Ross Mitchell answers to our questions
Q1 – 2017 will definitely not be a record year for aircraft orders and all OEM are in the same situation and that is putting a lot stress on new aircraft prices. When it comes to finalizing a deal with airlines, is it very challenging to find a commercial agreements that please both parties in 2017?
A1 – Negotiation is always a challenge as you can imagine and it has always been, it is not new of this year. We are always trying to find the best solution to satisfy both our business and our customers.
Regarding the Q400 program:
Q2-Last year Bombardier sold 33 aircrafts of the type while delivering 33 achieving a perfect book to bill the ratio of 1. Do you expect to end 2017 with the same ratio and maintain about the same number of deliveries?
A2 – On CRJ and Q Series, as previously announced, during the Investors Day in December, we are managing the market cycle, targeting 50 deliveries for 2017 – both aircraft programs combined.
Q3 -Are you happy with the actual configurations of the Q400 that can go up to 90 passengers in high density configuration or some other improvement have to be done? Or do you think that maybe an evaluation of the Q400 has to be done?
A3 – The Q400 product that we are offering today meets the market needs. As you mentioned we launched the 90-seat configuration version of the aircraft about a year ago and we believe this aircraft has the right size for future demand. Also, let’s not forget that most of the major Q400 systems are new ones and not derivatives from the Dash-8 series. The interior was upgraded too and the engines have a much newer design than our competition.
Regarding the CRJ program:
Q4 – The CRJ hit the 1900 sales milestone last year but with 19 sales and 46 deliveries which gives you a .41 book to bill ratio and a backlog of 52 aircraft. Numbers are speaking for themselves, something will have to be done in 2017; it’s either a major production slow down or a major order. Can you comment on that situation?
A4 – The CRJ is number 1 in the regional jet market with 42% market share – more than any competitor – CRJ Aircraft lead the market in performance, efficiency, reliability and the low cash operating cost. There are a number of sales campaign going on and we are confident that our customers see the benefit the CRJ aircraft has been bringing to the regional market for the last 25 years.
Q5 – The CRJ is Bombardier’s oldest commercial program and you have been saying recently that you are not working on a re-engine version of the type. So do you think it is still an attractive aircraft for operators and will it get its fair share of orders in the coming years?
A5 – Through constant improvement and refinement, CRJ aircraft continue to stay ahead of competitive products. Based on market analysis and customers’ feedback we launched a new cabin for the CRJ in May 2016. Again, the CRJ is setting new standards in passenger experience for regional aviation with a modern cabin design.
The new features of the state-of-the–art cabin include a new entrance area, enhanced passenger living space, more spacious lavatory, integrated connected cabin solutions, and new mood lighting option. Passengers will also benefit from 50% more space for carry-on bags in business class, new wheels-first overhead bins and larger main cabin bins to stow oversized carry-on bags.
The cabin offers excellent passenger appeal, and for operators, this represents seamless experience with mainline fleets, improved reliability and maintainability as well as enhanced branding opportunities.
We see lots of interest from the market since we publically announced the new cabin in May 2016. However, at the moment we can’t announce who will be the first airline to take delivery of the first new CRJ cabin.
Also, we are continuously striving to lower maintenance costs and recently escalated the A-checks to 800 hrs, the longest in class. And the escalation of the C-check intervals to 8,000 flight hours is currently under development.
Q6 – Do you expect the US scope clause to remain as is beyond 2021?
A6 – Scope clauses favour the CRJ900 that is one of the only aircraft to be scope clause compliant. For now, we don’t expect scope clause to change. We are already number one in the North American regional market and the potential for older fleet replacement or new CRJ900 aircraft in North America for the next few years is huge.
Regarding the C Series program:
Q7 – Launch customers seem to be very happy with the few aircraft they have in hand and I guess they would be happier if they could get some more. Should we expect a slow delivery pace for the first half of the year and then see a big jump in the second half?
A7 – It was a slower cadence of deliveries and we took that opportunity to upgrade the aircraft (software and systems) and our production system. We have delivered the 10 C Series aircraft so far. We continue to ramp up production on the C Series, and as per our plan, the cadence of deliveries will increase in the second half of 2017.
Q8 – After the deal with Delta, you said that you would like to have an LCC as next customer for the C Series, but since then nobody has signed. Are you still looking for an LCC?
A8 – I can tell you that we see a lot of interest from many airlines around the world – including legacy airlines, low cost carriers and start-ups.
Q9 –Is it possible that some customers are in a hold and see mode because of the engine’s delay?
A9 – Buying aircraft is an important and long-term decision as it is a huge investment for airlines. It is normal that they take the necessary time to evaluate their fleet strategies before they make their final decision. Now they see that our launch customers are happy with both the performance and the reliability of the aircraft and that marquee customers such as Air Canada and Delta ordered the C Series as well. This will sure help – as other airlines will want to be as competitive as the airlines who chose the C Series.
Q10 – If you cannot get the price you want for the C-series in 2017, are you willing to refuse to sign any deal in 2017 and wait until prices firms up?
A10 – We won’t discuss our pricing strategy.
Q11 – So far, all of SWISS and Air Baltic C Series are equipped with PW1524G engines, so that makes Korean Air the launch customer for the PW1521G. Can you tell us if there will be a big difference in the performances (SFC, runway etc.) with the CS300 of Korean
A11 – This is a question you should address to the customers directly. Thanks.
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