Bombardier Feeling Pressure over Q400 Deferrals

 - June 3, 2009, 3:16 PM

Bombardier’s plans to increase production of its commercial airplanes by 10 percent this year remain intact for the time being, notwithstanding Bombardier Aerospace president and COO Guy Hachey’s statement today that some customers have approached the company about possible delivery deferrals.

One customer, in particular–Seattle-based Horizon Air–has publicly disclosed its desire to defer delivery of all 11 of its Q400 turboprops that are scheduled for shipment this year, next year and in 2011. In a recent SEC filing, Horizon said it expects to reach an agreement with Bombardier “later in the second quarter,” in other words, by the end of this month. However, during Bombardier’s first-quarter conference call today, Hachey said the company would not grant any concessions, as he stressed that much depends on the Bombardier’s ability to transfer the early delivery positions to other customers.
The current schedule calls for delivery of three Q400s to Horizon during this year’s fourth quarter, seven next year and one in 2011. Bombardier held a backlog for 102 Q400s early last month, enough to maintain production at planned rates for 27 months.

“First of all, we haven’t agreed with Horizon; that’s the first statement,” Hachey said, when asked about the possible need to reconsider the production-rate hike. “The second statement is if we did postpone, it wouldn’t necessarily mean it would change our position on the [production] rates, but it could have an influence on what we do. We have had some other customers that have approached us, but it is not in significant numbers, so what we’re more focused on right now is, assuming we were going to agree with Horizon, how can we fill in those slots,” he said.