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Sep 6, 2016

Bombardier more than halves CSeries delivery forecast amid engine delays

Bombardier CS300

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Bombardier Inc more than halved its CSeries aircraft delivery forecast for the year at a time when the Montreal-based company is struggling to win orders for the new commercial narrow-body planes.

The aircraft and train maker cut its CSeries delivery forecast to 7 from 15 aircraft citing engine delivery delays by its supplier Pratt & Whitney, a unit of United Technologies Corp.

Bombardier also said it expected its full-year revenue to be at the lower end of its previously announced range.

The delay in deliveries is the latest blow to the CSeries program, which took years to get off the ground, hurt by production delays and cost overruns.

The company has since secured a $1 billion investment for the program from the province of Quebec and is in talks with the Canadian government about further funding.

Bombardier finally unveiled the CSeries aircraft more than a year ago to fanfare and high expectations, but has struggled with delays and slow sales.

Following two recent pivotal CSeries orders from Air Canada and Delta Air Lines Inc, Bombardier said last month that Russia's Ilyushin Finance Co reduced the number of CSeries aircraft it ordered to 20 from 32.

"Bombardier's C-Series has gained orders, but it is unclear if this airplane can be produced and sold profitably," Sanford C. Bernstein analyst Douglas Harned wrote in a note released prior to the company's statement on Tuesday.

Bombardier said it now expects to be close to the lower end of the $16.5 billion-$17.5 billion revenue range for the full year. However, the company reaffirmed its 2016 revenue and earnings before interest & tax (EBIT) guidance, on a consolidated basis.

"We are working very closely with Pratt & Whitney to quickly address this supplier ramp-up issue and to ensure we have a strong supplier base to support our long-term growth objectives," Fred Cromer, President, Bombardier Commercial Aircraft said.

"We are very confident in our production ramp-up plan, including our ability to meet our production goal of 90 to 120 aircraft per year by 2020."

Pratt & Whitney is facing heavy demand from aircraft makers and has 8,200 orders and options for the fuel-efficient GTF engine family, which is also being used in the Airbus  A320neo.

"In terms of production, we've made significant headway in the supply chain, but there is some pressure on new engine deliveries for this year," said Sara Banda, a spokeswoman for U.S.-based Pratt & Whitney.

"We are working closely with our customers on the delivery schedule, and we are keeping them apprised of the progress being made."

Banda could not say how the pressure on new engine deliveries would impact other aircraft makers.