Bombardier’s in Trouble as Republic Airways Files for Bankruptcy

Bombardier Had Expected Republic Airways to Be the North American Launch Customer for the CS300, the Larger of Two C Series Models.

Bombardier Inc’s C series looks like it could be in trouble as Republic Airways Holdings Corp which had made its biggest order is now filing for Chapter 11 bankruptcy protection.

Republic Airways announced that it would streamline its operations by operating only Embraer regional jets.

Bombardier had expected Republic Airways to be the North American launch customer for the CS300, the larger of two C Series models, with planes that were scheduled to be delivered in 2015.

However Republic Airways filed for bankruptcy protection under Chapter 11 and said pilot shortage caused a loss of revenue from which it was still trying to recover. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.

Republic Airways’ CEO Bryan Bedford signed a declaration as part of the bankruptcy filing in New York that stated that a revamped Republic plans to fly Embraer E170 and E175 jets exclusively. This filing made Bombardier’s future plans for its CS300 planes uncertain.

“Republic is likely to cancel the C Series order, especially when the airline did not apparently have a business plan for C Series jets,” Macquarie Capital Markets analyst Konark Gupta said in a note to clients

Bombardier and Republic Airways would have to work together to figure out a possible solution and a leasing company taking delivery of the order would make matters better for everyone involved, experts felt.

The high-tech, fuel-efficient aircraft is now scheduled to go into service in the second half of this year and the Republic Airways order represents 16 per cent of the 243 firm orders Bombardier received for it.

The aircraft is already two years behind the initial delivery date it had promised and has also exceeded its budget by $2 billion. Hence Bombardier really needs to sell these planes to drive revenue over the next 20 years.

Bombardier Commercial Aircraft spokesperson said Republic Airways’ C series order has not been cancelled and still stands, “We have a firm order in place and see no immediate impact.” She said.Republic Airways spokesperson however did not confirm or deny this statement.