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Bombardier struggles to secure airline foothold

– Bombardier has a flight-test schedule and debut date for its newest, biggest plane. What the CSeries jet still lacks are orders and big-name airline support.

The stock is suffering because CSeries customers so far are too few and too small to reassure investors that the aircraft will be able to boost revenue and profit, said David Tyerman, an analyst at Canaccord Genuity in Toronto. Bombardier is the worst performer among Canadian industrial stocks in the 21st century.

While Boeing and Airbus Group book orders for their single-aisle jets by the hundreds, Bombardier’s CSeries tally is just 203. Only one of the 12 named customers, Deutsche Lufthansa, ranks among the world’s top 20 by passenger traffic. The next-largest buyer, Korean Air Lines, ranked 31st in 2012, according to an International Air Transport Association study.

“They’ll get the plane done, but the problem here is really the orders,” Tyerman said. “It’s still somewhat distressing what the order book looks like, in terms of who’s in it.”

That lack of commitment contrasts with the wide acceptance of new jets like the 737 Max from Boeing and the A320neo from Airbus, whose stranglehold on the large narrow-body market Bombardier is trying to crack.

Bombardier Aerospace President Guy Hachey said a steady stream of would-be buyers to the company’s test facility in Mirabel, Quebec, will eventually result in sales.

Bombardier executives are entertaining “two to three clients” a week in Mirabel for briefings on the CSeries, Hachey said May 1. “We’re constantly with clients,” he told reporters after the company’s annual meeting. “There’s a lot more enthusiasm regarding the plane.”

There is less enthusiasm for the stock, which has lost 9.3 percent of its value this year, compared with a 7.6 percent gain for Canada’s benchmark Standard & Poor’s/TSX Composite Index. Bombardier is the fourth-worst performer this year in the subindex of Canadian 26 industrial stocks.

Most of the jets have been snapped up by smaller airlines and lessors or startups. Bombardier’s client roster for the CSeries includes Odyssey Airlines; Iraqi Airways; Sweden’s Braathens Aviation; Switzerland’s PrivatAir; and Russia’s Ilyushin Finance Co.