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

aerospace

Bombardier shakes up sales network Add to ...

Two high-ranking Bombardier Commercial Aircraft vice-presidents have departed in a major shakeup in the company’s sales network amid slow sales of the new C Series plane and other aircraft.

Raphael Haddad, vice-president of sales for the Middle East and Africa, and Steve Aliment, vice-president of sales for Europe, have left the company. Their jobs will be merged into one vice-president position. That executive, who has not been named yet, will oversee two regional vice-presidents, one for each of the Middle East-Africa and Europe regions.

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“They will take the leadership in terms of putting together the strategy for the sales and marketing teams in the regions,” Bombardier Aerospace spokeswoman Marianella de la Barrera said Monday.

The shakeup underlines once again the difficulties Bombardier Inc. is experiencing as it tries to crack the Airbus Industrie and Boeing Co. duopoly in the narrow-bodied segment of the large commercial airplane market. Those two plane makers have mounted a fierce defence of the market amid the Montreal-based company’s failures to meet its own deadlines for first flight and delivery to customers.

The shakeup began late last year with the departure of Chet Fuller, senior vice-president of sales and marketing and his replacement by Raymond Jones.

Since then, Bombardier has announced a decline in orders for commercial aircraft and business jets in 2013 from 2012 levels; a delay until the second half of 2015 in delivery of the C Series to customers; and layoffs of about 1,700 people in its aerospace division.

The delay in getting C Series planes to customers, which follows a nine-month delay in its scheduled first flight, has raised fears among analysts that Bombardier will face an increasing cash drain.

Darryl Genovesi, who follows the company for UBS Securities LLC, estimated Bombardier’s cash burn at $2.4-billion this year and in 2015, $1-billion worse than forecast before the latest C Series delay.

The expected deterioration in the company’s cash position is caused by an extra $500-million in the plane’s development costs and $400-million in inventory build to support the production ramp-up, Mr. Genovesi said.

The original cost of the program was $3.4-billion. The first flight was originally scheduled for the end of 2012 and delivery to customers a year later.

“While we see break-even free cash flow in 2016 as a possibility, we think cash likely remains negative for longer if C Series schedule slips again,” he wrote in a research report Monday.

Bombardier chief executive Pierre Beaudoin told interviewers at the World Economic Forum in Davos, Switzerland, last week that the company will not need to raise additional capital.

Mr. Genovesi also warned that the flight test schedule for the C Series is running behind that of Boeing’s 787 Dreamliner, which arrived in airlines’ hangars three years later than originally scheduled and is still experiencing in-flight problems.

The slow ramp-up of flight testing raises the risks of further delays in delivering the plane to customers, he noted.

Bombardier Commercial Aircraft spokesman Marc Duchesne said the company is comfortable it will meet its new deadline of entry-into-service in the second half of 2015.

“This new timeline was revised by the C Series leadership team, the Bombardier Aerospace leadership team and the Bombardier Inc. leadership team,” Mr. Duchesne said in an interview.

He declined to comment on the specifics of the UBS report.

“This isn’t the first time we [have launched] a plane,” he said, referring to the more than two dozen new aircraft – including the popular regional jet – Bombardier has brought on to the market over the past three decades.

Bombardier said last week that commercial jet orders fell to 81 last year from 138 in 2012, while business jet orders dropped to 305 from 343.

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