Bombardier gets serious about new jet project

 - March 30, 2007, 7:53 AM

Canada’s largest aerospace company has apparently given up playing coy about its reliance on government support to compete in the large RJ arena. While calling for the federal government in Ottawa to help pay for the development of a new family of 100- to 125-seat jets, Bombardier president and CEO Paul Tellier threatened to build the airplane at the company’s Short Brothers division in Belfast, N. Ireland, if a substantial part of the estimated $1.5 billion needed for the project didn’t come from state coffers. “We have a first-class facility with an excellent labor force in Belfast,” said Tellier. “There is in the UK a strong export-financing agency, so therefore all these factors come into account.”

As if to impress upon the ministers in Ottawa he wasn’t bluffing, Tellier hired CAE and Boeing executive Gary Scott specifically to head the studies into its technical and commercial feasibility. That, after the company announced it would slash 680 positions at Bombardier Transportation’s facilities in Burnaby, British Columbia; Kingston and Thunder Bay, Ontario; and Montreal ahead of a sweeping purge of some 6,600 employees worldwide last month.

For Bombardier, the urgency of a new program to address its lack of a 100-seat-class airplane has become painfully apparent as rival Embraer collects big orders for its 70- to 110-seat line in both the burgeoning discount-fare segment and with major airlines. Most recently, Air Canada told representatives from its mainline pilot union that it wants to replace half of its recent tentative order for 30 CRJ705s with 15 Embraer 170s or 175s. In December bankrupt Air Canada split an order for 90 airplanes between the two manufacturers, but ongoing negotiations over regional/mainline flying rights has prompted it to reconsider the planned fleet mix.

Scott, who served as CAE’s civil simulation and training group president since 2002, joined Bombardier on March 8. A long-time Boeing executive before joining CAE, Scott oversaw the launch of the 737 Next Generation and 757-300 programs and led the 737/757 division during the biggest production build-up in the company’s history. He last served as FlightSafety Boeing’s (now Alteon, a wholly owned subsidiary of Boeing) group president for civil simulation and training during his 29-year tenure with the U.S. manufacturer.

Scott’s Seattle connection sparked conjecture in the Canadian press of a plan to create a joint venture with Boeing. Asked to comment on the theory, a Bombardier spokesman issued close to a complete denial. “This is pure speculation that comes out of a Toronto Globe & Mail article and the musings of one journalist,” he said. “As far as I’m concerned it’s way out there.”

Tellier said the company would likely arrive at a decision on the three-member family of jets by year-end or shortly thereafter. Studies have centered on a 15-percent direct operating cost benefit over the comparably sized airplane under development by Embraer. Such an airplane would rely heavily on use of the latest composite technology, such as that planned for the Boeing 7E7.

Rather than Bombardier’s appointment of Scott to lead the project, a desire to limit costs associated with developing proprietary composites appears more likely to point to at least a technology-transfer arrangement with Boeing. But if Boeing plans to continue marketing the 717–potentially a direct competitor of the Bombardier product–such cooperation would seem highly counterintuitive.

Meanwhile, in Northern Ireland, where Bombardier employs some 5,600 workers, assembly members Sir Reg Empey and Michael Copeland have urged the government to support Bombardier’s proposition. Last May Shorts cut 600 jobs and plans to slash perhaps 100 more by next April. The company and its employee unions have yet to reach new labor agreements after six months of bargaining, a process punctuated by work actions and plant closures.