Meanwhile at Bombardier Business Aircraft
After the surprise announcement of the arrival of the Global 5500 and Global 6500 in Geneva last May, the Bombardier business jet division has returned to the shadows. Here is a brief overview of what is going on right now.
The renewal of the collective agreement for the two groups of unionized employees in Downsview allows the company to focus on the execution of the backlog and in particular on the certification and delivery of the first Global 7500. The enthusiasm of The Global Finishing Center team in Montreal empressive and all look forward to handing over the first Global 7500 to its customer Mr. Niki Lauda. In April, the deadline for this first delivery to take place in 2018 was still a tight. But the initiatives taken to avoid a slippage in the delivery schedule have given results, so now the goal should be achieved. The most optimistic even speak of three deliveries of Global 7500 in 2018.
The two new versions of the Global, the 5500 and the 6500, are already attracting significant interest from potential buyers in this category of business aircraft and firm sales are expected to begin to materialize in the coming months. The effect of these sales should be reflected in the order backlog as of the third quarter of 2018. Note that the improved performance of the Global 7500 has also attracted the attention of buyers and that other orders are also coming for this variant.
Several articles have recently made mention of the competitive advantage that the 25% Chinese surtax on aircraft weighing from 15 to 45 tons gave to Bombardier over its American competitor Gulfstream. But the reality is that it will take years before this surtax makes a real difference; Bombardier Business Aircraft adjusts its production rates to market needs, leaving it with very few available delivery slots. So a Chinese buyer who decides to cancel a purchase with Gulfstream to turn to Bombardier will probably have to wait two or three years before getting their hands on their plane. Before the decision is taken to increase production rates to supply the Chinese market, it will require a substantial increase in orders and once the decision is made, it will take another year before the first delivery.
The biggest market for business jets is still that of the United States, far ahead of the Chinese market. If the US administration’s trade war with its trading partners is to have a negative impact on its economy, it will have far more negative consequences for Bombardier Business Aircraft’s backlog than the few more orders coming from China.
A company the size of Bombardier is always working on new aircraft ideas or projects and only a few of them are going into production. However rumors are beginning to be persistent about a replacement for the Challenger 650. It must be said that its backlog is still well garnishes since 25 delivered last year. But it would be foolish from Bombardier Business Aircraft management to wait for the order book to be completely emptied before beginning to work on a replacement. So this is a subject that we will follow very carefully in the coming months.
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