Wednesday, April 15, 2015
Bombardier Looks to Spruce Up Lagging Performance with New Management
|Bombardier Challenger plant, Dorval, Canada. Photo: Bombardier|
[Avionics Today 04-15-2015] Bombardier is shaking up its leadership in the midst of further unrest for the company’s CSeries jetliner program as problems regarding a 32-aircraft order for CS300s from Russia’s Ilyushin Finance Company (IFC) arise. Following the “pause” of the Bombardier Learjet 85 program earlier this year — pointing to the company’s need to streamline resources in getting its current programs back on track — it’s likely the company is looking to new leadership to do just that.
“[Bombardier] are underperforming on a number of fronts relative to their plans — they are not achieving their key financial targets, and they are not executing on their programs by keeping on schedule,” Rolland Vincent, of business aviation consulting firm Rolland Vincent Associates, told Avionics Magazine. “I think they have made some strategic miscalculations that, combined with assertive competitors and their desire to demonstrate progress, have brought them to today’s difficult position.”
In the Canadian Original Equipment Manufacturer’s (OEM) attempt to remedy problems with its recent performance, current Senior Vice President and Chief Financial Officer Pierre Alary has announced his retirement from Bombardier. The company has begun an international search for his successor. Bombardier President and CEO Alain Bellemare looks to bring in new talent, which he hopes will “instill a fresh perspective at Bombardier, driving execution, alignment and intensity across the entire company,” according to a press release regarding the management changes.
Bellemare has already announced the appointment of Fred Cromer to the position of president of Bombardier Commercial Aircraft, effective immediately, replacing former president Mike Arcamone. The company is hopeful as it brings in fresh blood to shake up the slow progress of its current aircraft programs.
“[Cromer’s] strong leadership skills, international network and deep understanding of the aviation industry are a perfect match for Bombardier Commercial Aircraft, as we are preparing to realize the true market potential of our new CSeries aircraft, while refocusing on our Q400 and CRJ programs,” Bellemare said in the release.
Bombardier could use a strategic edge from new talent as sanctions imposed by the Canadian government on Russia threaten IFC’s order for CS300 aircraft. The sanctions deny IFC access to Export Development Canada (EDC) financing at attractive rates, said Vincent, which may ultimately lose Bombardier the contract.
“Russia’s economy is shrinking and the Russian government is eager to do what it can to shore up its business,” Vincent said, noting that the Sukohi Superjet could end up benefitting from any switch in allegiance. “In the build-up to the 2015 Paris Airshow, where we expect to see at least one of the CSeries flight test aircraft on the ramp, any cancellations will only put additional pressure on Bombardier to announce new significant orders, especially from ‘branded’ customers in Western economies.”
Should the order manage to go through as planned, however, all is still not well with the program. The CSeries jetliner’s date for entry-into-service has slid into 2016 even as the company defers or cuts spending on other aerospace programs that, according to Vincent, are “in dire need of investment.” Prior management changes have also contributed to the company’s difficulty at pinning down both stable finances and a successful roadmap for their current programs.
“Obviously they believe that they have a cost problem, serious challenges executing to their plans, and are on an unsustainable trajectory,” said Vincent. “There have been many personnel departures, both the high-level ones that make the headlines and a large number deeper into the organization, in a short period of time. This is very disruptive and typically takes place as an internal exercise that has external consequences,” Vincent said, noting that these are rarely the types of changes welcomed by customers.
Outside of management changes, Bombardier is also bringing onboard Plane View Partners and its Chairman Henri Courpron as strategic advisors. Courpron and his team will conduct an extensive review of Bombardier Commercial Aircraft’s operations with the aim to improve the company’s overall performance.
"Having Fred and Henri on board gives us a strategic edge like we've never had before,” Bellemare said. “We are really paving the way to strengthen our existing commercial programs and to make the CSeries aircraft a phenomenal success.”
Whether or not this is true, we will have to wait and see. The company is already more than halfway through a 2,400-flight hour test program for the CSeries, with Bellemare reporting that the plane is performing well in the trials. Still, Vincent sees rough seas ahead for the struggling company.
“I think that there are unannounced delays to the Global 7000/8000 programs that will need to be communicated,” said Vincent. “Other than that, they will need to invest in the Q400 and CRJ platforms to stay competitive in regional aircraft. The focus has shifted toward much broader questions regarding their business segments and portfolio: Do they want to be in the aero structures business? Should they seek out a partner or divest from their train manufacturing? What are their core competencies that they need to protect and embellish going forward? These will likely consume much of the attention of the leadership team for some time.”