Seems the company officially announced today not the cancelling of the project, but "putting it on hold" until such time as a launch customer can be found.
Bombardier grounds CSeries airliner for now
Tue Jan 31, 2006 11:58 AM ET
(Updates with company conference call, stock price change. In U.S. dollars)
By Robert Melnbardis
MONTREAL, Jan 31 (Reuters) - Bombardier Inc. (BBDsvb.TO: Quote, Profile, Research) said on Tuesday it could not find enough customers to launch its planned 110- to 130-seat CSeries jet, and would redirect resources from the $2 billion project to its regional aircraft program.
"Without launch orders, we could not make a launch decision," Pierre Beaudoin, president and chief operating officer of Bombardier Aerospace, told reporters during a conference call.
Beaudoin said the CSeries program was on hold, but not abandoned, as it would continue to seek firm orders for the airliner.
"We believe the market is there. It's too early to say one way or another," he said.
Beaudoin also suggested that Bombardier was considering stretching its CRJ900 or developing a larger turboprop that would seat 80 to 100 passengers.
"It is possible that you would see a new regional aircraft before you would see a CSeries," he said.
Beaudoin said Bombardier had discussions with potential partners about the CSeries, including Russia's Sukhoi, but he declined to comment on a report the Canadian company was interested in joining the Russian regional jet program.
Bombardier said it will redeploy 300 workers from the CSeries project to other projects, including business jets, as it focuses on the regional airline market for 80- to 100-seat jets.
A team of 50 employees will remain with the CSeries program, with emphasis on including other partners, the company said.
Bombardier's class B shares fell 12 Canadian cents, or 4 percent, to C$2.86 on the Toronto Stock Exchange shortly after the open on Tuesday before climbing back to C$2.96, off 2 Canadian cents.
MAY STRETCH CRJ900
The decision to shelve the CSeries will bring questions about Bombardier's ability to add new jets to its regional aircraft product line as it faces brisk competition from Brazil's Embraer (EMBR4.SA: Quote, Profile, Research) and Russian and Chinese manufacturers.
Production of Bombardier's original 50-seat CRJ 200 jet has been suspended because of weak demand, and the company is focusing on its CRJ700 and CRJ900 stretch versions of the jet.
Harry Nourse, analyst at Bank of America Securities, said in a research note that he was concerned about Bombardier's strategic direction in aerospace.
He said a reported four-seat stretch of Bombardier's 95-seat CRJ900 may only be a stop-gap measure.
The CSeries was designed as a new aircraft rather than a further stretched version of Bombardier regional jets.
Bombardier said it has spent some $100 million on the CSeries project and expected to spend another C$20 million in the fiscal year that begins on Wednesday. No charges to earnings are expected from Tuesday's annoucement, Beaudoin said.
Bombardier, the world's third-largest civil aircraft maker and the globe's No. 1 manufacturer of trains, had lined up government funding for the CSeries project from Ottawa, Quebec City and London, but none of those funds have been allocated or spent.
Bombardier was looking both for launch customers for the jet and for commercial partners for the project. United Technologies Corp. (UTX.N: Quote, Profile, Research) unit Pratt & Whitney was designing a new engine to lower the aircraft's fuel costs and increase efficiency.
Northwest Airlines Corp. (NWACQ.PK: Quote, Profile, Research) had been a potential launch customer, but the carrier's fleet plans are being modified as it grapples with restructuring under Chapter 11 bankruptcy.
http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh70298_2006-01-31_16-58-32_n31384203_newsml
The truth is out there - you just may not like hearing it.
