Odds and Ends: Goldman Sachs on CSeries; Embraer in China; A350 gets FAA certification;

CSeries: Bombardier presented to the Goldman Sachs Industrial conference this week. Goldman’s take:

  • CSeries test flight: BBD believes it can achieve the significant acceleration in flight test hours per month required to get to EIS because more aircraft are moving in to testing and because it did testing during the grounding. FTV4 is supposed to be in the air in weeks, and FTV5 in early 2015. BBD does not see any one or two major challenges remaining in flight test, rather just a need to get through total hours.
  • CSeries demand: BBD says it is on track for its 300 firm order by EIS target. When asked if anything could come from the current Zhuhai Air Show it said it is not a place for signing, and China tends to order in service jets.
  • CSeries impact on P&L: BBD says the CSeries is likely to be dilutive to the P&L as it ramps from unit 1 to full rate production, which could be a near three year process. Early aircraft would be more dilutive than later aircraft.
  • CRJ update: BBD believes they can maintain current CRJ production rates, but will clearly need success in current order campaigns to do so.

Goldman has a Sell rating on BBD.

Embraer in China: Embraer is shifting its sales strategy in China, failing to gain much traction with the mainline carriers, according to Bloomberg. Now it’s going to concentrate on start-up airlines.

EMB appeared at the same Goldman conference as BBD. Goldman’s take:

  • Overall Embraer continues to believe it can keep production relatively flat from current E-Jets to E2. It thinks 2015 and 2016 currently look solid. 2017 is a bit more of a question mark, but the timing of EIS of each E2 aircraft helps – largest E-Jet backlog (E175) has latest E2 EIS, and all aircraft are built on the same line. 2015 delivery mix will be similar to 3Q14 mix. Orders are likely to be in the 5-15 per range, or come from conversion of US options. ERJ says in the scenario where Bombardier does not refresh CRJ, E-Jets could become a substantial piece of the regional jet market, along with Mitsubishi (which it says is a solid aircraft).

Goldman has a Neutral (Hold) on EMB.

A350 certification: Airbus obtained certification for the A350-900 from the Federal Aviation Administration Wednesday.

8 Comments on “Odds and Ends: Goldman Sachs on CSeries; Embraer in China; A350 gets FAA certification;

  1. I think you meant to say that FTV3 will be in the air in the coming weeks.
    FTV4 was the plane that flew on October 6, 2014 to Indianapolis International Airport where it was showcased to Republic Airways’ employees, leadership team and board members.
    There is a program update video with Rob Dewar here: http://youtu.be/qDUslbMfgvw

    Bombardier is required by Canadian law to disclose any material events like a sale immediately as it is signed and cannot save them up for air shows like Airbus.

    In other news BBD signed a memorandum of understanding (MOU) with China’s SPDB Financial Leasing Co which clears the way for SPDBFL to provide advance expense financing, delivery financing and leasing solutions to Bombardier customers acquiring Q-Series, CRJ Series and CSeries commercial aircraft, as well as Learjet, Challenger and Global business aircraft for up to $500 million.

    BBD has also indicated that they are willing to set up a final assemble plant in China if there enough orders to justify it: http://www.flightglobal.com/news/articles/airshow-china-bombardier-open-to-chinese-assembly-line-405958/

    • Bombardier Commercial Aircraft confirmed on November 14, 2014 that all CSeries aircraft flight test vehicles have now re-joined the flight test program following the return of FTV3 to the skies in Wichita, Kansas.

      “I am thrilled to confirm that as of today, the four CSeries aircraft that were flying prior to the on-ground engine incident that occurred on May 29, 2014, have fully resumed in-flight activities,” said Robert Dewar, Vice President, CSeries Program. “We are very satisfied with the increased momentum in the CSeries aircraft’s flight test program.”

      In addition to FTV3 flying today, FTV1 resumed flight testing on November 6, 2014; FTV2 and FTV4 both took to the skies in September 2014.

  2. Anything noteworthy about the “time delta” in EASA to FAA cert for the A350 and the differences in ETOS / LROPS assignment ?

Leave a Reply

Your email address will not be published. Required fields are marked *