Despite Bombardier’s Turmoil, Airlines Still Have Faith in Problem-Plagued CSeries

Air Canada offers no firm commitments but says it will still consider CSeries airliner despite turmoil at Bombardier Inc.

Despite delays and cost overruns, Air Canada is still interested in the Bombardier CSeries airliner as a replacement for its aging Embraer 190s. According to a report from Financial Post, Air Canada CEO Calin Rovinescu doesn’t believe that Bombardiers’ current turmoil will be an issue.

Bombardier Inc. is currently undergoing a major shakeup in key personnel after suffering a net fourth quarter loss of $1.6 billion. Pierre Beaudoin, who served as Bombardier’s CEO for 6 years, stepped down earlier this month to the role of executive chairman, replaced by Alain Bellemare, a former executive at United Technologies Corporation.

Bombardier’s management has been severely criticized by both investors and analysts over the problem-plagued CSeries program. The program, which is developing a single-aisle commercial aircraft outfitted with 110 to 160 seats, is currently two years behind schedule and more than $1 billion over budget.

According to the Globe and Mail, Bombardier is still planning to have the aircraft in service this year, but the majority of analysts agree that this is an unlikely goal. Another delay, however, could cause a cash crunch for Bombardier, which has a $750-million debt due in January 2016.

While Air Canada may still be interested in the CSeries, it has made no firm commitment to the aircraft. To date, Bombardier has only 203 firm orders for the CSeries, 12 of which are scheduled for delivery in 2016 to Russia, Ukraine and Iraq.

Pierre Jeanniot, who served as President and CEO of Air Canada between 1984 and 1990, recently expressed doubts about the program and the airline’s current role in it. “I think people are beginning to wonder whether they will have the financial strength to pull the whole thing through,” said Jeanniot during an interview with Financial Post. “Removing dividends is a major signal that you’re in trouble.”

Bombardier may have one advantage up its sleeve — the 42nd Canadian federal election is being held this year. Not one to shy away from the public purse, it is estimated that Bombardier has benefited from upwards of $2 billion in public funding since 1966. In an election year, vote-rich Quebec might be a good place for the company to call home.

[Photo: Bombardier]