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When Bombardier’s CSeries jet makes its first European appearance at this year’s Paris International Air Show, the event will be surrounded by the razzmatazz that is de rigueur on such occasions. But the unveiling is so important to Bombardier’s future that few executives at the Montreal-based company will be relaxed enough to feel straightforward optimism.

Development costs for the aircraft, the production timetable and order numbers are so far out of line with original projections that Bombardier has been forced into bold moves in the year since the Farnborough Airshow (which alternates with Paris). Then, an attempt to show the aircraft had to be put off because of an engine fire.

The group has jettisoned its chief executive, mounted a significant capital-raising, halted a big development project, and announced plans to list a minority stake in its train-building business. Many of those decisions were aimed at raising cash to make up for the drain of a development programme that is currently projected to cost $5.4bn — well above the original $3.5bn budget — and has generated nothing like enough firm orders to recoup the costs.

According to Richard Aboulafia, an analyst at the Virginia-based Teal Group, the company is now in a significantly better position than it was before February; this is when Pierre Beaudoin, grandson of the founder, stepped down as chief executive and was replaced by Alain Bellemare. The leadership now appears to recognise, says Mr Aboulafia, how grave its predicament is.

“The new management seems to know exactly what is needed,” Mr Aboulafia says. “But can they do it, or is it too late?”

The central challenge the company has faced for the past five years is simply that it is seeking to challenge one of the most powerful duopolies in any industry — the Boeing and Airbus hold over the commercial jet market — with a fraction of their financial resources.

The CSeries was envisaged as a vehicle to move Bombardier from its niche as a supplier of regional jets and turboprops for the commuter market into a class between regional jets and the Boeing and Airbus narrow-body jets: the 737 and A320 families.

The company’s mistake, according to many people involved, was to expect that the mere existence of a niche for a smaller narrow-body jet and Bombardier’s production of a fuel-efficient aircraft to fill the niche would ensure that the CSeries sold well.

“You need to do more than just bring it to market,” Mr Aboulafia says. “You need to sell it in more than token numbers, and you have to do the kind of aggressive deals the market expects. In other words, you have to be prepared to lose money on the first couple of hundred planes.”

Bombardier’s approach to selling the aircraft has meant that it has won few of the high-profile customers that would have boosted other would-be purchasers’ confidence in the product. Its customer list is instead heavy on leasing companies and small or start-up airlines.

The challenge it faces was underlined in March, when Bombardier trumpeted the achievement of signing a letter of intent — well short of a firm order — for 20 aircraft with flymojo, a low-cost airline launching in Malaysia owned by so-far undisclosed commercial interests.

Mr Bellemare told analysts in May that he expected to be able to get “a little bit more traction” on pricing, given the aircraft’s performance so far in test flights.

But he went on: “There’s a market dynamic out there. We want to maximise our pricing as much as we can. We want to do the right thing in terms of increasing our backlog as well, so it’s always a fine balance.”

The chief executive also expressed optimism that progress on the flight test programme would overcome resistance to orders engendered by significant delays to delivery. The aircraft was due to enter service in 2013 but is now expected to do so next year.

Although the 243 firm orders so far received are well short of the 300 that the company hopes for by the time the aircraft enters service, the programme is “in a much different place than it was a year ago”, Mr Bellemare said.

“It’s about having confidence, and we now have confidence in the product, the product performance, and our ability to service it in the field,” he told analysts.

Yet there is no disguising, even if the new sales push succeeds, how comprehensively the problems facing the CSeries have affected Bombardier. In January, the company was forced to announce that it was shelving development of the Learjet 85, a midsize corporate jet.

It announced in May that it was scaling back production of its Global 5000 and 6000 corporate jets, following its earlier ramping-up of production to bring forward payment from customers for these high-end aircraft.

Alongside its first-quarter results, the company announced it was seeking to launch an initial public offering for a minority stake in its mainly Europe-based train-building business, the largest in the world. It has also issued $868m in new equity, and cut its dividend.

The sheer range of initiatives the company has taken to raise cash underlines quite how grave the crisis has become. Although Bombardier is likely to survive in some form, executives will be hoping that the Paris appearance starts a surge of badly needed orders.

“The basic problem,” says Mr Aboulafia, “has always been finding the cash to make this programme happen.”

Copyright The Financial Times Limited 2017. All rights reserved.
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