Bombardier Inc.’s C Series commercial aircraft program continues to endure delays in engine deliveries from its supplier Pratt & Whitney, which prompted the jet builder to reduce its forecast for fourth-quarter and full-year aircraft deliveries. In its 3Q 2017 results, Bombardier noted it now expects to deliver 20 to 22 of the C Series jets for 2017 (down from 30), and that the Commercial Aircraft’s revenue guidance for 2017 is adjusted downward to approximately $2.5 billion.
The problem with Pratt & Whitney engine deliveries is a long-standing one, now having impacted deliveries of the aircraft for two consecutive years.
In a call with analysts, Bombardier CEO Alain Bellemare assured listeners that the delivery problem is a “short-term issue” that the supplier is “actively addressing.”
Pratt & Whitney has not commented on the latest announcement. In October, P&W said it had identified and was resolving the causes of the delays in delivering its PurePower® PW1500G geared turbofan engine deliveries.
In lowering its delivery forecast, Bombardier also announced it entered into a “letter of intent” whereby Pratt & Whitney agreed to support excess inventory generated by engine delays, by providing us a supplier advance starting in the fourth quarter.
The C Series aircraft are twin-engine, medium-range jets developed for the single-aisle aircraft market that debuted in 2016. Bombardier recently entered into a “strategic partnership” with Airbus SE that gives Airbus a majority stake in the C Series program, but providing Bombardier with better access to the U.S. market with plans to manufacture the jets in a new, second assembly line at the Airbus plant in Mobile, Ala. Bombardier also contends that Airbus’ global reach and scale will provide commercial momentum and drive production cost savings. The transaction remains subject to regulatory approvals and is expected to close in the second half of 2018.
Amidst the news of the delays, Bombardier also announced that an unnamed European customer has signed a letter of intent for up to 61 C Series jets, including 31 firm orders and options for an additional 30 aircraft. Based on list prices, the firm orders would be valued at approximately $2.4 billion, rising to nearly $4.8 billion if all 30 options are exercised.
This contract is subject to the execution of a purchase agreement, which is expected before year end.
“This significant new order confirms the increasing confidence customers have in the C Series,” said Bellemare stated. “Looking forward, as Airbus joins the program, and with the C Series continuing to prove itself in service, we expect sales momentum to accelerate quickly.”