BOMBARDIER INC to Provide Update on CSeries Aircraft Program - Conference Call
Mar 07, 2013 AM EST
BBD.B.TO - Bombardier Inc
BOMBARDIER INC to Provide Update on CSeries Aircraft Program - Conference Call
Mar 07, 2013 / 03:15PM GMT
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Corporate Participants
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* Marc Duchesne
Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft
* Mike Arcamone
Bombardier Inc. - President of Bombardier Commercial Aircraft
* Robert Dewar
Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace
* Kent Statler
Rockwell Collins - EVP, COO
* Mark Czaja
Parker Hannifin Corp. - VP, Technology and Innovation
* Colin Elliott
Bombardier Inc. - VP, Engineering and Business Development of Bombardier Commercial Aircraft
* Francis Niss
Liebherr-Aerospace & Transportation SAS - President
* Hugues Lessard
Bombardier Inc. - VP of Saint-Laurent Manufacturing Centre
* Massimo Lucchessini
Alenia Aeronautica - GM of Operations
* Mike McCarthy
Zodiac Aerospace - EVP of Technical Operations
* Bob Saia
Pratt & Whitney - VP of Next Generation Product Family
* Haley Dunne
Bombardier Inc. - Manager, Communications and Senior Spokesperson
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Conference Call Participants
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* David Tyerman
Canaccord Genuity - Analyst
* Bella Reid
Aerospace International - Media
* Francois Shalom
The Montreal Gazette - Media
* David Newman
Cormark Securities - Analyst
* Chris Sloan
Airchive.com, Airways Magazine - Media
* Pierre Saint-Arnaud
The Canadian Press - Media
* Steve Hansen
Raymond James - Analyst
* Steve Trimble
Flightglobal - Media
* Anthony Scilipoti
Veritas Investment Research - Analyst
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Presentation
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [1]
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Bonjour, and good morning, everyone. Welcome to Mirabel and to this Bombardier CSeries aircraft program update. My name is Marc Duchesne. I am the Director of Communications for Bombardier Commercial Aircraft. It is a great pleasure to be here with you this morning. On behalf of all our employees, more than 1300 of them right here in Mirabel, I would like to thank you for joining us.
Also in the room today are a number of Bombardier executives, including Mr. Guy Hachey, President and Chief Operating Officer, Bombardier Aerospace. Welcome, Mr. Hachey, along with suppliers and customers. Welcome, everyone.
(interpreted) This will mostly take place in English because it is the language we use with the visitors. The presentation visual will be available in French, in both languages, but there will be also be simultaneous translation for those who need them. You will find [on] your chair -- you'll find if you need headsets. Thank you for your understanding. And please, channel four for translation into French.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [2]
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-- for simultaneous French translation during the presentations and for use during the plant tours. Please keep them with you. As you can see, water bottles are available if you need on the left-hand side of the room.
This is a proud and important day for Bombardier Aerospace. I know you've been looking forward to seeing firsthand the progress that has been made on the CSeries aircraft program and in being among the very first people to see our Flight Test Vehicle number one, the first CSeries aircraft to be nearing completion.
Today's agenda is as follows. First, Mr. Mike Arcamone, President of Bombardier Commercial Aircraft, will speak. Mr. Arcamone joined us in February 2012. He definitely hit the ground running, and in the past 13 months with us he has had a very busy and very successful year.
Following Mike will be Mr. Robert Dewar, the Vice President and General Manager of the Bombardier CSeries aircraft program. It is fair to say the world has been watching the CSeries aircraft's progress very closely, which means the world has been listening and watching Rob closely, for he has been both the face and the voice of this game-changing aircraft.
After Mike and Rob's presentation, there will be a question period, during which we will invite you to ask your questions. We will take questions from the room, then from the people following the webcast, and also from the journalists that are also attending this event, but from our Belfast, Northern Ireland facility.
Then there will be a tour of our hangar, where you will be able to see for yourself the FTV1 aircraft, and then the famous CIASTA building. Media representatives will be able to film and photograph the aircraft, no problem, but please note that we will not let you film or take pictures inside the CIASTA building.
Now, let's begin with our CSeries aircraft program update presentation. Ladies and gentlemen, it gives me great pleasure to introduce Mr. Mike Arcamone to the stage. I know you are looking forward to hearing from him. Mike, it's all yours. (Applause)
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [3]
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Good morning, everyone. Thank you. Welcome to the head office CSeries aircraft. We are all very pleased that you are here today with us for our CSeries aircraft program update. For those of you here today in the room, it is great to have you on-site. And for those joining via webcast, so glad that you could tune in.
I also want to send a very special welcome to a number of journalists, guests, that made their way over to our Belfast facility for a tour of our spectacular wing production site. Actually today was the first time we've opened the door to the wing facility for journalists and photographers. You can see why at Bombardier we are so proud of our Belfast family and providing us the cutting edge coming out of that site.
Okay. Let's get on with the program, because we know why you are all here really joining us today. You are eager to hear about the progress of the CSeries program and to get a first-hand glimpse of the CSeries aircraft. Seeing is believing, and you shall see soon.
Two weeks ago, we disclosed our earnings for the year ending at December 31, 2012, and we noted that our orders and commitments for the CSeries stood at 382. That same week, we announced that the Ilyushin Finance Company, or IFC, executed a conditional agreement for up to 42 CS300 aircraft.
What I want to share with you today is the fact that IFC was so encouraged with what they have been hearing and seeing, to ensure that delivery positions would be available, this lessor upped its original LOI for 30 by 12 more aircraft. We are very pleased with the current status of our order book. It shows diversity and a very wide geographic coverage, as we said it would be. We are tracking to our plan, 20 customers, 300 firm orders by entry into service.
Our three newest customers, airBaltic from Latvia, IFC and an undisclosed customer from the Americas, have come in rapid succession since December. We fully expect this momentum to continue and that the customer is following the program's progress very closely. We expect to see mounting interest as we fly and confirm the performance of this aircraft.
With this exceptional passenger comfort, range, air fuel performance, the CSeries aircraft's flexibility is unmatched, and it could be introduced into many different business models. Let me give you an example. An airliner is getting much recognition for its performance and ability to operate quietly to noise-sensitive urban airports. Sweden's Bromma-Stockholm and London City Centre are perfect examples of urban communities that can be served with the CSeries aircraft.
And in fact, we are analyzing the aircraft's performance out of some of the world's most stringent city airports, and I have to tell you, the results are really impressive.
The CSeries aircraft offers unmatched environmental benefits through low fuel consumption, reduced emissions and up to four times -- four times smaller noise footprint for the forward-thinking and environmentally conscious airline and consumer. That's the flexibility that today's operators want and need to drive new opportunities for new routes and, of course, new markets.
Speaking of flexibility, earlier today, we announced that the CS300 aircraft will now seat up to 160 passengers, thanks to a new option we introduced called extra capacity seating. We have been discussing this option with our customers for some time, and by amending the baseline aircraft and providing an optional second over-wing exit for the higher seat configurations, we have been really able to secure the ability to offer the CS300 productivity and increase it. Really in other words what it means is to fly more passengers.
In simple terms, the more seats you make available, the better your seat mile costs. In the case of the CSeries, our aircraft family already provides the best seat mile cost in its market segment. We made the economics today even better.
Let's make one thing clear. We are going to stay after the same market we always intended. Our main focus continues to be the development, optimization and marketing of the CSeries family of aircraft into 100- to 149-seat market segment. Our baseline CS300 will now have 135 seats, and when the full potential of the extra capacity option is used, we go to 160 seats versus the previous limit of 145 seats. Airlines can lower their cash operating cost per seat by up to 8% -- phenomenal.
Our background technical work on this option started years ago in anticipation that customers would request higher density configurations. Though it has been offered to customers for several months, today, we can publicly acknowledge that extra capacity option is confirmed. Rob will give you more details on the option in a moment. But first, I want to congratulate our CSeries aircraft customers that were the first to sign up for this new option.
This morning, we issued the press release announcing that airBaltic from Latvia was a buyer of the extra capacity option. Typically, we don't disclose our in-line customer seating configuration, but in this case, airBaltic was more than happy to confirm the news. The airline will configure its CS300 aircraft with 148 seats in a very comfortable and efficient arrangement, including additional over-wing emergency exit doors.
Now, for more details on the CSeries aircraft program and some very technical description of the extra capacity option, I'd like to invite my good friend, Rob Dewar, up to the stage. Rob, please. (Applause)
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [4]
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Great. Thank you very much. I'll give you a little bit more information on what we've done on the CS300. So basically, the baseline version now has five more seats, so it's at 135. It's at a 32-inch pitch, which is a standard in the industry.
Also, what is really more exciting is that we've enabled, through being able to offer new seats at 28-inch pitch and the over-wing exits, we can actually go up to 160 seats. And I have to tell you normally people would say 28 inches would be not comfortable. I'm a pretty big guy, as you can see, and I fit in there very comfortably, so you have to really go and take a look.
Really, this, as Mike mentioned, makes the aircraft, of course, more flexible, because you can configure in different configurations, and also lowers the seat mile cost, which is very important, as we know, for our customers, and also just provides more flexibility for the platform. Very important, though, same aircraft, really just a little bit more optimization, and we're excited to be able to offer it today to our customers.
So how did we actually do this? Really, it is focused in the center fuselage, where we actually were able to introduce a second pair of over-wing exits. And so they are the same, actually, doors, and you can either do it before delivery; or what is really unique also, we're first in the industry to be able to also -- if an airline decides to take it originally without, and if later they want to introduce it into their product line, then we've enabled that. So it's actually retrofitable in service. Next slide.
So what does this do from the seat mile cost? This chart shows basically how we, us and the airlines industry, measures the cost operating cash for the operations and service. So the vertical is the seat mile cost, so how much it costs per seat in the aircraft to operate. And the bottom one is really by trip, the whole aircraft, what does a trip cost.
So what is really exciting for us and for our airlines is that now the CS300 in the 160-seat configuration actually has the same seat mile cost as a 180-seat aircraft. Why is that important? Well, if you have routes that can't fill a larger aircraft, you can operate at the same cost advantage. So that allows airlines new opportunities and new routes that they can actually serve. So this basically makes a great aircraft already better. Next slide.
I guess if you're following the industry pretty closely like we do, there is a lot of controversy right now in the industry about the technology that is applied to aircraft and also the maturity that we offer. So we're going to take the opportunity to walk you through some of the critical and key technologies we have in the CSeries.
I'm going to tell you that we have a very rigorous process how we do this, and we are really, really satisfied with our choices and the choices that our teams made, and also all the work we've done to mature the technology. So these are -- I'm going to take you through one by one, so you have a chance to get a little bit more detail.
So starting with the front end of the aircraft, the cockpit, the flight deck, so really we had a unique opportunity in the CSeries, and the reason is that this is a new aircraft. We're not making it common to other aircraft. So we were able to take the lessons learned from the rest of the industry that we learned over the last 25 years and combine it with the new technology. So the CSeries has really a really new standard in the industry, and we've had really excellent feedback from our customers.
This flight deck, of course, is done in collaboration with our suppliers, so working with Rockwell Collins. So we're going to pass you over to Kent Statler. He is the Executive Vice President, Commercial Systems at Rockwell Collins. Give you a little bit more information on the background of our flight deck. Kent.
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Kent Statler, Rockwell Collins - EVP, COO [5]
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The entire Rockwell Collins team is extremely proud to be part of the Bombardier CSeries program. We will be bringing both our Pro Line Fusion and also our Primary Flight Control Computer to the CSeries program. We have developed these technologies in a true partnership with Bombardier, and we remain totally committed to support the first flight in the June time frame and the entry into service in the year to come.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [6]
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Thank you, Kent. Actually going on now to fly-by-wire. So this is now actually a standard in the industry. So we are able to again learn from the industry. So we have fly-by-wire on our aircraft. It is being provided to us by Parker Aerospace. So basically, we have had rigs running since back in 2011. There is actually three full rigs running down at Parker, so pretty exciting and intense times.
And also here in Montreal at this site, we have Aircraft 0, which you're going to have the opportunity to visit a little bit later this morning. And we also have the fully integrated system and all the other systems actually on that rig.
So what I am going to do is pass you over to Parker Aerospace. We have Mark Czaja, who is going to give us an update from how it's going down at Parker. Mark.
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Mark Czaja, Parker Hannifin Corp. - VP, Technology and Innovation [7]
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I'm Mark Czaja, Vice President of Technology and Innovation for Parker Aerospace. Parker is pleased to be a proud supplier to Bombardier of the fuel system, the wing-tank inerting, the hydraulic system and the stick-to-surface fly-by-wire flight control system. This is a proven technology that is right for the market, and we are very excited to be working with Bombardier and the other partners on this aircraft on this outstanding CSeries airplane.
We are aligned on our schedule, and we're putting together in the systems integration lab the final touches on the flight controls here in Irvine to support first flight and the aircraft flying in June. Parker is pleased to be a supplier to Bombardier, and we look forward to the flighting of this outstanding aircraft.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [8]
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Thank you, Mark. So now, moving on to the structures, CSeries, as you're aware, we actually have advanced carbon fiber wing, actually designed and built from our Belfast site. Totally new site built, really state-of-the-art facilities and also technology. It is actually our Center of Excellence for carbon fiber.
I know they are listening to me this morning, so I know they are excited. They've done an amazing job for the CSeries. I'm going to pass you over to Colin Elliott, who is going to give us a little bit more information on the background of the carbon wing and the progress -- the good progress we have in Belfast. Colin.
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Colin Elliott, Bombardier Inc. - VP, Engineering and Business Development of Bombardier Commercial Aircraft [9]
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Hi. I'm Colin Elliott, responsible for engineering and product development here at Bombardier Aerospace in Belfast. We are very proud to have designed and now to be producing the advanced composite wings for the CSeries. We're using a unique resin transfer infusion process developed here in Belfast.
We're delighted with the quality of the product and the progress that we are making. Everyone here is fully committed to the program as we move towards first flight and entry into service, and we look forward to delivering many wings over many years to come.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [10]
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Thanks, Colin. Excellent job from the Belfast team.
Moving on now to the systems a little bit more, so this is on the landing gear. It is actually with Liebherr Aerospace, based in Germany. Also, they provide the air management system, which is from Toulouse. And also, we have electric brakes that we've selected.
So really, if I look at the technology of the landing gear itself system is really, I would say, an evolution -- like a natural evolution and maturity of industry learning, so built on a very solid base.
Electric brakes is a new technology we selected. We selected it back in 2008. And just to explain the process, so once we selected it, we actually did ground tests with it to make sure that it is suitable. Then on this particular system, we actually flight tested it. So we modified a Global Express, installed the electric brakes and did a full flight test program with it, and that was completed a couple years ago. So this is the type of work we do in the background to really make sure the technology is mature.
I'm going to pass you over now to Francis Niss, who is the President of Liebherr Aerospace and Transportation, so let's hear from Francis.
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Francis Niss, Liebherr-Aerospace & Transportation SAS - President [11]
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We at Liebherr Aerospace are very proud and motivated to participate to the CSeries program. We are on board with two major systems, a landing gear system, as well as the air management system. Liebherr Aerospace fully supports the CSeries overall schedule, and especially the first flight and the entry to service. Our industrial capabilities will enable Bombardier to manufacture the aircraft according to the ramp-up required to fulfill the orders of its customers.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [12]
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Thank you, Francis. Now moving over to the fuselage. So in the fuselage, we actually selected aluminum lithium for the main fuselage. We think it's a very smart choice, very satisfied with it. We've already tested three lives. We built a barrel and tested it, so we already have the results. We were finished back in 2010. So that learning we were able to incorporate into the baseline CSeries.
You'll see later the rear fuselage in carbon fiber. That is built in Saint-Laurent, and of course, that is going well. As you know, the fuselage is also built -- sections are built in China, so we are very satisfied with the progress on that side. All the barrels have been delivering to our plan, so great job from the SAC team. Here's a picture, you can see them celebrating some event before some of the deliveries out of China.
I'd like to pass over actually to Hugues Lessard from our facility in Saint-Laurent, where the cockpit and rear fuse is done. He's going to give us a quick update from the great progress from the team in Saint-Laurent.
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Hugues Lessard, Bombardier Inc. - VP of Saint-Laurent Manufacturing Centre [13]
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I am Hugues Lessard, Vice President responsible for the Saint-Laurent facility, home of the manufacturing of cockpits and composite fuselage assemblies. Today, I want to show you FTV5 cockpit, which is in the process of being prepped for delivery to meet (inaudible) in the next few weeks.
Operations here in Saint-Laurent are going according to plan and schedule. Enjoy your day.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [14]
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Thank you, Hugues. So you can see, people mentioned (inaudible). We have a little competitions inside, so I challenge who gets their units here first; so he is proud to mention he is on FTV5. No pressure for the rest of the teams.
Also, I'll talk about the empennage, so that's the vertical and horizontal stabilizers. It's from Alenia, from Finmeccanica. And actually, it is built on mature, so third-generation, carbon fiber. They are actually doing really well. You will have a chance to visit a little bit later.
So I'm going to pass you over to Mr. Massimo Lucchessini, who is the Chief Operating Officer of Aermacchi in Italy. Please go ahead.
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Massimo Lucchessini, Alenia Aeronautica - GM of Operations [15]
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My name is Massimo Lucchessini, Chief Operating Officer of Alenia Aermacchi. My company is very proud to participate in the Bombardier CSeries program and is fully confident in the commercial success of such program. The Bombardier CSeries will be among the (inaudible) commercial aircraft, more competitive in terms of fuel consumptions and direct operational costs, thanks to the propulsion system, through the adopted technologies, aerodynamics, structural solutions and fly-by-wire flight controls.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [16]
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Thank you, Massimo. So that is the baseline of the technology selected on the aircraft. And now the most important one for an actual -- the passengers, you and I when we travel, is really ultimately what the experience is -- the cabin, the interior and the whole environment that we provide. And really, we are the first company in really the last 25 years that have really developed a new cabin.
So we actually started from the inside out. I know it's rather obvious, but that's not always the way aircraft are done. So what we've been able to offer really is truly a cabin that is bigger than any other cabin in the industry. So if you compare seats, overhead bin space, aisles, windows, you are going to see the CSeries is best-in-class in all those categories.
So we are very satisfied. We have really great feedback from our customers, and I know that the traveling public is really going to appreciate when they have the opportunity to fly in a CSeries.
I'm going to actually pass over to Mike McCarthy, who is Vice President of Product Development in C&D Zodiac, California, give us an update from how it's going over there. Mike.
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Mike McCarthy, Zodiac Aerospace - EVP of Technical Operations [17]
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Zodiac Aerospace is the proud producer of the CSeries interior. Our responsibility includes industrial design, engineering and manufacturing a fully-integrated product. Our relationship with Bombardier spans over four decades. The trust and respect our companies have for each other really shines through this beautifully styled interior. The design is spacious, extremely weight efficient and offers unsurpassed comfort.
Here at Zodiac, we are hard at work on the CSeries and we are fully committed to supporting the upcoming flight test campaign. We are proud to be part of this amazing aircraft.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [18]
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Thank you, Mike. So now, moving on to the engine, of course, the engine is a major part of any aircraft program. And what is really key for the CSeries, it was really the technology. Of course, it's a game-changing engine, when you combine it with a game changing aircraft. And when you specifically size both the aircraft and the engine for the market segment and add this technology, you have a huge opportunity in terms of cash operating cost, and that's exactly what this combination of engine and airframe does.
So I know Mike mentioned (inaudible) -- so we have a 20% fuel burn advantage. We have 50% less emissions. And we actually have a four times less footprint actually compared to aircraft that are currently in service. So really satisfied.
Also, Pratt had a major, major milestone on the 21st of February. They announced the certification by Transport Canada for the GTF engine, so exciting time for us. And I'm just going to pass it over to Bob Saia, who is a Vice President from Pratt & Whitney on their product development programs, about this important milestone and the engine overall. Bob.
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Bob Saia, Pratt & Whitney - VP of Next Generation Product Family [19]
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Hello. I'm Bob Saia, Vice President of Pratt & Whitney's Commercial Development Programs. Pratt & Whitney is very pleased to be providing propulsion systems to Bombardier for the CSeries program. The aircraft will be powered by Pratt & Whitney's Geared Turbofan engine, the PW1500G.
The engine has recently been certified by the Canadian authorities, with the first two propulsion systems delivered to Bombardier and installed on the first CS100 airplane. I am personally looking forward to seeing this aircraft complete its maiden flight later this year. I want to congratulate Bombardier for their program progress and readiness to that first flight.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [20]
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Thanks, Bob. I'm pretty excited, too, by the way. I'm always excited, but trust me, I'm more excited.
So I hope that gives you an overview of the technology, where we are on the process, and you have a chance to see some of the suppliers, as well, and how they are doing, giving an update directly from them.
Now schedule of course is also very important, as we all know. And so I'm going to update you kind of on the up to first flight where we are, what our plans are. And you're going to have a chance to see it yourself a little later on this morning.
So there are really three critical paths we have. So we have, of course, the test aircraft, the static test article, which is very important. And that's really to demonstrate the static strength of the aircraft.
We have, of course, the first flight test vehicle. You see it is FTV1; of course, getting that built and ready for flight tests. As you can see in the blue, we're getting very close to the end of that blue line.
And then I'll go to the bottom, we have Aircraft 0. That is a system test aircraft, and that is actually making sure all the systems are integrated together.
And then the other two blocks is really in preparation for a flight test. We always do things in advance to be ready. So you're going to see we have a simulator running, and we also have a flight test article from the CRJ that we have here in Mirabel, and we are practicing with that to get the teams ready and trained and ready to go when the CSeries takes a flight.
So this is the structural test article. Inside it is -- we refer to it as CAST, meaning Complete Airframe Static Test article. So it is a full structure. It's here in Montreal at Saint-Laurent facilities. It is going well. The build was completed back in December of last year, and we've already completed two tests successfully. The first one was the pressure test.
And I'm very happy to announce today that the actual most critical test, which is the wing max up-bending test case, was completed successfully last Saturday. So great job by the Belfast, Montreal team, Saint-Laurent team, to make it happen.
So here we can see the curve up. So it gets loaded like in-flight conditions, so it is the max ever load it could see in service, and we test this. So just to give you an example, the wingtip deflection is approximately five feet. Of course, the engineers have this more precise. But it was actually within prediction and a very successful and key milestone for the program.
This is Aircraft 0. And again, you are going to have a chance to visit this a little later today. So what this is -- you saw a structured aircraft. This is a systems aircraft that has all the representative systems on there. And really, this is to -- again, I want to make sure you understand -- we have -- each supplier has their own rigs that you saw in some of the videos, they run themselves; and that is to make sure their systems function correctly.
This is to make sure it all works together. So we have all the systems, they are all production standard, and we integrate them. So we've already finished the first block of testing, and now we are actually in safety -- starting safety-of-flight testing, getting ready for a flight test. So great progress, and you will have a chance after to do a visit.
This is the ESIM, engineering simulator. Actually, it was built by CAE here in Montreal. And really, the plan for this really is that we can -- the strategy rather was really to prepare the pilots to train, and it is ready to do that now. Actually, it is up and running. And we are already conducting safety-of-flight testing. Again, that is located here in Mirabel in our facility. Unfortunately, you won't have a chance to visit today. This is running seven days a week, 24 hours a day, and it is -- with the size of group. But it is looking good and doing really well. Next slide.
So that was really to give you a pretty good update on the program, where we are, the technology in CSeries. So what I'd like to do now is invite Mr. Mike Arcamone, our President, Commercial Aircraft, to join me on the stage. Mike.
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [21]
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Thanks, Rob. Well done. (Applause)
So to summarize, we continue to work with our suppliers to ensure commitments and the key milestones that Rob showed you are met. And we are very pleased with the high level of engagement throughout the supplier community.
Overall, the feedback from all the sites, as Rob mentioned, and our suppliers is very positive. I am pleased that some of our suppliers are here today with us to mark his great achievement.
The CSeries aircraft program is making solid progress. You will see for yourselves very soon. The first CSeries aircraft is on its way of achieving its first flight by the end of June 2013, for entry into service a year later. For CS300, it will follow very closely and is still on track to meet its entry into service by the end of 2014. So Rob --
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [22]
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Mike, you ready?
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [23]
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I'm ready.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [24]
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Let's do it.
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [25]
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Ladies and gentlemen --
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [26]
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Let's do it. FTV1.
(Video playing)
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [27]
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So what do you think? What do you guys think of that? (Applause) Believing is seeing. Well done, Rob.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [28]
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Thanks, Mike. Thank you. You guys got to admit, it looks pretty awesome.
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [29]
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Unbelievable, isn't it?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [30]
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So a couple points I want to make, actually. As you can imagine, this is a very challenging undertaking, and I got to tell you, this is a team sport. So there was a whole team to do this. And I want to take the opportunity to really thank all the people, because in the end, it is about the people that have the dream, the passion and the drive to make it happen. And I can tell you, we have an awesome team, so I want to thank everybody for support. (Applause)
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [31]
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Rob and I are very privileged to be onstage in front of you today, but really, we represent thousands of our employees, our union, our suppliers and our customers. They have, as you could see, the same passion, drive, commitment to make this aircraft very successful in the marketplace. Yes, they were bodyguards guarding the FTV1, but they have the same passion we have to deliver it to our customers.
Thank all the customers, all our union, our suppliers, our clients. Because of their dreams, because of their passion, today has become a reality, FTV1 has become. Thank you for all employees, because not only myself and Rob, we are very fortunate to very privileged to be here to represent all these people. Thank you, everybody, to all the people here for all your hard work and your effort.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [32]
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Take a few minutes for a photo op. So, ladies and gentlemen, from the photo crew and the video crew, please make sure to take the right picture with the right angle. And gentlemen, please make sure to post your best smile towards the camera, because this is a very positive day.
Thank you, gentlemen. Congratulations again. Now let's start the Q&A session. I think it's the right time, with the media and the analysts that are first in the room, and then we will invite questions from the Belfast facility and then from the webcast.
Please, make yourself comfortable. Have a seat. And we have, I believe, two microphones in the room here in Mirabel, standup microphones. There is one right in front of me here and one right there. So media and financial analysts, please just walk to the microphone and identify yourself for the first question to Mr. Arcamone or Dewar.
==============================
Questions and Answers
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [1]
------------------------------
No questions in the room? Please. We need an icebreaker. Good morning. Your name and publication, please.
------------------------------
David Tyerman, Canaccord Genuity - Analyst [2]
------------------------------
My name is David Tyerman. I'm with Canaccord Genuity. So you are mostly done; from the slide, it looked like you are 90% or 95% done. What is left to do at this point on this airplane?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [3]
------------------------------
I'll take that question. So, good question. So actually, as you can see, basically the aircraft is nearing completion, so basically all the structures are in place. We have the wing to body fairing, which will be installed actually over this weekend will arrive, and that was actually to our plan. And we have -- all the wires are also installed in the aircraft.
So really, there is just a few other minor systems to install, and then we start doing what is called functional test procedures, making sure that all these systems actually work together. So that is the plan going forward.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [4]
------------------------------
Let's ask a question from the Belfast facility, if we have any.
------------------------------
Bella Reid, Aerospace International - Media [5]
------------------------------
[Bella Reid] from Aerospace International in Belfast. Any chance the first flight in time for Paris Air Show?
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [6]
------------------------------
Mike?
------------------------------
Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [7]
------------------------------
Good question, hey, Rob? We have committed, as I said in my presentation, that the first flight will be completed -- will be started and completed by the end of June 2013.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [8]
------------------------------
Thank you, Mike. Maybe a question from the webcast, please, Haley.
------------------------------
Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [9]
------------------------------
Yes, we have Graham Warwick from Aviation Week. Can you explain the reason for the delays, and are those issues being worked off on the latter flight test aircraft, and how quickly?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [10]
------------------------------
As we announced previously, the delays were due to a challenge with some of our suppliers and also integration. As you saw, we did make some modifications to the aircraft. So really, a combination of things, but that was what was announced previously back in November.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [11]
------------------------------
Thank you, Rob. Mr. Shalom from the Gazette. Good morning.
------------------------------
Francois Shalom, The Montreal Gazette - Media [12]
------------------------------
Good morning. Is there a technical capability for the CS300 to accommodate more than 160 seats?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [13]
------------------------------
Good question. So actually, no, with the length of the aircraft we have, the 28-inch pitch, really the limit is at 160 seats.
------------------------------
Francois Shalom, The Montreal Gazette - Media [14]
------------------------------
And the fly-by-wire system, as I understood from the video, it is going well. But are you confident that the kinks that you might have been anticipating have been worked out?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [15]
------------------------------
Yes, so actually, we are tracking to our plan, as you saw from the video from Parker, with all our rigs are running, progressing well. It is on critical path, as we've said before, but we are tracking absolutely to our plans with Parker.
------------------------------
Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [16]
------------------------------
Francois, we have a very clear line of sight to fly the aircraft by the end of the month June. And maybe it would be good for Rob -- we've done a lot of testing, so the aircraft does not do all the testing. We've got a lot of static testing and system testing to make sure we don't have any kinks as we get ready for our first flight.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [17]
------------------------------
Thank you, Mr. Shalom. Do we have a question from Belfast? From the webcast?
------------------------------
Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [18]
------------------------------
From the webcast, we have [Chris Klegard]. I apologize, Chris, if I've mispronounced your name. I know the big racks overhead are very big, but can they accommodate roll-ons for 160 passengers?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [19]
------------------------------
Yes, so as I mentioned in my presentation, that we have the largest bins in the industry. So on one side of the aircraft, we can have bags 24 inches, wheels first, inside. And on the other side, it is 22 inches. So really a new class in the industry. Normal configurations, 90% of the people can have a full-sized carry-on bag. So that was going to be really great for the flying public.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [20]
------------------------------
Thank you, Rob. Question from Mr. (inaudible), (inaudible) Canada. Please.
------------------------------
Unidentified Audience Member [21]
------------------------------
(Interpreted) I'd like to ask my question in French, please. It is good that you announced this increase in the capacity for CS300. But do you have any plans to develop a plane -- a bigger, bigger than (inaudible) -- what about a 180?
------------------------------
Unidentified Company Representative [22]
------------------------------
(Interpreted) Our plan at this time is to get the CS100 and the CS300. That's our plan. For the 300, we've got one option, which would go up to 160 passengers.
------------------------------
Unidentified Audience Member [23]
------------------------------
(Interpreted) Let me -- I have a second question, please. The development budgets for the CSeries, how much is your budget? Are you on budget? Are you --
------------------------------
Unidentified Company Representative [24]
------------------------------
(Interpreted) Yes, yes, we are on budget. We've -- as forecast, when we launched the program.
------------------------------
Unidentified Audience Member [25]
------------------------------
(Interpreted) How much have you spent already?
------------------------------
Unidentified Company Representative [26]
------------------------------
(Interpreted) We can't give you the percentage of (inaudible).
------------------------------
Unidentified Audience Member [27]
------------------------------
(Interpreted) What -- about 3 billion, 4 billion? Give me a number.
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [28]
------------------------------
What we announced (inaudible) fine with that, with our business case, 3.4 billion was the investment in CSeries, and we are on track with that.
------------------------------
Unidentified Company Representative [29]
------------------------------
(Interpreted) We are on a business plan. Business plan is straight online for the 3.4 billion. Thank you.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [30]
------------------------------
Any Belfast callings, please?
------------------------------
Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [31]
------------------------------
Question from [Bernie Baldwin]. Rob, you said the CS100 would enter service in 2014. When is the first flight for CS300?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [32]
------------------------------
That is a good question. So the CS100, as you know, first flight will be in June, enters into service in mid-2014. And the CS300 starts flight testing early in 2014.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [33]
------------------------------
Thank you. Back to the webcast.
------------------------------
Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [34]
------------------------------
Yes, Graham Warwick again is asking just to clarify -- are the issues that caused the delay being overcome with the following flight test aircraft to get them assembled more quickly?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [35]
------------------------------
That's a good question. Actually the assembly of the aircraft has gone really better than expected, and you are going to have a chance later to visit. It has really been a great success for the program. We are on plan that basically every month we have another build of aircraft, and we are tracking to that plan. So we are highly confident that we're going to support the flight test program as was planned.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [36]
------------------------------
Thank you, Rob. Back in the room. Hi, good morning.
------------------------------
David Newman, Cormark Securities - Analyst [37]
------------------------------
David Newman, Cormark Securities. Two questions. One is on -- the plane looks great, the structures look like they are coming along nicely. On the critical path, what do you have left in terms of software drops that you have to get comfort that you're going to get to that first flight?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [38]
------------------------------
Good question. On the software, we have basically -- across all the program with all suppliers, we go in blocks. And it's the first time we organized that way. That's to make sure everybody is harmonized.
We already have the final versions of software in testing for the first flight. And really, we have provisioned another roll of software, just basically for any learning we are going to have during the testing process. So that has been harmonized and when some of the suppliers spoke about their schedules, that is aligned with their plans as well.
------------------------------
David Newman, Cormark Securities - Analyst [39]
------------------------------
Just a quick question on the active campaigns that you have ongoing. Where is the breakthrough? Can you just give us a sense of what you have going on in the background to meet your targets?
------------------------------
Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [40]
------------------------------
Good question. We talked about our three customers that we have just completed since December. And I can only tell you that we have active campaigns across the globe, again, with lessors, major airlines and low-cost carriers. So you will get to see by first flight at the end of June, we'll pick up more momentum, and we will make announcements at the right time for our campaigns.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [41]
------------------------------
Thank you, Mike. Any questions from Belfast?
------------------------------
Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [42]
------------------------------
Yes, (inaudible) from [Iowa] International. Do you know if the higher capacity option will have a higher gross weight, and are there any other modifications?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [43]
------------------------------
Yes, so when we increase the capacity of the aircraft, of course, to maintain the range, we increase the max takeoff weight. And we will be publishing our new brochures shortly that will have that data inside.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [44]
------------------------------
(spoken in French))
------------------------------
Unidentified Audience Member [45]
------------------------------
(Interpreted) (inaudible), TVA, for television. Please let me ask my question in French. Why is it necessary to have the 160 places? Why did you decide that?
------------------------------
Unidentified Company Representative [46]
------------------------------
(Interpreted) The reason is because in the markets, the market. In most of the global markets, low-cost carriers, we -- like the low-cost carriers who want more capacity, they want to bring down their operating costs. In other segment for the 100 and 150 is the same phenomenon.
Not all the clients, but some of the clients, they need to diminish or to reduce their operating costs for operations. It is the demand, it's market demand.
------------------------------
Unidentified Audience Member [47]
------------------------------
(Interpreted) Is the -- this 160, would you think be -- earn you more money, more orders?
------------------------------
Unidentified Company Representative [48]
------------------------------
(Interpreted) It's an option. We're offering it as an option. And we'll see once we -- if we get good results, it's an option, of course, which will make it a better offer, a better offer. But it's not the only option, it is not the only option.
Can you repeat again in French please?
------------------------------
Unidentified Audience Member [49]
------------------------------
(Interpreted) Your calendar for the first flight, everything is on schedule? Can I give the last update in French, please?
------------------------------
Unidentified Company Representative [50]
------------------------------
(Interpreted) With great pleasure, of course. Our first flight for the plane, which you see here, will be the end of June 2013; we will be up in the air. And as we said, it will enter into a service a year later, enter into service one year later, in 2014 -- for 2014.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [51]
------------------------------
Thank you, Mike. You've got another year, got another year to your contract. (inaudible) the webcast.
------------------------------
Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [52]
------------------------------
From the webcast, we have Blair Watson, at Canadian Skies Magazine. It says Bloomberg reported yesterday that Bombardier has sold only 180 planes and would need a 67% increase in its order book to meet a goal of 300 by mid-2014. Comment.
------------------------------
Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [53]
------------------------------
That's a tough question. Order book, as I said in the presentation, very satisfied with the number of customers we have. Very satisfied with the diversity. Very satisfied geographically where our customers are located.
We, as I said in the presentation, have 382 orders. Out of those, we have firm orders, but the rest are letters of intent to continue to work with our customers. So it is a huge number.
When I look at where we are in our timeline, 15 months before entry into service, very comfortable that we will get to our targets that we've established, which is to get 300 firm aircraft and to get up to 20 customers. Very, very comfortable.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [54]
------------------------------
Thank you, Mike. Back in the room. Good morning.
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Unidentified Audience Member [55]
------------------------------
(Interpreted) (inaudible), Radio Canada. Radio Canada, please. But in French. What do you say to your investors at the present time who are worried -- investors are worried that you might not reach your objectives in terms of sales, and it's essential for Bombardier to --
------------------------------
Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [56]
------------------------------
(Interpreted) We are very, very comfortable with, as I said, the number of planes sold. We have a total of 382. Of the 382, 193 are confirmed, with options of course, if we look where we stand at the present time.
Our objective of three years, 300 planes, 15 months even before, we've already got -- were more than halfway there. So if I look at the competition, if we (inaudible) the same place of where we're talking -- with same point, at the same speed, same amount of time, I am really comfortable with the number of customers we have.
We are going to get 20 clients. We're going to have 20 clients. We're going to get 20 planes sold, with everything we have to offer, with our campaigns, the (inaudible) -- the first flight by the end of June, which again, is greater momentum to -- both for sales with the customers and I'm sure very, very convinced we will reach our objectives.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [57]
------------------------------
Belfast.
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Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [58]
------------------------------
Kristine Liwag, Bank of America Merrill Lynch. How many aircraft do you have to deliver for the CSeries program to break even?
------------------------------
Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [59]
------------------------------
Great question. The number of aircraft that we have to deliver, I'm not going to divulge, other than saying that we are meeting all our business plan metrics, and we are very comfortable with the number of orders we have, the number of future orders, the campaigns we have ongoing, that we will meet those targets. And all the sales we have got to make economically sense, and we are making economically sensed decisions. So we are very comfortable of meeting these metrics.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [60]
------------------------------
Thank you, Mike. Back in the room. Good morning.
------------------------------
Chris Sloan, Airchive.com, Airways Magazine - Media [61]
------------------------------
Good morning. Congratulations. Chris Sloan, Airchive.com Airways Magazine. Could you restate the exact firm orders for the 100 and the 300? Because still a little foggy on what the exact number is for each model.
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [62]
------------------------------
We don't actually disclose that outside. So Mike told you the numbers that we have inside. So we have 180 aircraft total. I can tell you that there is a slightly larger percentage currently on the CS300. But based on the experience, that varies depending on timing and when customers come on boards, their needs.
So right now, we see a very healthy opportunity; so both models are being very well accepted by the market. But they are quite different in the sense that the 300 really has the best economics in the industry. And the CS100, of course, has those economics, but also has very superior air and runway performance. So those two things make both products very interesting to the market; and again, depends on the customer needs.
------------------------------
Chris Sloan, Airchive.com, Airways Magazine - Media [63]
------------------------------
And you said that the tracking is the 300 was a two-to-one, or did you (multiple speakers)?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [64]
------------------------------
No, I wasn't specific.
------------------------------
Chris Sloan, Airchive.com, Airways Magazine - Media [65]
------------------------------
Okay, and lastly, is the cabin altitude anywhere reduced from -- based on some of the new advanced fuselage technologies, or does it -- do you know what the cabin altitude is?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [66]
------------------------------
Yes, so we are actually -- the aircraft flies to 41,000 feet, and the pressure altitude is 8000 feet.
------------------------------
Chris Sloan, Airchive.com, Airways Magazine - Media [67]
------------------------------
Excellent. Thank you very much.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [68]
------------------------------
Thank you. Back to Belfast or the webcast.
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Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [69]
------------------------------
Yes, Belfast. Bernie Baldwin from Low-Fare & Regional Airlines. How does that EIS target compare with similar aircraft programs?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [70]
------------------------------
If you look at the flight test program for the CS100, we have five aircraft. So it really depends of course how you run the flight test. So on the C series, we have Aircraft 0, which we actually take credit for for testing, so that helps to unload the flight test program. And the other critical thing is getting a flight test article every month into the flight test program so you get actually the capacity and productivity.
12 months is what our plan is. People have done it in less in the industry. And we really believe we can meet that objective. Challenging, but we really believe our plan will hold.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [71]
------------------------------
Thank you, Rob.
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Pierre Saint-Arnaud, The Canadian Press - Media [72]
------------------------------
(Interpreted) Pierre Saint-Arnaud, Canadian Press. The question that I could ask you (inaudible) when you enter service, when you commission, when the CS100 is commissioned in June 2014 as we've heard and 300 at the end of 2014, what will the rate after that, production rate, and how many employees on the lines do you expect to have during those years?
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Unidentified Company Representative [73]
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(Interpreted) Number of employees, line employees has increased with our production -- we have about 3000. We're talking about 3000 employees in all our facilities, including Mirabel. Our rate, our rhythm of employee, perhaps (inaudible) 15 planes, (inaudible) to get to 20 or 30 for next year.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [74]
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Belfast.
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Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [75]
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We have Patrick Hoeveler from Flug Revue. He has two questions. One, what would be the status of fuselage production in China, and what is the schedule for the next test aircraft?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [76]
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Yes, I'll take that question. So China is producing the fuselage barrels. They are producing right now one per month. And they are actually -- the quality has been excellent. And as you'll have a chance to visit a little bit later, we already have FTV4 here from China on site, so a great job by the China team.
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [77]
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Let me add to Rob's answer. I just got back from China, and I can tell you after visiting SAC that their component build is exceeding our quality expectations and they are meeting their delivery schedule. We are very proud of their achievement.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [78]
------------------------------
Thank you. Good morning.
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David Tyerman, Canaccord Genuity - Analyst [79]
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Good morning. David Tyerman from Canaccord Genuity again. Perhaps you could give us some idea of where you are on constructing the automated production lines and timelines that you would expect to get to full ramp-up of those kinds of lines.
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [80]
------------------------------
Actually, this facility we are in, actually is a CRJ facility which we've modified to accommodate the initial CSeries build. And we will also be conducting a flight test program out of this facility at the other end.
We've already started construction of the buildings, and basically, there is a satellite for Pratt & Whitney for the engine buildup, which is actually in construction; it will be finished in May. And then the main facilities start -- actually, end of this month, we will start construction and will go over a period of roughly 2.5 years.
So we are building really in line with -- as Mike mentioned, as we ramp up the program, we build the facilities in line with our production plans.
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David Tyerman, Canaccord Genuity - Analyst [81]
------------------------------
So would the first aircraft actually be produced on the normal production lines or will they be produced in a more customized manner a la the flight test vehicles?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [82]
------------------------------
Yes, so the first flight test vehicles all produced here, and the first few production units also would be produced out of this facility. And then we don't share exactly the exact production number, but after a handful of aircraft, production will be moving over to the new facility.
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [83]
------------------------------
But to maybe add a little bit further, we are using the same tooling, flexible tooling, for the aircraft that are being built here. And as we move into our new location, which is next door, it's the same tooling, same processes.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [84]
------------------------------
Back to the webcast or Belfast.
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Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [85]
------------------------------
Yes, on the webcast, we have Richard Connelly. Is there any indication yet as to which region of the world we will first see the first entry into service?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [86]
------------------------------
That's actually a well-kept secret. So our launch customer -- the first mover, of course, was with Lufthansa and Swiss. But the actual first aircraft is going to be delivered to a non-disclosed customer.
The reason it is nondisclosed is for competitive reasons. CSeries offers a very strong competitive advantage, so airlines want to keep that tight to their chest so they have a longer timeframe advantage in their market.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [87]
------------------------------
Thank you. (inaudible).
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Unidentified Audience Member [88]
------------------------------
(Interpreted) Yes, when you look at what happened with the 787 and the lithium battery, do you get cold sweats thinking of what could happen with the CSeries?
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Unidentified Company Representative [89]
------------------------------
(Interpreted) That's why I do the technology aspect of the presentation, of course, at the outset. You would never know where it might lead you. But now we know enough, because all the tests were completed, all those (inaudible) were -- on the structure were done. And I would say that up to date, all the tests went fine.
Of course, we've had issues, but minor issues. So today, I really feel -- sleep well and I am very confident that everything will run well. And fortunately, with our teams doing the trade study for the lithium-ion batteries test -- for us, Bombardier, with our CSeries, we had found that technology was not ready for that.
------------------------------
Unidentified Company Representative [90]
------------------------------
(Interpreted) I would expand on this remark, one item. You say you sleep well. That was okay one. But I haven't reached that point. But I don't have cold (inaudible). But I would add that the team would be vigilant in the choice of technology for the plane, the existing technologies that work and the new technology. And with the new technology, there is a lot of benchmark tests. So we will go through this before we introduce it.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [91]
------------------------------
Would you mind repeating your answer in English, so that everyone --?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [92]
------------------------------
So the question was do I have goose bumps, I guess, (spoken in French) about having a problem similar to the lithium-ion batteries. So what I explained is of course in the beginning of the program, you really do all your engineering work, get trade-offs, and in the end, you make your decisions for your program. So I can tell you today, we are very satisfied. We've really done all our tests, basically development has been completed successfully. And yes, we did have learning, but we didn't have any major problems, which is great. And I was telling Maria that I sleep well, so that's a good sign.
And on the battery decision, actually on the lithium-ion batteries, when we did the trade-off study for -- in the timeline of our program, for our aircraft, we found that the technology for us, Bombardier, was not mature. So we made a decision to go with more conventional batteries, so the nickel cadmium batteries. And today, of course, we are very satisfied with that decision. And it has been really good process across our program, and that is why I took the time to walk through really our process and the technology.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [93]
------------------------------
Thank you, Rob. Back to the webcast or to Belfast.
------------------------------
Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [94]
------------------------------
Bill Read, Aerospace International. Are you considering in the future a business jet variant?
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [95]
------------------------------
I am personally focused on commercial aircraft. So I think you would have to ask Mike or Steve Ridolfi.
------------------------------
Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [96]
------------------------------
Great answer. It's a great answer, seriously. Our major focus is to launch the CS100, launch the CS300, and of course then we will consider what our opportunities are in the marketplace. But the whole team and I are really focused on getting this aircraft -- continue our path towards first flight, entry into service, and then we'll look at all our options, if our customers ask for different options.
------------------------------
Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [97]
------------------------------
Thank you. Back to the room.
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Steve Hansen, Raymond James - Analyst [98]
------------------------------
Steve Hansen, Raymond James. I'm just curious whether or not on the total market opportunity you have had a chance to determine what the additional capacity option would do to the total platform opportunity.
------------------------------
Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [99]
------------------------------
I'll let -- I'll take -- it's a good question. As we are introduced, first, we responded to market demand. And we are seeing that this market demand is picking up traction. And of course, I can't quantify now how many more customers it will bring. But definitely, it is more, because you are offering an option that was not offered at the beginning, and now, we've said we can offer this option.
We worked, like Rob explained, about the slim seats that give a 28-inch pitch. It's becoming more attractive as the world economics are, as you know how they are, people are looking to maximize and reduce their seat cost. So I'm sure this will give us much, much more traction in sales.
------------------------------
Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [100]
------------------------------
Sorry -- one point. So my concern really to be honest is really being able to build them fast enough and enough of them to really furnish the market demand. Especially in the early years, it is really the challenge that we see. We don't see the challenge really on the sales side. We still have lots of runway in front of us, we already have a good number behind us, and we are in good shape.
------------------------------
Steve Hansen, Raymond James - Analyst [101]
------------------------------
So as a follow-up to that, then, is there any chance of increasing the potential line rates in the near term, or is that something you'd consider at a later date?
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [102]
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That is another good question.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [103]
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I get asked that question almost every day. So he says is it going well? A lot of aircraft. When are you going to ramp up the rate?
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [104]
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Definitely, we will address the question now, and we will be prepared to meet the customer demand, absolutely.
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Steve Hansen, Raymond James - Analyst [105]
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And just a last one, if I may, is on the timeline for first flight. Can you give us a sense for number of days or weeks that you have of buffer built into the first flight timeline?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [106]
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That's a good question. Of course, we do measure this not even by day -- we're down to hours, by the way. That's how we measure the program, and I'm being very sincere when I say that.
Basically, we will give you a big picture. We have a number of weeks left to finish FTV1, and then we have some small testing on FTV1; then it moves over to the flight test center, which is just next-door to here. And then after that, they have their own plans, so what tests they have to do in preparation for first flight.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [107]
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Thank you. One, maybe two more questions from Belfast and the webcast and then one more from the room here, and will move to the next step. Haley, please.
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Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [108]
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On the webcast, we have [Luis Calvo] from Spain asking -- the re-engined and maybe longer model of the E-jet family, does that have something to do with the extra passengers on the CS300?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [109]
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Actually, what I would say is I really can't answer on behalf of our competitors. Really, from our point of view, really the CSeries is very competitive in the market, so we see our competitors actually reacting to try to gain some ground back on the competitiveness of the CSeries.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [110]
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Thank you. Mr. Trimble, good morning.
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Steve Trimble, Flightglobal - Media [111]
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Good morning. Can you be more specific -- sorry, Steve Trimble with Flightglobal. But can you be more specific about the modifications that you made back in -- or that were part of your decision back in November for the delay?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [112]
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As I explained earlier, really there were a number of reasons for the delay. The primary one was really difficulty with some of our suppliers on integrating the technology onto the aircraft and our systems. And also, as we showed you, we did make a modification to the 300 that also had a small impact on our schedule.
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Steve Trimble, Flightglobal - Media [113]
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What was that change? I didn't catch it when that happened.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [114]
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We showed you on the CS300, we introduced the extra over-wing doors, and we did also at that time a small increase in the length of the CS300.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [115]
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Thank you. Back to Belfast or the webcast.
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Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [116]
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One more question from Bernie Baldwin -- just wants clarification on the IES sales target. It is 20 customers plus 300 from orders. So how does this compare with other programs?
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [117]
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Well, that is our program targets for the CSeries. And it is a specific segment we are going after, 100 to 149 seats. And during the development of the program or business plan, we said we would like to have 20 customers, but across the globe. So we've got 14, we're going towards 20. We are very comfortable of attaining the 20.
We want to get at least 300 firms going into entry into service. We are very close, as I said before. We've got momentum getting to the 300. We've got active campaigns. Out of the 382, we already have close to 180 firm campaigns. So as you can see, we are well progressing towards selling what we set out as a target at the beginning.
As compared to what the other competitors are doing, different market segments, in our market segment, we think that is a very aggressive target and we are working towards that and being very successful.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [118]
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Thank you, Mike. Two last questions. One from the room here. Good morning.
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Anthony Scilipoti, Veritas Investment Research - Analyst [119]
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Anthony Scilipoti, Veritas. You mentioned that there were some modifications, and I understand to add the new door. Was there anything else more to do with the original CS100 and 300 that was changed, engine, wing, weight, any of that sort of thing?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [120]
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When we made the change on the CS300, of course the CS100 and 300 have a high level of commonality, so there were some minor impacts on the CS100, yes, that's true. And as we mentioned, on the CS300, we grew the max gross takeoff weight to accommodate the additional passengers that we can now accommodate.
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Anthony Scilipoti, Veritas Investment Research - Analyst [121]
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Okay, and the certification for the engine was Canadian. Do we have to still wait for the US, and what happens with the rest of the certification?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [122]
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Yes, the way the process works is because the final assembly of the engine is in Canada, Pratt did a certification -- initial certification with Transport Canada. And following that, there will be FAA IASA and really if follows a sequence. And we have the same approach with the aircraft. We start with Transport Canada, followed by FAA IASA. And it really depends also -- where the aircraft is going to be delivered first will dictate which second authority that you go through.
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Anthony Scilipoti, Veritas Investment Research - Analyst [123]
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Okay, thanks.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [124]
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Thank you. One last question please from the webcast, I believe.
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Haley Dunne, Bombardier Inc. - Manager, Communications and Senior Spokesperson [125]
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So the final question from the web is from Jon Ostrower from Wall Street Journal. Many have said that Bombardier has been too timid in the face of aggressive marketing conditions by Boeing and Airbus. What messages do you have for the duopoly today?
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [126]
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Let me go first. I love the question. The message we have for them today is, first, most of you talked about, well, you were late. Five, six months late is not late. We are going to fly at the end of June 2013. It is not a paper airplane, as I mentioned before. It is a real airplane. And just bear with us a few more minutes and you'll get to see why I'm so confident, as I think Rob would want to talk about some other initiatives that he has going right now, right here in this hangar.
We are very, very focused on our 100 to 149 seat aircraft market segment. We have an excellent product, excellent product, not only on fuel burn, on seat cost, on capacity, interior cabin, new engines. So it is not a re-engined aircraft we are putting in the market. It is totally a new aircraft with a well-executed plant of proven and new technology, mitigated by doing upfront testing; over 200 suppliers have conducted upfront testing. We've put all this together with the current reaction we have had with customers across the globe. The number of orders, I can tell you we are a very serious contender in that market segment, and we're going to be there and we're going to win. That's the message.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [127]
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Thank you, Mike. Anything to add, Rob?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [128]
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No, good answer, Mike. Thank you.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [129]
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So take care, everyone. Thank you for these questions. And thank you, Mike and Rob, for these insightful answers. So now Rob, what do you say? I think our guests want to take a look at the FTV1.
Before we do so, I would like to invite all the cameras to walk closer to the FTV1 so that you can capture this event. And then, Rob, we can start to walk towards and inviting our guests to take a look at the FTV1. Just wait one second so that the cameras can start moving. Thank you very much.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [130]
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So what do you guys think? Pretty awesome, eh?
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [131]
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Thanks, Rob, for the update, and actually you can see it is a real aircraft. Now, Rob, do you have anything else to show us today?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [132]
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You know, Mike, I always have a few surprises for you. So as you said, seeing is believing. FTV1, music, please. (Applause)
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [133]
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What do we have here, Rob?
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [134]
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Here we have FTV2. But wait, Mike, I have a couple more surprises for you.
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [135]
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Tell me.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [136]
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Just behind, we have also FTV3 fuselage, and also in the corner, FTV4. So really, we have a fleet of aircraft for you, Mike. What do you think of that?
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Mike Arcamone, Bombardier Inc. - President of Bombardier Commercial Aircraft [137]
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Outstanding. Outstanding. I want to congratulate you and the whole team for CSeries. And for our audience, as you can see, it is a real program. We have the first aircraft, the second; you'll be able to go on the tour and to see the number three. And right there in the corner, we've started number four.
Hugues mentioned in the presentation he is already working on cockpit number five, to be delivered here to Mirabel. Rob mentioned about the flight testing program. It takes five test vehicles. We're well on our way to get this milestone on all these five achieved. Great job.
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Robert Dewar, Bombardier Inc. - VP and GM, CSeries, Bombardier Aerospace [138]
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Thanks, Mike. Thank you.
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Marc Duchesne, Bombardier Inc. - Director of Communications, Bombardier Commercial Aircraft [139]
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Congratulations. Thank you very much. So thank you, everyone, for joining us today. Our first flight is now within reach, and I know every Bombardier employee is extremely proud of the work we have been accomplishing together.
I hope you found this session very inspiring and very interesting. This concludes today's presentation. I want to thank all of you for your time and your questions. For those of you who have joined us online through the webcast, I'd like to say goodbye. We'd like to say goodbye from Mirabel. So thank you for viewing the webcast from your home or your office. I wish you a very good day.
And please make sure to visit CSeries.com in order to become a CSeries fan. Thank you very much, and we will start the plant tours in just a few seconds. Thank you very much.
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