Bombardier (TSE:BBD.B) is pondering the launch of a third and larger 180 passenger version of its new C-series twin jet, now offered in the CS 100 and CS 300 variants.
Such an aircraft, which could be designated CS 500, would be the first by Bombardier to compete against the Airbus 320 and Boeing 737 families, the most popular airliners in the world.
The current C-series offerings range from 125 seats to 160 seats, just shy of the smallest Boeing or Airbus models.
The CS100 is still undergoing flight tests, but Bombardier expects to receive full certification from regulators by the end of this year, allowing the Montreal based aircraft manufacturer to start selling and delivering this model in the middle of 2016, which is two and half years behind schedule. The CS300 should follow six months later.
The Wall Street Journal quoted analyst David Tyerman, from Canaccord Genuity, as saying that while there has been speculation about a third and larger CS series model, this possibility “adds to the uncertainty surrounding the company”, noting that “this is nothing positive for the share price, since it adds to current and future changes in the business".
Other analysts from Credit Suisse, an investment bank with significant aerospace sector expertise, like the idea of a larger Bombardier aircraft to challenge the market space dominated by Boeing and Airbus, but, they say, such an aircraft is "too late".
Indeed, Bombardier’s failure to offer a 180 seat version of the CS series from the start may have been a mistake because, while crucial components requiring the largest development expenditures such as wings, would have been easier to adapt from a larger to a smaller capacity aircraft. The proposed ‘CS500’ may not be able to use the same wings as the CS300.
Speculation over the additional CS series model should help the company attract attention in the weeks ahead of the Paris air show, which starts on June 15, one of the world’s most important aerospace market venues and for which Bombardier has few new orders to announce, even as it presents the C-series to the public for the first time.
The company had been struggling to fulfill the C-series program’s financial and operational targets due to delays. However, last February, Bombardier performed a crucial airborne test of the larger member of the C-series family, the CS300 before employees, customers and media, which proved successful in retaining existing orders and attracting new buyers.
Bombardier’s C-series aircraft, the largest ever made by the Montreal based manufacturer, have been designed specifically for the single-aisle 100 to 149 seats market. They feature advanced lightweight composite materials to compete in a market segment that has been closely guarded by Boeing and Airbus with their respective 737 and 320 models.
Some of the technological advances include engines also designed and manufactured by Pratt & Whitney Canada, part of the United Technologies Group (NYSE:UTX).
The PW1000G engines, known feature a novel ‘geared turbofan’ (GTF) configuration that helps to reduce noise, fuel burn and emissions. This technology will make it easier for Bombardier to sell the C-series to airlines planning to use smaller airports located closer to city centers – such as the Toronto Island airport for example.
To date, Bombardier has recorded orders and commitments affecting 603 CSeries airliners, including 243 firm orders. Nevertheless, delays have raised production costs from US$3.4 billion to US$ 5.5 billion, and while fears of a C-series program write-down have dissipated, the order book is not filling as fast as expected.
Shares of Bombardier opened 0.81% higher on Monday in Toronto.