Engine supplier production woes hamper Bombardier turnaround

Just as the parent of Wichita’s Learjet had gained some momentum on its new narrowbody airliner program, Bombardier said it would cut by more than half the number of C Series aircraft it was planning to deliver this year.

In an update this week, Bombardier said it would deliver seven C Series jetliners in 2016, down from the 15 deliveries it had expected to make.

But Bombardier said the cut to its delivery forecast wasn’t of its own doing. Rather it’s because the C Series’ engine maker, Pratt & Whitney, can’t deliver its geared turbofan engines fast enough.

A fairly quick resolution to the slow engine production is something Bombardier needs to meet its plan of reaching financial stability and profitability in the next few years, Teal Group analyst Richard Aboulafia said Wednesday.

“The main problem is just Bombardier has a very tight window in terms of ramping up production and achieving profit by 2020,” he said. “Developments like this just complicate that problem.”

Bombardier, which employs about 1,800 people in Wichita, was already two years behind schedule and $2 billion over budget before delivering its first C Series CS100 airliner in June to Swiss International Airlines. Swiss has since taken delivery of a second CS100 and both aircraft have accumulated nearly 600 flight hours, almost 400 hours of which were revenue flights.

Analysts have pointed to the C Series delays and cost overruns that nearly drained the company of cash as one reason why Bombardier last year canceled development of the Learjet 85 business jet. That led to the layoff of 600 Wichita workers.

Bombardier said in its update it doesn’t expect a “material” effect to its 2016 earnings before interest and taxes but revenue in its commercial aircraft unit will be lower, though it didn’t say by how much.

“We are working very closely with Pratt & Whitney to quickly address this supplier ramp-up issue and to ensure we have a strong supplier based to support our long-term growth objectives,” Bombardier Commercial Aircraft president Fred Cromer said in the update.

For its part, Pratt & Whitney said in an e-mailed statement Wednesday it is working to overcome the production delays.

“In terms of production, we’ve made significant headway in the supply chain, but there is some pressure on new engine deliveries for this year,” the statement said. “We are working closely with our customers on the delivery schedule, and we are keeping them apprised of the progress being made.”

Pratt’s Geared Turbofan engine has won five national and international awards, including from Popular Science, Aviation Week and the China Aviation Association and AVIC Science and Technology department. Pratt claims the engine offers a 16 percent reduction in fuel burn, a 75 percent decrease in the noise footprint and a 50 percent reduction in regulated emissions.

Former Delta Air Lines CEO Richard Anderson said in January that the geared turbofan engines are “really the first big innovation since the (Boeing) 787.” About three months later, Delta placed a firm order for 75 CS100s and options for 50 more.

It’s not unusual for early production delays to occur on a new airplane or jet engine. But Aboulafia thinks Pratt is struggling with the engine because it will be used on a variety of commercial airplanes – Airbus A320neo, Embraer E190-E2, Mistubishi Regional Jet and Irkut MC-21 – and each one of those aircraft will have a different version of it.

“What really complicates things is that Pratt is trying to ramp up and develop an unprecedented number of variants of the same engine at once,” he said. “There’s always complications between variants.”

Aboulafia thinks there’s a “very good chance” Pratt will successfully work through its engine production issues and not upset Bombardier’s turnaround plan.

But if that effort takes too long, “it just complicates Bombardier’s efforts to keep its head above water,” he said.

This story was originally published September 7, 2016 at 4:52 PM with the headline "Engine supplier production woes hamper Bombardier turnaround."