Bombardier CSeries launch delayed until 2015

MONTREAL – Bombardier Aerospace has delayed delivery of its first new CSeries commercial aircraft by about six months, the company confirmed Thursday shortly after announcing a major Saudi order for the plane.

The Montreal-based company said the CS100 is now expected to enter into service in the second half of 2015, to be followed about six months later by the larger CS300 aircraft.

Shortly before that announcement, Bombardier received a firm order for 16 new-generation CS300 jets for SaudiGulf Airlines, a deal worth about US$1.21 billion at list prices before options.

READ MORE: Bombardier inks $2 billion Saudi sale

The latest CSeries delay was widely anticipated by analysts due to the small number of test flights since the first one on Sept. 16.

Bombardier (TSX:BBD.B) said the CSeries flight test program is “making solid progress” and initial performance results are “in line” with its expectations. But it said the flight test phase requires more time to ensure it has what it calls “overall system maturity.”

“We are taking the required time to ensure a flawless entry-into-service. We are very pleased that no major design changes have been identified, this gives us confidence that we will meet our performance targets,” stated Mike Arcamone, president Bombardier Commercial Aircraft.

Arcamone said the CSeries test program should gain traction in the coming months following the first flight of the second 110- to 125-seat CS100 test aircraft, on Jan. 3.

In the earlier announcement, Arcamone said “we are thrilled that SaudiGulf Airlines . . . . will base the core of its business plan on the CSeries aircraft.”

The value of the SaudiGulf contract would increase to US$1.99 billion if the buyer exercises options to acquire another 10 CSeries of the 120- to 160-seat CS300 aircraft.

The agreement with Al Qahtani Aviation company, signed in Bahrain, means that Bombardier has firm orders for 198 CSeries planes plus nearly 250 options or commitments from a total of 17 customers.

The manufacturer has stated it hopes to secure 300 firm orders from more than 20 customers by the aircraft’s entry-into-service.

SaudiGulf Airlines will operate domestic and international flights, with the international route network focusing on main capitals in the Middle East and Gulf as well as the Indian subcontinent. It becomes the third Middle Eastern carrier to order the CSeries.

SaudiGulf Airlines chairman Sheikh Tariq Al Qahtani said the company is “very excited about the CSeries aircraft’s suitability for this market and the long-term success it will bring to the region.”

He also said it is a “exciting time for the aviation industry” in the Arab states and neighbouring regions, with more than 54 million passengers moved through Saudi Arabia’s 27 airports last year alone.

Walter Spracklin of RBC Capital Markets described the CSeries order as “positive.”