Bombardier and the Cseries Dilemma

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  • Topic: Bombardier CRJ700, Bombardier Aerospace, Embraer E-Jets
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  • Published : October 31, 2012
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9B11M072

Ali Taleb and Louis Hébert wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2011, Richard Ivey School of Business Foundation

Version: 2011-09-02

“Bombardier Aerospace announced today the name of its new commercial aircraft family and revealed the aircraft’s distinctive black and white livery. The CSeries, for competitive, continental and connector, would target airlines operating aircraft in the lower end of the 100- to 150-passenger market, a large segment that is not well served by any aircraft in production today.” Bombardier press release, July 19, 2004

“On March 15, 2005, Bombardier’s board of directors granted Bombardier Aerospace authority to offer the new CSeries family of aircraft to customers. The authority to offer is an important step in the process that could lead to the aircraft program launch. Prior to launch, Bombardier will continue to seek firm commitments from potential customers and suppliers.”

Bombardier press release, May 13, 2005
“Bombardier announced today that present market conditions do not justify the launch of the CSeries program at this time. The corporation will now reorient CSeries project efforts, team and resources to regional jet and turboprop aircraft opportunities to address regional airlines’ future needs in the 80- to 100seat aircraft market.” Bombardier press release, January 31, 2006

In March 2005, the board of directors of Bombardier Inc. authorized its Aeronautics division, Bombardier Aerospace, to offer a new generation of aircraft named CSeries to its clients. The company postponed the actual launch of the project several times, prompting investors and analysts to question what the long-term strategy of the company was.

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This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Bombardier Inc. or any of its employees.

Licensed to Athabasca Univ for use by Dr. Aris Solomom in the course CPEX-506, from Aug. 8, 2012 to Aug. 14,2012. Use outside these parameters is a copyright violation

BOMBARDIER AEROSPACE: THE CSERIES DILEMMA1

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9B11M072

As the date of the company’s annual meeting was imminent (scheduled for May 29, 2007) investors and industry analysts were expecting Pierre Beaudoin, president of Bombardier Aerospace, to clarify the company’s plans for CSeries during this meeting.2

Bombardier Inc., the parent company of Bombardier Aerospace, was headquartered in Montreal, Canada since its inception by Joseph-Armand Bombardier in 1942. As its original name — Auto-Neige Bombardier Ltd.3 — implied, the company specialized initially in developing and trading snowmobiles in its home province of Quebec.

In May 2007, Bombardier’s activities were structured into two relatively independent divisions: Bombardier Aerospace (BA) which was the global leader in business and regional aircraft manufacturing and Bombardier Transportation (BT) which was also a world leader in rail equipment. The strategic objective of Bombardier had always been to make both divisions global leaders in their respective markets. While BA was already the leading manufacturer of regional aircraft in 2001,...
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