Bombardier's CSeries jet lands after taking first test flight

Bombardier's C-Series commercial jet takes off on its first flight on Monday, Sept. 16, 2013 in Montreal. (Ryan Remiorz / THE CANADIAN PRESS)

MIRABEL, Que. -- Bombardier's CSeries aircraft completed its maiden flight Monday, in a successful test run of a new narrow-body airplane design that promises to support Canada's aerospace sector while challenging the dominance of the industry's two giants.

Nearly 3,000 employees, suppliers and invited guests cheered as the gleaming CS100 plane quietly lifted off the runway at Mirabel airport north of Montreal in sunny skies after early morning rain ended and heavy clouds dissipated. It landed about 2 1/2 hours later after flying across the Lower Laurentians and conducting a fly past.

The company's test pilot left the airplane waving and lauding the aircraft's performance.

"It flew very well," said Chuck Ellis.

"It's a bit of a cliche but it really did fly pretty much like our predictions, like the simulators, the models that we have," he said later during a news conference.

Mike Arcamone, president of Bombardier commercial aviation, said the flight will help to convince potential customers of the aircraft's value. The company faces determined competition from industry giants Airbus and Boeing that are putting new engines on their popular planes to preserve their market share. Embraer is also updating its E2 family of jets.

"I think it will get even more competitive as people have seen across the world that there is an aircraft and it's an aircraft that is fulfilling its mission which is to be a game-changer in terms of the engine," he told reporters. The Pratt & Whitney engine promises to be quieter and help it to deliver fuel cost savings.

Analyst Walter Spracklin of RBC Capital Markets believes the program cost is "trending towards" $3.9 billion, but shouldn't have a material impact on Bombardier's (TSX:BBD.B) liquidity.

Arcamone created confusion about the final program cost when he said several times during the news conference that Bombardier was working to keep it below US$4 billion.

Officials corrected the total, initially saying it remains US$3.4 billion, with Bombardier contributing US$2 billion and $1.4 billion coming from suppliers and various governments in Canada and abroad. They later said the US$3.9 billion figure was correct because of new IFRS accounting rules which include US$500 million of capitalized interest that is amortized once planes are delivered.

Spracklin said the first flight will help Bombardier's share price, while investors now focus on securing more orders. The company wants to have 300 firm orders from 20 to 30 customers by the time it enters service. That's up from 177 firm orders and 388 commitments to date.

Earlier, senior company executives hugged after the aircraft successfully took off, nearly a decade after it was first introduced and following several delays over nearly nine months.

Company chairman Laurent Beaudoin and his son Pierre, the president and chief executive, said they were very pleased with the inaugural flight.

"It's very important for us and the aerospace industry," the elder Beaudoin said in an interview in between hugs of congratulations and photos with employees.

Bombardier aerospace president Guy Hachey said the flight was very emotional for him.

"My heartbeat was going quite fast and a lot of thoughts in my mind about how important this is and how long we've been working at this and how important it's going to be for the future of the company," he said.

He said the CSeries is the world's first new narrow-body design in 27 years. It's also the first major Canadian-designed aircraft since the Avro Arrow.

The first 110- to 125-seat CS100 is slated to enter into service in about a year, barring delays, which industry observers believe are likely. Deliveries of the CS300 are expected to begin a few months later.

The president and CEO of Toronto-based Porter Airlines, which is planning to use CSeries jets to expand its service from an enlarged island airport near Canada's largest city, said he's looking forward to receiving test data to confirm the engine's are as quiet as expected -- and to silencing some critics.

"I think the test data that Bombardier will be able to produce now that this test program is underway should flow to the city (of Toronto) and help validate in due course the information it needs to give the approval," said Porter chief executive Robert Deluce.

The maiden flight lasted longer than normal, allowing onboard systems to measure some 14,000 metrics. Seven test planes will be built and complete unique missions as the company moves to the production stage.

The program has employed about 800 engineers and design officials to date, but hiring will soon begin for the 3,500 workers needed to assemble the aircraft in Mirabe where a new assembly facility is to open mid next year. Plans call for between 120 and 240 planes a year being built with parts from Belfast, Northern Ireland and China.

The test plane hadn't even landed when industry observers began to talk about a larger version that would further challenge the world's two largest manufacturers, Boeing and Airbus.

"You always start to dream when you have an aircraft like this and you say it should have more seats," said Rainer Hilterbrand, chief operating officer of Swiss Airlines, which has firm orders for 30 CS100 and CS300 aircraft.

Karl Moore of McGill University's Desautels Faculty of Management doesn't doubt that a larger version will ultimately be built.

"Given the market they are going after to make it bigger would make sense over time to compete more with the (Boeing) 737 and Airbus 320 and all," he said.