While some analysts believe the Challenger 650 is outdated, NetJets, a major Bombardier customer, sees it differently. This business jet is still capable of doing well, believes the company belonging to the conglomerate of billionaire Warren Buffett.
Customer feedback even prompted the shared ownership and business jet leasing specialist to introduce the Challenger 650 – a platform that originated in the late 1970s – into its fleet in Europe.
“Our customers appreciate the space in the cabin […] and it’s one of our main tools, ”commented NetJets President of Sales, Service and Marketing, Patrick Gallagher, on Thursday in the Bombardier hangars in Dorval.
In a ceremony attended by more than 500 people, including employees, NetJets received the first of its 20 Global 7500s – sold for US $ 75 million each – ordered 10 years ago. The company already operates 156 Bombardier jets in its fleet of several hundred aircraft.
For Bombardier, it was also the 1000e delivery of an aircraft from the Global family, the first aircraft of which were put into service in 1999.
Since the start of the pandemic, business aviation has gained altitude as the better-off turn to luxury private jets to get around, which is boosting sales. But this surge in popularity makes the competition fiercer.
In the mid-size segment, some analysts say, Gulfstream’s G400, due for delivery starting in 2025, could give the Challenger 650 a headache.
” [Le Challenger 650] Wouldn’t take a bigger place in our fleet if we didn’t believe in the aircraft, ”replied Mr. Gallagher, when asked whether the Bombardier plane was too old. All devices can also be upgraded, right. ”
There are 27 Challenger 650 at NetJets, a subsidiary of the Berkshire Hathaway conglomerate. This version of the platform was presented in 2014.
No change of course
Bombardier analyzes the products of its rivals and “is still evaluating” the next steps for its product portfolio, explained its President and CEO, Eric Martel.
He says he doesn’t feel any worries.
“I have said it publicly: currently, there is nothing that my competitors are doing that worries us or that makes us speed up certain things,” said Mr. Martel, in the scrum, alongside the representative of NetJets.
PHOTO MARTIN TREMBLAY, THE PRESS
Éric Martel, President and CEO of Bombardier, and Patrick Gallagher, President of Sales, Service and Marketing of NetJets
Brian Foley, of the firm Brian Foley Associates, is among those who believe that Bombardier will have to make a decision to avoid giving up market share to its competitors.
“In this industry, if you don’t refresh your products every seven to ten years, they look like what is offered in the second-hand market,” the analyst explained in a telephone interview. I believe Bombardier is at a crossroads. ”
Due to its heavy debt, the Quebec aircraft manufacturer, which has just offered a facelift to its Challenger 350, renamed Challenger 3500, probably does not have the means to finance the development of a brand new aircraft.
Walter Spracklin of RBC Capital Markets concurred in a memo released earlier this week.
A refresh would respect the financial framework of the company. A new model would represent a significant increase in expenses compared to forecasts.
Walter Spracklin, Analyst
Fallout
Concurrently with the event, Bombardier released a study commissioned from PricewaterhouseCoopers (PWC) which suggests that between 2010 and 2019, the Global 7500 program contributed $ 4.8 billion to Canada’s gross domestic product.
Quebec got the lion’s share of the spinoffs, with $ 3.4 billion, according to PWC.
On the Toronto Stock Exchange on Thursday, Bombardier shares closed at $ 1.68, up 8.4%, or 13 cents.