Bombardier considers further CRJ rate cuts

 - May 27, 2010, 12:18 PM

Bombardier Aerospace’s sales force will no doubt feel considerable pressure to boost CRJ transactions this month, as the company again considers cutting production of its regional jet line in Mirabel, Canada, in reaction to weak sales. During the company’s fiscal year-end conference call in April, Bombardier Aerospace president and COO Guy Hachey expressed particular concern about the “risks” associated with the company’s line of regional jets, most notably over the early part of this year.

“Fortunately we did take in an order late last year [22 CRJ700s from American Airlines], but it is not enough,” said Hachey. “So we do have to look [at] the end of this year to see whether we can top off our skyline. Otherwise, we might have to reconsider the production rate for Mirabel.

“But over the next month-and a-half we’ll have to make a decision that depends on the campaigns that we’re able to win,” added Hachey. “There might be a reduction in personnel, but we’re going to try to avoid that if we can.”

As of January 31, the backlog for CRJs stood at 41 CRJ700s, 18 CRJ900s and 49 CRJ1000s–barely enough airplanes to keep the line busy at its current rate for 22 months.

The last hopeful sign for Mirabel’s 1,000 workers came on April 14, when Bombardier landed a firm contract from Pluna Airlines of Uruguay for three CRJ900s. The contract, worth some $120 million at list prices, includes options for six more of the big RJs that could raise the total value to $370 million.

Montevideo-based Pluna’s fleet now includes seven CRJ900s delivered as specified by an order placed on July 9, 2007.

Last year Bombardier delivered 121 commercial aircraft, or 10 percent more than the previous year, while it delivered 25 percent fewer business airplanes over the same period. On the commercial side, it booked gross orders for 104 airplanes while accepting cancellations for 16. It also managed to increase its market share from 37 percent to 44 percent, said Hachey. This year, he added, the company expects to sell 20 percent fewer aircraft than it did last year, although Hachey predicted improving conditions in the second half of the year.