When the Bombardier CS300 takes to the skies over Le Bourget later this month, the 135-seater will not only steal the spotlight on the aviation industry’s biggest stage: the flying display of the most popular CSeries variant also offers a humbled and rebuilt Bombardier executive team a rare opportunity to reset the public perception of the programme.
– CS300 First Flight
Of course, none of the programme’s well-chronicled troubles – a two-year-plus schedule delay, with 40% of the flight-test programme still to go; an embarrassing, 100-day grounding last year, spoiling the type’s debut at the Farnborough air show; and an underwhelming order backlog after eight years on the market – are simply swept away by the double debut of the CS100 and CS300 in the Paris air show’s static park.
But the public flying display only three months after the CS300’s first flight can highlight some easily overlooked positive facts about the programme’s performance so far. By all publicly available accounts, including even one major customer currently threatening to withdraw from the programme, the 18-month-long flight-test campaign shows the CS100 is essentially the aircraft Bombardier promised it would be.
The aircraft may be slightly overweight, according to one customer, but overall its performance is as good as can be hoped: the CS100 can fly the promised 3,000nm (5,560km) segment while reducing specific fuel consumption 20% and cash operating cost 15%, as advertised when Bombardier launched the programme in 2008.
Not surprisingly, Bombardier’s newly appointed head of the commercial aircraft division, Fred Cromer, prefers to focus on the performance promises of his predecessors that the CSeries has kept rather than the schedule commitments it has not.
“Given the success we’ve had in the flight-test programme, it’s a new level of confidence that we can go out and talk to the marketplace that what we said we were going to do on a piece of paper is what we’re going to deliver,” said Cromer in a recent interview, “and I can tell you not every new aircraft programme has been actually able to deliver what they’ve promised early on. But from where we sit right now we feel very comfortable telling you the aircraft is going to deliver what we said it was going to deliver.”
Cromer and his even more freshly hired chief salesman, Colin Bole, bring a different approach than the executives who departed earlier this year. Cromer’s immediate predecessor, Mike Arcamone, came to Bombardier only three years ago after a career in automotive manufacturing. One of Arcamone’s first moves after being hired in 2012 was to order Bombardier’s machinists to build a wooden mock-up of the CS100. It seemed like an anachronism in an era of digital aircraft design, but reflected Arcamone’s focus on validating modern tools with old-school methods.
Arcamone’s expertise, however, may have been less effective in sales negotiations with airline fleet planners, grasping to understand how to optimise a schedule with aircraft between roughly 110 and 150 seats.
Cromer, by contrast, is an aviation industrial lifer, having served as regional airline executive, network airline fleet planner and, more recently, president of lessor ILFC. His new chief salesman, Bole, had worked for Cromer at ILFC before becoming commercial chief at lessor Intrepid Aviation. Another former ILFC colleague, now-PlaneView Partners chairman Henri Courpron, has also been brought on board as a strategic adviser.
“I know how to take a schedule and figure out what the best aircraft is for that schedule. So when I sit across the table from the customer, I may have a different way of communicating than previous people in this job, because I’ve been there and I know what they’re looking for,” Cromer says.
Something needs to change to reset expectations for the programme. It has always been unfair to compare the CSeries backlog with the nearly 3,800 firm orders claim by the Airbus A320neo and the more than 2,700 Boeing 737 Max aircraft in the backlog through mid-May. Even if Bombardier could sign that many orders, it could not hope to ramp up production to 40 to 50 aircraft a month for several years. But many have still been disappointed by the orderbook of only 243 aircraft on firm order through mid-May.
It seemed even more perilous when the third-largest CSeries customer, Ilyushin Finance (IFC), threatened to withdraw a firm order for 39 aircraft due to new financing problems. IFC chief executive Alexander Rubtsov says the aircraft is performing as expected, but Canadian government sanctions on Russian businesses mean the lessor no longer has access to favourable lending rates from Canada’s export agency.
Such risks in the CSeries orderbook have not gone unnoticed by the industry’s most influential leaders. When Air Lease founder Steven Udvar-Hazy was asked in March what advice he would offer to Bombardier’s CSeries programme, he repeated the same one-word exclamation – “Sell!” – seven times.
Cromer does not disagree with his former leasing industry colleague’s guidance.
“I would say Steve is absolutely right,” Cromer says. “The emphasis going forward is absolutely going to be additional sales and more customers.”
The CSeries is making some progress. In early May, Bombardier confirmed that Lufthansa subsidiary Swiss International Air Lines will be the CS100 launch operator, finally removing a perplexing mystery over which customer would receive the first aircraft following certification later this year. Bombardier has also signed a new letter of intent with Malaysian low-cost start-up Flymojo, further highlighting the CSeries’ appeal to the low-cost market.
An easy way to generate sales is to offer steep discounts, but Bombardier has always resisted calls to slash prices below a certain threshold. If the CSeries performs as expected, Bombardier has reasoned that it deserves to receive its fair share of the value the product is creating for its customers. The wholesale departure of the company’s former commercial aircraft leadership has not changed that position.
“Given the performance of the aircraft now, we can demonstrate that the aircraft is bringing really significant value to airline operators,” Bombardier chief executive Alain Bellemare told analysts during a 7 May earnings call. “We want to maximise pricing as much as we can. We [also] want to increase our backlog. There’s a fine balance. We don’t want to give the aircraft away.”
Cromer takes a similar position, suggesting his role is mainly to educate potential customers about the potential value of the aircraft.
“The market sets the price of what the airplane is going to be,” he says. “I have some leverage within a certain band to influence that price. And that’s… making sure people understand the capability of the airplane, and people should be willing to pay for performance.”
But Cromer is also well aware of the fleet planner’s immediate response.
“Having been on the other side of it when I’m negotiating these deals, I’d say: ‘I don’t need that performance so I’m not going to pay for it.’ So I understand both sides of the dialogue,” says Cromer, who then switches hats to Bombardier executive. “Really, the issue is: is there a sizeable market for the capacity that this airplane fills at 100-150 seats? Yes. Is this plane the best airplane optimised for that size capacity? Yes. So, to me, that should make my job easier.”
Another factor easing the sales pressure on the CSeries sales team is Bombardier’s production capacity. Three years ago, Bombardier briefed journalists at its factory in Mirabel, Canada, on plans to ramp up production to 10 aircraft per month within three years of entry into service, with potential capacity to double that rate if demand warranted it.
Bellemare acknowledged in the first-quarter earnings call that the three-year timeline may have to be extended.
“We are really trying to understand what is the best ramp-up rate,” Bellemare says. “We will do the best possible ramp-up. We want to ramp up in cadence as soon as we can, and that’s something we are working on with the team right now.”
In an interview, Cromer also hinted that the slower pace could be driven by a new focus on improving reliability as the first aircraft enters service early next year.
“We don’t want to find ourselves in the position where we are trying to satisfy all of the demand out there and pushing the aircraft through before we’re ready,” Cromer says. “[That’s] because entry into service and operational reliability is almost as or more important than the number of sales we can generate in the backlog. As a former operator I’m equally focused on the entry-into-service performance of the airplane as I’m on selling it and ramping up.”