BUMPY TAKEOFF
Bombardier shuffles management as it struggles with repeated delays in bringing new CSeries jets to market,
As Bombardier struggles to bring its CSeries plane to market after repeated delays, the Montreal-based aerospace manufacturer has cleaned house again with yet another management shuffle.
Alain Bellemarre, who took over in February as president and CEO from Pierre Beaudoin, announced Thursday that Fred Cromer will become president for Bombardier Commercial Aircraft, effectively immediately.
Cromer was most recently president of International Lease Finance Corporation, one of the world’s largest lessors, but also has airline experience holding different executive positions.
Cromer replaces Mike Arcamone, who served as president of the commercial aircraft division since 2012.
The company also announced that chief financial officer Pierre Alary is retiring, but will stay on until a replacement is hired.
In a news release, the company said “these changes will instill a fresh perspective at Bombardier, driving execution, alignment and intensity across the entire company.”
Canaccord Genuity analyst David Tyerman said Arcamone presided over a period “where profitability was pretty poor.” The commercial aircraft division lost $140 million last year and is forecast to lose $240 million this year.
While some of that can be attributed to costs around the CSeries program, Tyerman noted the results also imply that regional jets and Q400 turboprops were only break-even projects under Arcamone.
Cromer looks impressive on paper with his experience at the leasing company and airlines, Tyerman said.
“The one question I have is he doesn’t look like he has manufacturing experience,” he said. “I don’t know how much of the profit challenge is related to (Bombardier) selling airplanes at unprofitable rates.
“And how much is related to working as effectively in the factories as you might be able to,” he said.
However, Tyerman noted that Bombardier has hired Plane View Partners and its chairman Henri Courpron, a former Airbus executive, as strategic advisers who might be able to provide that manufacturing guidance.
The shakeup comes just weeks after company executives acknowledged what many analysts have speculated: the first CSeries jet will not enter commercial service later this year, as promised.
Instead, officials say the plane will have entry into service in 2016. Flight test hours have been growing and the company now has six test planes flying, including five of the CS100 planes, the smaller version, and one of the larger CS300 planes.
The company said the CS100 plane outfitted with actual cabin interiors flew for more than 7 1/2 hours recently, and there was still fuel left for another two hours, highlighting its fuel efficiency.
New questions have arisen this week about whether a Russian leasing company, frustrated by repeated delays, will go ahead with its CSeries order of 32 CS300 planes.
Ilyushin Finance Co., one Bombardier’s larger CSeries customers, is rethinking its purchase and will make a decision by the Paris air show in June, according to the aviation journal Flightglobal.
Bombardier spokeswoman Marianella de la Barrera acknowledged that Ilyushin Finance Co., which was in Montreal last week to see progress on the jet, faces financing challenges given Canada’s sanctions against Russia, over its actions in Ukraine.
“It is a firm order. They are a solid customer, but we do anticipate challenges moving forward,” she said, noting the sanctions means Russian companies cannot have access to financing through Export Development Canada.
“We are working together to look at third-party financing,” she added.
Tyerman added Bombardier needs to get the CSeries into service as well as boost orders.
“First, they have to (have the) plane finished, and that process may help them secure orders,” he said.
“If there are not more orders between now and the end of the year, it will be even more problematic.”