EBACE 2011: On 25th anniversary, Bombardier looks ahead

 - May 17, 2011, 1:35 AM

Asked at the 1986 Farnborough airshow what market share Canadair wanted for the Challenger corporate jet, Donald Lowe said simply, “We want our third.” Lowe was chief executive designate at the government-owned aircraft company that Canadian mass-transit manufacturer Bombardier had agreed to acquire just three weeks earlier.

Although it seems only the day before yesterday that Bombardier entered aerospace, in fact 25 years have passed–during which period the company has built a formidable portfolio by buying airframing companies de Havilland Canada (in 1992), Learjet (1990) and Northern Ireland’s Short Brothers (1989) and carving out rich niches in the business aircraft, regional airliner and amphibious utility aircraft markets.

Lowe’s aspiration was not a prescient reference to fractional ownership: he wanted the Challenger program that came with the Canadair territory to take its place in the long-range business aircraft market alongside the competing Dassault Falcon 50 and the Gulfstream GIII designs. Analysis of shipment statistics for the past 13 years, the second half of Bombardier’s time in the industry, shows that in head-to-head competition against contemporaries Cessna, Dassault, Embraer and Hawker Beechcraft, the company has held its place in the market. During 1998-2010, Bombardier accounted for just over 21 percent of more than 10,000 worldwide business jet deliveries, according to the U.S. General Aviation Manufacturers Association (which does not break down the value of those shipments).

Earlier this month, Bombardier Aerospace had not yet announced how it plans to celebrate its quarter-century in the business, although the formal anniversary of the Canadair purchase is not until December 23. Possibly, the company decided not to draw too much attention to this since the celebration might draw attention to the fact that many of its rivals have been in the business far longer.

In the 25 years since it bought into the industry, the Bombardier group has established an aerospace business that in its most recent year (the 12 months to Jan. 31, 2011) generated revenues of $8.6 billion, compared with $9.4 billion in 2009-10. Earnings before interest and taxes are put at $448 million (5.2 percent of revenues), compared with $473 million (5.1 percent) a year earlier. Bombardier Aerospace fiscal-year-end backlog was $16.6 billion, down only slightly on 2009-10’s $16.7 billion.

Bombardier Aerospace reported 201 orders (after accounting for 66 cancellations) in fiscal year 2011, compared to just 11 orders (with 202 cancellations) a year earlier. Deliveries totaled 244 aircraft compared with 302 in the previous fiscal year. “We seem to have turned the corner with business jet orders picking up substantially in the fourth quarter,” said Pierre Beaudoin, president and chief executive of the Bombardier parent company and grandson of founder Joseph-Armand Bombardier. “To further strengthen our product-leadership position, we continued to make progress on the development of new products within our business- and commercial-aircraft segments, both of which have healthy long-term growth prospects.”

Bombardier, which claims to be the “world’s third-largest civil aircraft manufacturer,” employs about 30,000 people worldwide. “Since 1989, we have launched 28 successful new aircraft programs.

Our production sites are situated in Canada, the U.S., the United Kingdom (Northern Ireland) and Mexico. We have a robust network of maintenance service centers, authorized service facilities, distribution centers, depots for spare parts and sales and marketing offices worldwide.”

Looking back, the Canadian manufacturer sees the value of continued investment in the business. “Over the past years, we have taken significant steps to strengthen our operations and invest in our future programs,” said Bombardier Aerospace president and chief operating officer Guy Hachey. “By meeting the challenges of today and setting our sights on the future, we believe we are creating a loyal customer base for our products and services, and will emerge from this difficult [global financial crisis] environment a stronger and more efficient company.

“With a comprehensive portfolio of products, we believe our fundamentals are strong in the long term for both the business- and commercial-aircraft markets. The aviation industry is cyclic by nature and Bombardier’s long history of success is attributable to our ability to face each challenge head-on, focus on the things we can control and put our plans into action,” concluded Hachey.

Current business aircraft products are based on three distinct families of corporate, long-range and executive jet designs: the Challenger 300, 605 and 850; the Global Express XRS, Global 5000, 7000 and 8000; and the Lear 40XR, 45XR, 60XR and the in-development Lear 85.

In fiscal year 2011, Bombardier delivered 143 business aircraft and Don Lowe would have been proud. That part of part of the company remains “market leader, with a share of 32 percent based on revenues.” Bombardier has its one third.