01/21/2016 11:54 EST | Updated 01/21/2017 00:12 EST

Bombardier misses opportunity as United selects Boeing over CSeries

MONTREAL — The sales drought for Bombardier's CSeries jetliner continues with the announcement that United Airlines has selected a Boeing plane over the Montreal-based manufacturer's fuel-efficient aircraft.

In fact, in making public its decision Thursday, the large U.S. carrier said it would be acquiring 40 Boeing 737-700s, not Boeing's new more fuel-efficient MAX version, for delivery in mid-2017.

The planes will replace some of the capacity operated by United's regional partners as the carrier plans to cut by more than half the number of 50-seat planes in its fleet by 2019.

Bombardier (TSX:BBD.B) has said it was targeting orders from large airlines to help ignite momentum for the CSeries, which has been stuck at 243 firm orders for nearly 16 months.

Commercial aircraft president Fred Cromer has said it was looking at airlines that would put "a seal of approval" on the program and energize customers' perception in the marketplace.

Although he didn't identify airlines by name, industry analysts pointed to United and American. Delta Airlines said this week that it is also looking at the CSeries if the price was right.

United declined to say why it went with Boeing over rival bidders.

Walter Spracklin of RBC Capital Markets said the order loss is a disappointment for Bombardier.

"A flagship order from a major U.S. carrier would have helped build legitimacy for Bombardier's foray into the narrow-body segment with the CSeries," he wrote in a report.

The cost of United's order was not disclosed, but Spracklin believes Boeing was aggressive on pricing and opened production slots to accommodate the order.

Benoit Poirier of Desjardins Capital Markets said he thought the CSeries had a "solid chance" of beating Boeing, Airbus and Embraer for United's business.

Meanwhile, he thinks order opportunities remain with Air Canada, Delta and British Airways.

The Quebec government has committed US$1 billion for a 49.5 per cent stake in the CSeries. Bombardier said the support would reassure potential customers who may have been concerned about the company's financial ability to bring the jetliner to market. The federal government is considering its own financial participation.

In the meantime, Poirier expects the market will remain skeptical and believes there is a real risk that the CSeries could be cancelled if no orders materialize in the next six months.

Bombardier has begun to ramp up production of the CS100 as it prepares to deliver the first aircraft to Swiss Airlines by the second quarter.


Ross Marowits, The Canadian Press