Bombardier being watched closely for CSeries orders at Paris air show

MONTREAL – A year after Bombardier left the world’s largest annual air show without any orders for its CSeries plane, industry observers are hopeful the world’s third-largest aircraft manufacturer won’t strike out again.

There is a buoyant mood heading into the Paris Air Show, which kicks off on Monday and which is expected to translate into numerous orders for aircraft manufacturers, particularly Airbus.

“There’s just more buzz in the industry right now so we feel really good about this show,” Bombardier spokeswoman Haley Dunne said in an interview from Paris.

About 180 Bombardier (TSX:BBD.B) officials are gathering at a mini-city of chalets erected at Le Bourget airport in a costly annual ritual to meet customers, suppliers and analysts. Several ministers from the federal and Quebec governments are among those expected to attend the commercial and military air show.

Five Bombardier aircraft will be on display and a separate pavilion will showcase a mock-up of the 110- to 149-seat CSeries, which is slated to enter service at the end of 2013.

Dunne insisted the company doesn’t time orders for air shows and wouldn’t say if any could arrive to help steal some of the spotlight this year.

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“We will have orders eventually, whether it’s this week or in the weeks to come or in the months to come,” she said.

“Right now we’re very comfortable with our order position based on where we are in the program so this show just gives us another opportunity to meet with our customers and continue conversations.”

Some of the pressure to produce orders was reduced when Bombardier announced earlier this month its first CSeries orders in 15 months. Sweden’s Braathens Aviation ordered 10 planes while another, unidentified, buyer ordered three of the aircraft.

Richard Aboulafia of the Teal Group said the industry is watching Bombardier closely after the “shocking absence of orders” at last year’s air show in Farnborough, U.K.

“The CSeries will either be conspicuous with orders or conspicuous by the absence of orders, but conspicuous either way,” he said in an interview.

“At this point I think it’s just become a wait and see story but this is going to be another occasion to either produce something or remark upon seriously underperforming the broader market.”

He said the aerospace industry’s rosy outlook and great promise for orders at the show demonstrate the disconnect from economic trends around the world.

Cameron Doerksen of Versant Partners said the most likely CSeries order will come from Qatar Airways, which has been expected to buy the airplane for some time. The head of the Middle Eastern airline has hinted that an order may be firmed up in Paris.

A number of small orders like Braathens are possible and would increase the number of CSeries customers. So far, five customers have placed 103 firm orders for two versions of the aircraft.

“A larger customer base means more potential for follow-on orders, less cancellation risk for the backlog and more leasing company interest,” Doerksen wrote in a report.

That’s also important because there are few delivery slots available through 2015, noted Joseph Nadol of J.P. Morgan.

“Net-net, we believe that the orders at the show will be enough to shift the focus on CSeries from demand to execution,” he said, adding that the CSeries is well positioned because of its promise of operating cost savings.

David Tyerman of CanacordGenuity said a lack of CSeries orders could present a good buying opportunity for Bombardier shares. The company’s shares fell 6.5 per cent last year when it failed to win orders, but subsequently recovered.

“We suspect a similar opportunity could happen this year under similar circumstances,” he noted.

A more pressing issue for Bombardier will be to win orders for its regional aircraft. The company plans to reduce Q400 production later this year and may reduce the CRJ rate if it fails to attract new orders.

Franco-Italian turboprop builder ATR’s vow to announce record orders at the show could also threaten Bombardier’s market share.

Bombardier isn’t the only Canadian company hoping to capitalize on its presence in Paris.

Flight simulator and training company CAE Inc. (TSX:CAE), landing gear and aerostructure manufacturer Heroux-Devtek (TSX:HRX) and engine manufacturer Pratt & Whitney (TSX:UTX) are all expected to announce new business.

All three stand to benefit from substantial orders that are expected for Boeing and Airbus planes.

Heroux-Devtek may announce new parts supply agreements, but new landing gear development programs are also a possibility, added Doerksen. He suspects the company is targeting Bombardier’s new Global 7000 and 8000 series of business jets.

As the engine manufacturer for both the Airbus A320neo and CSeries, Pratt could win no matter which company signs up orders.

However, the first A320neo orders signed for rival CFM’s Leap-X engine threatens to steal some of Pratt’s thunder, Aboulafia said.

Virgin America became the first buyer of the CFM engine to power 30 Airbus A320neo re-engined narrowbody planes.

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