CSERIES FRUSTRATING SWISS CARRIER

‘Not an easy decision’ to be delay-plagued plane’s first customer, CEO says

Swiss International Air Lines AG has been a champion of sorts for Bombardier Inc.’ s troubled CSeries program as both the first customer to place a firm order for the aircraft in 2009 and eventually the first to fly it commercially once it’s ready next year. But the chief executive of Swiss, frustrated by a two-year delay, says it “was not an easy decision” to become the CSeries’ launch operator and he’s worried the role will just create “more work” for him and his team.

Swiss, a division of Deutsche Lufthansa AG, stepped up to the plate after the original launch operator for the CSeries, Braathens Aviation AB, backed out last year citing “increased uncertainty.”

It took more than eight months for Bombardier to name Swiss as Braathens’ replacement, and it took several meetings to convince the airline to fill the role.

“We had to evaluate if we would be capable of doing so,” Swiss CEO Harry Hohmeister said in an exclusive interview with the Financial Post from the airline’s headquarters in Zurich.

“For Swiss, which is a small entity with a small team, it was not an easy decision.”

Being the first airline to fly a new aircraft commercially comes with its share of risks. New aircraft sometimes have kinks that need to be worked out, like the battery fires that plagued Boeing Co.’s 787 during its first year of service, and there’s no institutional knowledge about how to deal with them.

“I always say an aircraft is a living animal, so you never know what might happen,” Hohmeister said.

“This is, of course, a challenge for a company which has no huge engineering department.”

In the end, both Lufthansa and Bombardier pledged their support and Swiss agreed to be the CSeries’ launch operator, although Hohmeister stressed that the decision “was more driven by the request of Bombardier than by our own wishes.”

When asked if there are any advantages to being the first to fly a new aircraft, Hohmeister demurred.

“I don’t know … it’s just more work,” he said.

Hohmeister is sanguine about the role the CSeries will play in Swiss’s fleet once it is finally delivered next year, two years later than originally planned. The smaller CS100 will replace aging Avro RJ100s, while the larger CS300 will replace Airbus A319s, which Swiss plans to phase out.

He’s enthusiastic about the plane’s size, calling it an “ideal solution” for the airline, as well as its capability to land on short runways like London City Airport, where Swiss is one of the biggest operators. He also speaks positively of its low operating costs, its cabin layout and how quiet its engines are.

After making its debut at the Paris Air Show in June, the CS100 made a side trip to Zurich so Swiss’s team could see it first-hand.

“My impression was very positive and I share this impression with my team,” Hohmeister said.

“Within the Swiss team, the feedback is very positive, not just from the cockpit but also from the flight attendants.”

However, he doesn’t hide his frustration over the multiple delays the CSeries has experienced. Swiss was originally supposed to take delivery of its first aircraft from Bombardier in 2014, and that has now been pushed back to the middle of 2016.

To cover the delay, Swiss was forced to lease four Embraer SA aircraft from Helvetic Airways.

“On the one hand, we are not happy that the aircraft is delayed for 24 months,” Hohmeister said.

“But on the other hand, I think we have to be realistic. We are talking about an investment which has a 25-year lifetime cycle. When you take this into account, for me it’s important that we get something delivered which is working well over the 25-year lifetime cycle, compared to a situation where we have to fix problems which might appear.”

Once the CSeries is delivered, Hohmeister is confident that Bombardier will be able to rack up more orders for the plane. To date, the company is 57 short of its 300-order goal, and hasn’t recorded a new firm order since September 2014.

Hohmeister also isn’t losing sleep about Bombardier’s cash flow, debt levels or liquidity, all of which have been weighing on the company’s share price, which is down more than 60 per cent so far this year.

“Of course we have to look at (Bombardier’s financial situation) because we are talking about a lot of money. It’s a really huge investment for us,” he said. “We have good confidence that Bombardier has this under control. I have no indication that Bombardier is in financial trouble and the rest is speculation.”