Bombardier held its investor day in New York today, with Guy Hachey, President of Bombardier Aerospace and Philippe Poutissou, VP Marketing for Bombardier Commercial Aircraft, speaking at the event.

Guy Hachey indicated that aerospace expects a better 2014 than 2013, and that progress is continuing for Lear 85 and CSeries. The first flight for the Lear 85 was scheduled for today, but scrubbed because of weather, and the CSeries flight test program is continuing well, with twice the hours in March as in February, and with more aircraft joining the fleet, a dramatic upturn in hours expected in 2nd quarter.

He emphasized three areas – significant milestones that have been achieved, how the company is well positioned for growth, and the outlook for Bombardier Aerospace.

In terms of milestones, he cited the CSeries first flight, the Learjet 70 and 75 entering service, production rate increases in multiple programs, an expansion of the service business with 20 additional locations, and the growth in non-traditional markets, including the MoU with Rostec in Russia for Q400 production. The Russian deal is being impacted by sanctions now.

Business jet orders remained significant, at 305 units in 2013 and a book to bill of 1.7, following 343 in 2012 with a book to bill of 1.9. As a result, backlog is building in the business jet sector. On the commercial side, 81 orders were received, a book to bill of 1.5, albeit on a slower production year. He was particularly pleased with the geographic expansion of commercial aircraft orders in China, Russia, Africa and the Middle East, non-traditional markets for Bombardier. Over 40% of the backlog is for aircraft currently in development, and in total represents 4 years of manufacturing capability.

He also mentioned that the services sector has more than $3 billion of services revenue in backlog. Over 1,200 business aircraft are now enrolled in Smart Services, the highest capture rate in the program’s history.

In terms of how the company is positioned for growth, he focused on $8 to $12 billion of additional revenues in 2018, driven by CSeries, Global 7000/8000 and Lear 85. Bombardier is investing to maintain its leading market share position in business aircraft, and is looking for CSeries to fuel growth in the commercial aircraft segment.

He showed a graphic of seat-mile and aircraft-mile costs comparing CSeries with its major competitors, shown below:

Bombardier CSeries Economics Chart

To date, the CSeries program has 201 firm orders from 18 customers and lessees, with up to 447 commitments when options and purchase rights are included.

The outlook for Bombardier is changing to be more global. From 1993-2012, 80% of deliveries of commercial aircraft were made in North America and Europe. From 2013-2032 Bombardier expects this to shrink to 50% as it expands into China, Russia, Middle East, Africa and Latin America.

The company now has 131 Customer Support and Services locations worldwide, with 20 new locations added in 2013.

During the Q&A session, Guy clarified that the fly-by-wire system has indeed been operating on the aircraft, and that direct mode is used for flight testing because the “normal” mode, which prohibits certain actions by pilots, would, for example not permit the stall and unusual attitude tests that are currently being completed. He emphasized that normal mode is installed and running on CIASTA, the iron-bird test machine, and will be fully installed on the test fleet soon to enable testing of the normal mode, once the other required tests are completed. With direct mode, the test pilot is in full control of the aircraft, without the normal mode restrictions in place.

Philippe Poutissou, VP Marketing of Commercial Aircraft, presented an update on CSeries. This update focused on the aircraft certification process, and how the flight test program works. He discussed the aircraft development process, the certification and flight test program, and provided an update of where the CSeries stands.

Since 1986, Bombardier has certified 25 aircraft models, with six under development. Philippe explained the design cycle and certification process Bombardier employs, including trade studies, technology readiness roadmaps, provider expertise, testing, and rigorous design and certification gated processes. He explained the role for each flight test vehicle, as shown in the chart below.

CSeries flight test vehicle roles

The CSeries remains on track for a mid 2015 entry into service, as shown in the following chart:

CSeries Development Timeline

Bottom Line: No earth-shattering announcements from Bombardier at Investor Day, but a focus on continued improvement, more positive financial results in 2016, and continuing progress for CSeries and other new programs.

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