Bombardier Aerospace is conducting a “full review” of its new Global 7000 and 8000 ultra-long-range business jet programs even as the first Global 7000 takes shape. A Bombardier spokesman told AIN that the first flight-test aircraft is “in final assembly with major structural parts joined, including the rear, center and forward fuselages and the wing, as well as the main landing gear.”
Bombardier is dropping hints that the schedule for both aircraft might be delayed in light of continuing revenue pressure on the company generated by a two-year delay, $2 billion in cost overruns and other demands associated with developing its new CSeries single-aisle twinjet airliners. The company issued this written statement to AIN last month. “Following the arrival of new leadership in our organization–namely Alain Bellemare as president and CEO of Bombardier Inc. and David Coleal as president of Bombardier Business Aircraft–we are conducting a full review of all aspects of the program, including its schedule. We will continue to hold to our current commitments and once the full review is complete, we will provide any possible updates to the program.”
Bellemare joined Bombardier from Pratt & Whitney Canada in February. Coleal was promoted from the company’s Learjet division in May. Bellemare has moved quickly to cut costs and raise cash. The company announced that it would lay off 1,750 employees in its aerospace division and slowed production of Global 5000s and 6000s in May. This follows the layoffs of 1,000 and shuttering of the Learjet 85 program in January and another 3,500 aerospace layoffs last year. Bellemare said the company would take a fresh look at its supplier relationships as part of overall cost-cutting.
Looking for Cash Infusion
He also acknowledged in May that Bombardier’s strategy for raising up to $3 billion in cash this year includes selling off a minority portion of its German-based and profitable rail car division, Bombardier Transportation (BT). Analysts peg the overall value of BT at $6 to $7 billion, and the cash generated from a full or partial sale could provide some of the needed funds to complete both the CSeries and new Global programs.
That cash call could come sooner rather than later. Bombardier posted a net income drop of 13 percent for the first quarter of this year compared with the same period last year, to $100 million on revenue of $4.4 billion. Last year Bombardier posted an annual net loss of $1.2 billion, the majority of that stemming from charges associated with “pausing” the Learjet 85 program. In February the company suspended its stock dividend and major rating agencies downgraded its debt. Since the beginning of this year, the value of the company’s stock has been cut in half. Raising cash from BT may be one of the few arrows Bombardier has left in its quiver as the company’s debt load stood at an estimated $8 billion earlier this year. In a company statement released in May, Bombardier said any offering of BT equity likely would not come until the fourth quarter.
Bombardier announced the new Globals in 2010, in part to compete with the Gulfstream G650, which was certified in 2012. Cruising at Mach 0.85, the Global 7000 will have a maximum range of 7,300 nm; the range of the slightly shorter Global 8000 will be 7,900 nm. Both aircraft use the current Global 6000 fuselage but stretch it–the 7000 by 11 feet, 3 inches and the 8000 by two feet, three inches–and add bigger cabin windows extending higher up the sidewall. The aircraft will feature fly-by-wire flight controls, a new thin high-speed wing, more fuel-efficient GE Passport engines (16,500 pounds of thrust each) and Rockwell Collins Pro Line Fusion avionics. GE reported in May that the engines had concluded testing after logging more than 100 hours on 20 flights. For now, the aircraft are scheduled to enter service in 2016 and 2017, respectively.