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2014 a critical year for Bombardier: CEO Beaudoin

Jan. 7, 2014, Montreal - Last year was all about the CSeries’s first flight for Bombardier Inc. This year is all about delivering the actual airliner to actual airlines.


January 7, 2014
By The Montreal Gazette

So no one expected the Montreal aircraft-maker’s December
announcement — Chet Fuller, their salesman in chief for the CSeries,
was gone. Effective immediately.

 

That hardly seems like a good
omen for the aircraft in development that’s struggling to find its
market — particularly given the timing of Fuller’s departure.

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The
aircraft that first flew on Sept. 16 faces a formidable year. Bombardier
is committed to completing a gruelling flight-test program involving
five aircraft flying about 2,400 hours, while diagnosing and fixing the
complex technical issues that will crop up. The company will need to
receive certification for the CSeries from demanding regulators, set up
production at facilities around the world that will put the aircraft
together, with final assembly in Mirabel before delivering the 182
airplanes in its firm order backlog.

 

Bombardier has insisted all of this will be completed within one year of that first flight — which is about nine months away.

 

A
chorus of doubt has already been voiced about meeting that one-year
deadline. Observers speculate first deliveries are likely to slip into
early 2015.

 

So 2014 is shaping up as a crucial — and daunting — year for Bombardier.

 

Company
president Pierre Beaudoin himself said in a wide-ranging interview with
The Gazette in December that the CSeries flight-test and delivery date
are currently under review and a new “proper schedule” may be announced
next month.

 

Of course, the CSeries is not the alpha and omega in Bombardier’s full agenda.

 

The
business aircraft Learjet 85, also a brand new plane, was supposed to
have its own first flight in December but that was postponed and will
now take place “in the next few weeks,”

Bombardier Business Aircraft
spokesperson Annie Cossette said on Friday.

 

And as the largest
rail manufacturer in the world, Bombardier has a lot riding on the
recent shift in China’s focus from high-speed trains to commuter trains
in the wake of a devastating 2011 crash that killed 40 people.
Bombardier and several other rail equipment makers are also being
investigated in Brazil over allegations of bid rigging.

 

But these
challenges — even once the delivery of Montreal’s métro cars by year’s
end is factored in — pale in comparison with the CSeries. Thousands of
jobs in Montreal and many other cities around the world depend on that
aircraft program, as does Bombardier’s future in aviation.

 

During a
wide-ranging interview with The Gazette, Pierre Beaudoin weighed in on a
variety of issues. Excerpts of that interview, by topic, appear below:


On the departure of Fuller, who was hired from GE three years ago:

 

“We felt it was time to make a change and we made a change.”


Because of lagging CSeries sales?

 

“It’s
not about what was not working. We felt (his replacement, Raymond
Jones) would be the right guy to lead this team. It’s a large team, he’s
got lots of international experience, knows our company very well and
the timing was right.”

 

Beaudoin deflected some
analysts’ criticism that Jones comes from Bombardier’s private jet
division and has no airline experience, a very different business than
selling planes to rich people and corporations.

 

“What’s important
to lead a sales force is your leadership skills. Ray has demonstrated
… his ability to manage a broad network of sales people. … From the
product perspective, airplanes are not different from a business jet to a
commercial aircraft. And he has an understanding of how Bombardier
works on the inside. He has no airline experience, but that’s the part
that with his sales team — which has a lot of airline experience — he’ll
learn very fast and develop his own relationships.”


On the CSeries’s prospects:

 

Bombardier
has set a target of 300 firm orders from at least 20 customers for the
plane by late this year. It currently has 182 orders from 16 clients,
and a total of 419 commitments of various types.

 

“I’m very
confident we’ll get to our 300. You know, it’s normal there’s
questioning of a new program in main line (carriers). There’s no other
company that has done that since Airbus (when it introduced its A320
family in 1987).”


On the flight-test program:

 

“It’s (going) according to our plan. A second airplane will fly within weeks. (FTV2's maiden flight was on Friday.) We’ll take the appropriate time to evaluate what the proper schedule is for the CSeries, and that’s what we’re doing now.”


On
the agreement with Commercial Aircraft Corporation of China, Ltd.,
which would identify opportunities for common systems and procedures
between the CSeries and COMAC’s larger C919 aircraft, also in
development:

 

“An area of focus is the flight deck, especially
the human interface (screens, dials, knobs and switches, etc.) Also,
we’re looking at common ways to do maintenance and servicing … as well
as areas our sales forces could work together.”


On a
breakthrough order for the CSeries that opens up the Chinese market for
the airliner — Asia is set to overtake North America and Europe as the
world’s largest aircraft market:

 

“We recently sold 15 CSeries
to China Development Bank, a leasing company. That’s good news because
leasing is very important for airlines. It was signed by the president
of China (Xi Jinping) in the presence of Canada’s governor general
(David Johnston). It’s a sign to Chinese airlines that this aircraft
will be supported at the highest levels in China. We wanted the
president to sign it and he agreed to do it. Now we can approach
airlines and say ‘you’ll get support.’ You don’t get any higher than the
president of China.”

 

“Airlines there look for two things; leasing
planes and whether the government will support their demand. Because
once they agree to buy your airplane, they have to submit that to the
authorities. … So this signature (by Xi Jinping) was a good
confirmation.”


On the fly-by-wire system, an electronic system
that replaces many flight-control functions that were once done manually
— and a particular area of concern for Bombardier:

 

“No
worries, but we have a lot of focus on it. It’s the first time
Bombardier has a fly-by-wire airplane, so there would be more attention
than other systems because it’s still a learning process for us. …
It’s always a back and forth (with suppliers Rockwell Collins and Parker
Hannifin), and sometimes we’ve made changes that they have to adapt to
and sometimes they want to make changes. … But I think we’re working
very well as a team. … I have 100-per-cent confidence that we’ve done
our work from a safety perspective.”


On the Montreal métro contract:

 

“It’s
on track, manufacturing starts in February (at La Pocatière) and the
first deliveries will be by year’s end. I’m upbeat about it, it’ll be
exciting when it starts operating in Montreal.

 

“We’ve really put
these new cars through some challenges before they enter service. …
We’ve been very supportive of the (Société de transport de Montréal).”


On
the astonishingly candid statements by Rusdi Kirana, president of
Indonesia’s Lion Air, who said he wanted to buy up to 100 CSeries and be
the launch (first) customer for the CS300 version, the bigger CSeries —
and that he hoped to place a large order at the Farnborough air show in
July. Observers have cast doubts on that plan, saying it’s more wish
than reality:

 

“I think he’s quite serious … Others are in
Asia as well, like Air Asia. Because they’re all going after the same
model — low-cost airlines with 165-170-passenger type aircraft. But now
they’re also saying: ‘Yes, but if we want to be competitive over the
long term, what can we do differently?’ That’s what the CSeries permits
airlines to think about … less seats, more frequency.

 

Instead of three
flights a day (on larger planes), you can have six CSeries flights a
day. And then you can really hurt the competition. Because if you travel
and you’re not sure about your schedule, you’re going to go with the
airline that offers the most frequency.”


On the rail market in
China, which had planned for staggering figures of dedicated high-speed
tracks — up to 20,000 kilometres at one point. That was scaled back
after the accident and accusations of corruption, but industry sources
in China say the growth has largely resumed. Bombardier has supplied
trains, métros and components to many joint ventures it signed with
Chinese rail companies.

 

“They’re evaluating whether they need
more high-speed trains. But their big focus right now is on commuter
trains, about 160 kilometres an hour. And that’s good for Bombardier
because we’re very strong in commuter trains around the world. And they
have a new thing: they want more (lighter) aluminum trains. We produce
aluminum trains all over the world, but not in China. So we’re designing
a new (250 km/h) aluminum train there. And we’re starting soon the
delivery of the (380-km/h very-high-speed steel) Zefiro train that’s in
tests right now.”


On the development of the Global 7000 and
8000 business jets that will be at the pinnacle of the private jet world
— competing with Gulfstream’s G650. The two have long engaged in
one-upmanship dogfights, each successively trumping the other’s aircraft
range and performance. Steven Spielberg, Oprah Winfrey, the Aga Khan,
Guy Laliberté and other billionaires own Global aircraft, while many
other celebrities and corporations fly Gulfstreams.

 

“We’re
about mid-stream in development. … We’ve done a really good job in
product positioning. … Our main competition (Gulfstream) has the 650,
which offers 7,000 nautical miles (non-stop) at .85 Mach (85 per cent of
the speed of sound, or about 1,041 km/h). “We have a
7,000-nautical-mile airplane, but with three metres more cabin…. And
if the customer says ‘I want the same size as the the current Global
(6000) or the G650,’ we not only offer 7,000 miles, we offer 8,000
nautical miles (with the Global 8000 due out in 2017). So we’ve got the
competition really boxed in well.

 

“It’s a category addressed to
billionaires, of which there are 1,300 in the world. But that’s
predicted to double in the next 10 years worldwide.”


On being investigated with other firms in Brazil, part of a probe into an alleged cartel that rigged bids on train contracts:

 

“We
have training on our code of ethics, so employees understand what we
tolerate and (do) not. We have very, very disciplined procedures to
approve an agent that would work with us … We work with (Canadian)
embassies … to understand local practices and so on.

 

“It’s one
thing to have that in writing, but we tell our executives; ‘It’s how you
behave every day, too, how you’re seen in the smallest ways that will
make a difference.’

 

“Now we’re a global company with 75,000
employees … You can’t be naive and say there’s never going to be any
(corruption) issues.

 

“There’s an investigation in Brazil and we’re
all over it — to really understand what happened and how to correct it.
We’re still in the investigation phase internally. … Like always, if
there was something that happened, there will be no compromise. We will
take action.”