardier Transportation is the only one in the industry that has a base in both Europe
and North America, and recently began a railcar manufacturing plant in China in partnership with
Power Corp. of Montreal.
The company has stopped production of its electric golf-cart type vehicle, and is studying its options.
"We still believe there's a market there; we have to have the right product." said Brown. |
