Bombardier Inc.launched two new Learjet business jets Monday that will replace its smallest entry-level executive jets, while Qatar Airways said it would buy 10 of its new larger Global executive jets. The Learjet 70 and Learjet 75 were formally launched Monday at the European Business Aviation Convention & Exhibition in Geneva. The aircraft are expected to enter the market in the first half of 2013 and have a list price of $11.5-million and $13-million respectively. The Montreal manufacturer said it had firm orders, letters of intent and other commitments for 50 of the new executive jets, valued at roughly $650-million. The new aircraft, which are based on the Learjet 40 and 45, will compete directly against the Cessna Sovereign and Embraer’s Phenom 300. The aircraft are expected to make Bombardier more competitive in the entry-level segment which has been hit hard since the recession. “It has been challenging,” said Danielle Boudreau, Bombardier Business Aircraft spokeswoman. “In the entry-level of the business jet market, a lot of the customers are entrepreneurs and they have been pretty hard by the economic situation.” While there haven’t been any layoffs in Learjet assembly, she said, the backlog for Bombardier’s entry-level aircraft has fallen to five months worth of work. Bombardier typically aims from the six to nine months worth of work, said Cameron Doerksen, National Bank Financial analyst. Mr. Doerksen described the Learjet 70 and 75 as “significant updates” to the existing 40 and 45. “The Learjet 40/45 was probably something that needed to updated,” he said. “If you look at Bombardier’s Learjet backlog, it’s been pretty weak. There haven’t been a lot of sales of 40/45s, and maybe part of the explanation is that they were coming out with a new model that people were willing to wait for.” Faid Chamoun, BMO Capital Markets analyst, noted Bombardier delivered just 15 Learjet 40 /45 in 2011, a 75% drop from 60 aircraft delivered at the peak of the prior cycle in 2007. “The aircraft fared well from a performance standpoint (speed and range) and we believe this major upgrade in interiors and avionics should enhance its competitive position in this highly competitive segment of the business jet market,” he said. “The timing also makes sense to us, as the business jet cycle continues to progress and this segment, which has lagged thus far, appears to be poised for a recovery in coming years.” The new Learjets will be built on the same assembly line as the 40 and 45s in Wichita, Kan. They will feature a new interior, next-generation cabin management system and major upgrades to the avionics, including the introduction of Vision Flight Deck, which the company recently introduced on its Global Series, Mr. Chamoun noted. The new aircraft are already in test flights, and the program is very much on track for entry into the service early next year, Ms. Boudreau said. Meanwhile, Bombardier received some other good news in Geneva with Qatar Airways ordering 10 larger Global 7000 and 8000 business jets, valued at roughly $650-million based on list price. The new Global jets are expected to enter into service in 2016 and 1017 respectively. “Qatar also said that it had reached a strategic agreement with Bombardier’s Flexjet. Both announcements, though not confirmed by Bombardier, should be viewed positively by the Street,” said Benoit Poirier, Desjardins Securities analyst.
BY SCOTT DEVEAU, FINANCIAL POST
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