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The Globe and Mail

Concerns raised over future of new Bombardier plane

The airline that has placed the largest single order for the new Bombardier Inc. C Series airplane says it is worried about the future of the $3.4-billion project.

"What's distressing is that it hasn't been a particularly strong seller," Bryan Bedford, chief executive officer of Republic Airways Holdings Corp., told Bloomberg News. "We have concerns about the viability of the project."

Republic holds 40 of the 138 firm orders for the 100-to-150-seat airplane – along with options on another 40 – and is the only U.S. airline that has ordered the plane.

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"If I'm Republic and I'm the largest customer for this aircraft, I'd probably feel better knowing a lot of my peers are interested in the plane as well," said industry analyst Michael Willemse, who follows Bombardier for CIBC World Markets Inc. in Toronto.

The plane is scheduled to fly for the first time at the end of this year and be available to airlines at the end of 2013. Republic's planes are the larger CS300 version, which seats 130 to 145 passengers and are scheduled to be delivered beginning in 2014.

The C Series is Bombardier's ambitious bid to take on Europe's Airbus SAS and Chicago-based Boeing Co. in the narrow-bodied segment of the commercial-aircraft market, which is the largest segment and is dominated now by the Airbus A320 family and the Boeing 737. Both those plane makers have responded to the Bombardier challenge by offering new, more fuel-efficient engines on those planes.

The Montreal-based transportation giant has insisted, however, that its new plane has a 15-per-cent operating cost advantage on existing aircraft and will also be more cost-effective than the updated versions of the Airbus and Boeing planes.

In addition to the 138 firm orders, customers have signed 179 options, purchase rights or letters of intent on the C Series. "Over the last few months, we've seen significant progress in the development of the C Series aircraft program," Bombardier spokesman Marc Duchesne said on Tuesday.

The company has said it wants to have as many as 30 customers and 300 orders by the time the plane enters into service next year.

While Mr. Bedford said the C Series order remains intact, Republic has also ordered 80 Airbus A320 planes, including 20 of the smaller A319 version of that aircraft, which competes directly with the C Series.

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The Airbus order, which was announced at the Paris Air Show last summer, raised questions about the future of the Bombardier deliveries, because analysts do not believe that Republic needs 120 new airplanes, or 160 if the C Series options are included.

The Airbus planes are scheduled to be delivered beginning in 2016 to Republic's Frontier Airlines unit, which the parent company is trying to sell or spin off to shareholders.

Mr. Bedford did not respond to e-mails on Tuesday seeking more information and clarification of his comments to Bloomberg News.

While he raised concerns, another CS300 customer, Korean Airlines, also urged Bombardier to step up the sales effort. Airline and manufacturer website quoted Korean's senior vice-president of corporate strategy and planning, Walter Cho, as saying: "I believe once more customers get an interest in it, it [the C Series]will be a very successful program."

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