Workers move a Bombardier Q400 NextGen airplane into a static display two days before the opening of the 49th Paris Air Show at Le Bourget airport near Paris on June 18. On Tuesday, Bombardier announced deals to sell up to 46 aircraft to three separate buyers at the air show.
Photograph by: Pascal Rossignol, Reuters
LE BOURGET, France — There's little evidence here at the world's most famous air show that the massive global aerospace sector is facing tough times due to high oil prices, defence budget slashing and travel-disrupting calamities from Japan to North Africa.
Jet fighters swoop overhead doing acrobatic stunts while VIPs, from deal-making industry executives to shmoozing American senators, circulate in golf carts driven by young women who zip past the luxurious commercial aircraft and fearsome warplanes on display.
"By invitation only," is stamped on almost every corporate "chalet" door that leads to suites where tire-kicking clients are treated to fine wines, gourmet meals, and elaborate technical displays by companies like Boeing, Airbus, Lockheed Martin and Canada's Bombardier.
It was Bombardier that grabbed a chunk of the attention Tuesday, announcing deals to sell up to 46 aircraft to three separate buyers. The total list price for the planes was just over $3 billion U.S., according to Bombardier, though buyers typically negotiate significant discounts on the list price.
One deal, to sell up to 30 of the company's new C Series jets to Korean Air, helped shake a monkey off the Montreal-based firm's back, given the skepticism over Bombardier's new C Series line of commercial jets.
Korean Air is buying 10 of the Bombardier CS300 aircraft and is getting an option to acquire 10 more. Korean Air has also obtained "purchase rights" — essentially the same as an option, but without a guaranteed delivery date — for an additional 10 planes.
The CS300, at 100-149 seats, is larger than the regional jets the company has historically produced. It's part of the fuel-efficient C Series line of commercial planes scheduled to be operational in late 2013.
Bombardier calls it a "game-changer" that could rival the Boeing 737 and Airbus A320, the smallest planes produced by the commercial industry's two dominant players.
The deal is only the seventh since 2008 involving the C Series planes, with firm orders for 113 aircraft. It comes on the heels of Monday's announcement that an unidentified "major network carrier" was buying 10 CS100 planes from the C Series fleet, with an option on an additional six. The 10 aircraft would have a total sticker value of $616 million U.S., but that would rise to $1 billion U.S. if the options were exercised.
Analysts have questioned whether Bombardier is collecting enough C Series orders to keep unit costs down and maintain customer interest.
But Gary Scott, president of Bombardier Commercial Aircraft, said he has never bought into the speculation from analysts and media commentators that the C Series project — developed with $1.3 billion U.S. in funding from Bombardier, along with $350 million U.S. from the Canadian government and another $118 million from Quebec — was on shaky ground.
"No, and I've said this many times: this is a 30- or 40-year project and we're at a point in the development phase where orders start to escalate, and this is true for almost any airline development program," Scott told reporters after the Korean Air announcement.
Bombardier won measured praise from aerospace industry analyst Richard Aboulafia, vice-president at Fairfax, Virginia-based Teal Group Corp.
"It sure beats a disastrous repeat of last year's dry Farnborough Air Show, and Korean Air is a good strategic win," he wrote in an email. "They've also gotten a launch user, a very welcome and long overdue event."
But he said Bombardier's orders "look conspicuously tiny" compared with the Airbus A320neo aircraft that is experiencing a "remarkable" showing so far this week at the Paris Air Show.
Bombardier announced two other deals Tuesday:
- The Australian business jet operator AVWest bought four Global 7000 jets and two Global 8000 ultra-long-range aircraft. The list price total is $400 million U.S..
- VistaJet, a Swiss luxury business carrier, announced it has ordered 10 Global 8000 aircraft. The list price is $650 million.
The International Air Transport Association announced earlier this month that it was reducing its 2011 industry profit projections to $4 billion U.S., less than half the forecast in March and a 78-per-cent drop from the $18 billion U.S. earned last year.
IATA, which said profit margins this year will be squeezed down to 0.7 per cent, blamed high oil prices, disasters in Japan, and unrest in North Africa and the Middle East.
"I see it in the eyes of my customers," Scott said Tuesday. "They're a little concerned about the slowdown in the growth, in the U.S. in particular."
Bombardier isn't the only Canadian company finding ways to make money in a tough climate. Winnipeg-based MicroPilot, which produces autopilot technology for unmanned aircraft used around the world, is one of more than 100 Canadian companies that have displays here.
Company president Howard Loewen said high oil prices aren't a problem given that the pilotless aircraft his customers use require relatively small amounts of fuel.
"We have a very niche product and it hasn't been that affected by the general overall condition of the aerospace industry," Loewen said.
He said the hefty expense to set up his own booth while staying for a week in Paris is a sound investment.
"You know what? Canada's a great country but if you're going to do business you've got to get out in the world."
Poneil@)Postmedia.com
Twitter: @poneilinparis
Jet fighters swoop overhead doing acrobatic stunts while VIPs, from deal-making industry executives to shmoozing American senators, circulate in golf carts driven by young women who zip past the luxurious commercial aircraft and fearsome warplanes on display.
"By invitation only," is stamped on almost every corporate "chalet" door that leads to suites where tire-kicking clients are treated to fine wines, gourmet meals, and elaborate technical displays by companies like Boeing, Airbus, Lockheed Martin and Canada's Bombardier.
It was Bombardier that grabbed a chunk of the attention Tuesday, announcing deals to sell up to 46 aircraft to three separate buyers. The total list price for the planes was just over $3 billion U.S., according to Bombardier, though buyers typically negotiate significant discounts on the list price.
One deal, to sell up to 30 of the company's new C Series jets to Korean Air, helped shake a monkey off the Montreal-based firm's back, given the skepticism over Bombardier's new C Series line of commercial jets.
Korean Air is buying 10 of the Bombardier CS300 aircraft and is getting an option to acquire 10 more. Korean Air has also obtained "purchase rights" — essentially the same as an option, but without a guaranteed delivery date — for an additional 10 planes.
The CS300, at 100-149 seats, is larger than the regional jets the company has historically produced. It's part of the fuel-efficient C Series line of commercial planes scheduled to be operational in late 2013.
Bombardier calls it a "game-changer" that could rival the Boeing 737 and Airbus A320, the smallest planes produced by the commercial industry's two dominant players.
The deal is only the seventh since 2008 involving the C Series planes, with firm orders for 113 aircraft. It comes on the heels of Monday's announcement that an unidentified "major network carrier" was buying 10 CS100 planes from the C Series fleet, with an option on an additional six. The 10 aircraft would have a total sticker value of $616 million U.S., but that would rise to $1 billion U.S. if the options were exercised.
Analysts have questioned whether Bombardier is collecting enough C Series orders to keep unit costs down and maintain customer interest.
But Gary Scott, president of Bombardier Commercial Aircraft, said he has never bought into the speculation from analysts and media commentators that the C Series project — developed with $1.3 billion U.S. in funding from Bombardier, along with $350 million U.S. from the Canadian government and another $118 million from Quebec — was on shaky ground.
"No, and I've said this many times: this is a 30- or 40-year project and we're at a point in the development phase where orders start to escalate, and this is true for almost any airline development program," Scott told reporters after the Korean Air announcement.
Bombardier won measured praise from aerospace industry analyst Richard Aboulafia, vice-president at Fairfax, Virginia-based Teal Group Corp.
"It sure beats a disastrous repeat of last year's dry Farnborough Air Show, and Korean Air is a good strategic win," he wrote in an email. "They've also gotten a launch user, a very welcome and long overdue event."
But he said Bombardier's orders "look conspicuously tiny" compared with the Airbus A320neo aircraft that is experiencing a "remarkable" showing so far this week at the Paris Air Show.
Bombardier announced two other deals Tuesday:
- The Australian business jet operator AVWest bought four Global 7000 jets and two Global 8000 ultra-long-range aircraft. The list price total is $400 million U.S..
- VistaJet, a Swiss luxury business carrier, announced it has ordered 10 Global 8000 aircraft. The list price is $650 million.
The International Air Transport Association announced earlier this month that it was reducing its 2011 industry profit projections to $4 billion U.S., less than half the forecast in March and a 78-per-cent drop from the $18 billion U.S. earned last year.
IATA, which said profit margins this year will be squeezed down to 0.7 per cent, blamed high oil prices, disasters in Japan, and unrest in North Africa and the Middle East.
"I see it in the eyes of my customers," Scott said Tuesday. "They're a little concerned about the slowdown in the growth, in the U.S. in particular."
Bombardier isn't the only Canadian company finding ways to make money in a tough climate. Winnipeg-based MicroPilot, which produces autopilot technology for unmanned aircraft used around the world, is one of more than 100 Canadian companies that have displays here.
Company president Howard Loewen said high oil prices aren't a problem given that the pilotless aircraft his customers use require relatively small amounts of fuel.
"We have a very niche product and it hasn't been that affected by the general overall condition of the aerospace industry," Loewen said.
He said the hefty expense to set up his own booth while staying for a week in Paris is a sound investment.
"You know what? Canada's a great country but if you're going to do business you've got to get out in the world."
Poneil@)Postmedia.com
Twitter: @poneilinparis
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