As Bombardier Inc. begins to see signs of recovery in the aerospace industry, Chief Executive Pierre Beaudoin is betting his legacy on a new jetliner called the CSeries that will bring the Canadian plane and train builder into direct competition with Airbus and Boeing Co.
Reuters
Bombardier Chief Executive Pierre Beaudoin
For six years Bombardier has been trying to launch this jet—which seats as many as 145 people—but it didn't have the advance orders needed to begin actual production. Finally, in 2008, Lufthansa signed on as a launch customer and Bombardier moved forward. It now has 90 orders for the CSeries, the biggest jet built to date by Bombardier, which normally makes smaller commuter turboprops and regional and business jets.
The timing is opportune for Bombardier, as Airbus and Boeing are showing some vulnerability while deciding whether to update the models of their jets that compete with the new CSeries. Because the CSeries will likely be ready for service a few years before Boeing and Airbus's new offerings, Bombardier aims to grab some market share.
It is Mr. Beaudoin's chance to leave his stamp on the company his family has led since its founding in 1942. He took the top job in June 2008 from his father Laurent, who headed the company for nearly 42 years and who remains chairman.
During the recession, the Montreal-based company saw orders for business and commercial jets dry up, and cut more than 4,400 jobs. Mr. Beaudoin says the climate is improving and is buoyed by recent orders for new business jets, as well as a large order for the CSeries from Frontier parent Republic Airways Holdings Inc.
In an interview, he says he is also looking to China for growth, and is betting that U.S. business- jet sales will revive as corporations begin loosening their travel budgets. Excerpts:
WSJ: What sort of impact are you hoping for with the CSeries?
Mr. Beaudoin: We think it could add $5 billion to $8 billion in sales per year, which is a pretty big thing for a company with annual revenue of around $20 billion.
WSJ: Your business-jet sector got hit hard during the recession and corporate-jet travel became a focus of public outrage at the end of 2008. Where do things stand now?
Mr. Beaudoin: We have reduced production on our business-aircraft lines significantly since 2008. The industry did not need that negative attention at that time given the state of the economy. About 95% of business aircraft are used for legitimate business needs and as companies come back to life, the increased use of business aircraft will come back with it.
WSJ:Do you think the stigma on corporate travel has gone away yet or will it continue to be a problem for the industry?
Mr. Beaudoin: I don't think [the criticism] will have a long-term impact. The industry will come back very strong. Already, business-jet usage has begun to increase and new orders are coming back. If you can afford to move around in a business aircraft, you will because the airlines didn't get any better during the recession.
WSJ: How are you managing the company through the recovery?
Mr. Beaudoin:We continue to pursue an aggressive product-development strategy. In aerospace, we have the Lear 85 business jet and the CSeries commercial aircraft, for which we now have 90 orders and 90 options. On the transportation side, we have our very high-speed train, the Zefiro 380, for which we have recently secured a multibillion-dollar order in China.
WSJ: China has huge potential for commercial aviation. How is Bombardier navigating that market?
Mr. Beaudoin: I have made it a priority. Already, Chinese manufacturers provide fuselage parts for the Q400 [turboprop] aircraft and we signed a deal in 2008 with China Aviation Industry Corp. to build fuselage sections of the CSeries. We need to go into this with both eyes open.
WSJ: China is also an important market for your rail business. How did that side of the company fare during the recession?
Mr. Beaudoin: It did not slow down during the recession. We have a $4 billion joint venture to build very-high-speed trains in China, and the potential for growth there is quite large. We are also in the midst of an $11 billion contract to replace trains in France. The U.S. will represent a bigger portion of our rail business over time, as well.
Reuters