STATUS REPORT tatus Report: Global Express The clash of the titans officially begins, S with heavy-iron rule in the next millennium at stake. By FRED GEORGE August 1994, Document No. 2400 (11 pages) Bombardier’s December 20, 1993 news release, pro- global economy and growth of free enterprise. “Global claiming the official launch of the Global Express, creat- businesses will continue to chase margins and look for ed plenty of fervor in the general aviation industry. It cheaper labor markets, while business people will need wasn’t just another new product announcement. It was face-to-face meetings,” he explained. an unequivocal challenge to Gulfstream Aerospace for The typical customer profile varies extensively. the title of “Heavy-Iron King” of business aircraft. Prospects include entrepreneurs, overseas companies This isn’t the first time a challenger has attempted to and traditional top industrial firms, although large U.S. knock off Gulfstream for the super-heavyweight title. corporations now very cautiously approach new heavy- Others, including firms with prodigious aircraft manu- iron aircraft acquisitions. Customers are more sophisti- facturing experience, have attempted to become the cated than in past years, according to Moss. They favorite builder of flying flagships for the top industrial plunge into intense discussions of operating costs, companies, foreign governments and eminently success- extended twin-engine operations (ETOPS) reliability and ful entrepreneurs during the last 30 years. product support. Long gone are six-pack martini lunches None has succeeded. and sales contracts penciled out on cocktail napkins. Bombardier, the family-operated, Canadian trans- Moss conservatively expects to sell 250 Global portation conglomerate that has only been in the air- Express aircraft to such buyers. Canadair currently has craft business since 1986, now has embarked on this more than 40 orders and options for the GEX (short for daunting mission. Bombardier’s Canadair subsidiary Global Express), representing more than $1.2 billion in will design, develop and assemble the Global Express sales. Certification and initial deliveries of green air- for Bombardier. The aircraft, carrying Bombardier’s craft are slated for late 1997, but the earliest available own BD-700 model designation rather than wearing GEX delivery slot is in the first quarter of 2000. the Canadair label, will be the largest cabin business Next, look at Bombardier CEO Laurent Beaudoin’s aircraft ever built and Bombardier’s contender for titan- track record during the last 14 years. (See sidebar.) class champion. Beaudoin’s skilled team of financial managers now is What are Bombardier’s odds of success? Here are directly involved with the Global Express project some factors to consider: First, Bryan Moss, Canadair’s Canadair began in 1991. Beaudoin, mindful of the business aircraft division president, believes a market need to reach break-even early in the program, has exists for 550 to 800 ultra-long-range, large-cabin busi- formed major risk-sharing partnerships with outside ness aircraft, a feeling largely fueled by the increasing companies. Also, he has meted out tasks for building COPYRIGHT 1995 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED Status Report the GEX among Bombardier’s own aircraft companies— Canadair, Short Brothers, Lear- isk-Sharing Partners jet and possibly de Havilland. The result: The program will Partnerships are a key part of Bombardier’s strategy for building the GEX.R The team approach allows the $1-billion GEX development program costs break even when the 100th GEX is sold, Moss claimed. to be spread among a sizable number of partners outside the company. All the The third factor is aerody- outside vendors are long on expertise, and they have the financial backing to namic sophistication. In spite share $600 million in development costs. of having the roomiest cabin Bombardier, however, didn’t just sign up the first qualified partner to run up the ever offered in a business air- flag. Instead, the firm orchestrated fierce competitive bidding, often fine-tuning the craft, the GEX will be remark- program requirements during the bidding process to turn up the pressure on the ably slippery for its size, participants. For example, Honeywell and Collins competed for the avionics pack- according to Canadair engi- age in one of the fiercest campaigns in the history of business aircraft. neers. It will have a highly In addition, Bombardier made each partner agree to strict price controls on swept, supercritical wing spares, a key element of Canadair’s strategy to make the GEX more affordable designed for high-speed, high- to operate. altitude cruise and an area- ruled, aft fuselage section to reduce drag. would be closer to 6,000 nm than 6,330 nm. Industry The sharp sweep to the wing will move the trailing observers, though, believe that the GEX can make good edge of the inboard section well forward on the fuselage, on its promise of 6,500 nm at 0.80 Mach if it can fly away from the engine nacelles. That will lower interfer- 6,000 nm at 0.85 Mach. ence drag between the fuselage, wing and nacelles. Similar differences exist between airport performance Canadair claims the GEX’s aerodynamic refinements projections and guarantees. Canadair estimates the will make it unsurpassed in speed, range, airport per- GEX’s takeoff distance at 91,000 pounds MTOW to be formance and operating economy in the big-iron busi- 5,540 feet at SL-ISA, while its guaranteed takeoff dis- ness aircraft class. tance is 5,930 feet. That’s in line with Canadair’s design Fourth, and not to be overlooked, the Global Express goal to have a takeoff distance of less than 6,000 feet, is priced about $1 million lower than its only known which the company feels is adequate for access to virtual- competition—the Gulfstream V. ly all airports near likely business destinations. Projections from Canadair for the GEX’s weight and PROJECTIONS VERSUS GUARANTEES performance, although far from guarantees, are quite Canadair expects the Global Express to have maximum credible. All of Canadair’s partners have agreed to the ranges, with NBAA IFR reserves, of 6,500 nm at 0.80 weight goals, and Canadair’s weight estimates have Mach, 6,330 miles at 0.85 Mach and at least 5,000 been padded to accommodate unforeseen changes in miles at 0.88 Mach. Such range capability will enable certification requirements, structural modifications and a GEX to travel from New York to Tokyo in 13.5 hours. systems improvements. That’s equivalent to flying a 6,313-mile distance in still Canadair’s last two aircraft certifications prove that air when the 5,845-mile great-circle distance is adjust- this methodology works. Both the Canadair RJ regional ed for 85-percent probability headwinds. airliner and CL-415 water bomber met their original Moss adds, “High speed is even more of a selling design weight and performance goals. factor than long range.” The GEX, cruising at 0.88 However, the GEX’s interior completion weight Mach, could shear an hour off some shorter internation- allowance of 6,000 pounds may be a little lean. For al routes, such as Los Angeles to Berlin, Jeddah to example, the actual interior completion weight of an Tokyo or Moscow to Johannesburg, compared to the average Challenger, an aircraft with the same fuselage flight times of the present generation of long-range busi- cross section as a GEX and having roughly one-half the ness aircraft. cabin space devoted to passengers, is just under 4,100 However, Canadair’s range guarantees are much pounds. (The interior completion-weight budget for a more limited than the marketing projections. The firm’s Gulfstream IVSP is 5,600 pounds and 7,000 pounds only guarantee is for this design point specific fuel con- for a Gulfstream V, according to the manufacturer.) sumption (SFC), according to the aircraft type specifica- Mindful of this, Canadair engineers, working with tion: 0.158 nm per pound at 0.85 Mach at 65,000 completion centers, are aggressively pursuing pounds. If the maximum range is adjusted for the mini- lightweight interior designs. They believe that three tons mum guaranteed SFC, then the range at 0.85 Mach is sufficient for an interior appropriate to this class of COPYRIGHT 1995 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED Acquisition And BLOCK FUEL Operating Costs 40 Canadair’s operating-cost informa- 35 Conditions: 1,600-lb tion for the GEX is every bit as care- payload (8 pax); fully thought out as its design and NBAA IFR reserves; performance characteristics. For 30 zero wind; ISA; example, the $161-per-hour engine max cruise altitude, 25 FL 510 reserve is higher than, but consistent with, the cost of operating a Rolls- 20 Royce Tay turbofan. All costs do not include the effects of warranty cov- 15 erage. Block Fuel (lbs) 10 0.85 Mach Fixed Costs (per year) Acquisition N/A 5 0.80 Mach Salaries and benefits (two crewmembers) $157,970 0 Hangar 75,000 0 10203040506070 Insurance NBAA IFR Range (nm) ($50-million liability) 4,700 Source: Bombardier Business Aircraft Division All data preliminary Recurrent training 36,750 Interior refurbishing reserve 35,714 Aircraft modernization 120,000 TIME AND FUEL VERSUS DISTANCE Miscellaneous 9,389 7,000 6,330 nm Conditions: 1,600-lb Total $519,523 37,981 lbs 6,000 payload (8 pax); 5,648 nm 6,500 nm NBAA IFR reserves; 33,222 lbs 37,963 lbs zero wind; ISA; 4,677 nm 5,340 nm Direct Costs (per hour) 5,000 max cruise altitude, 26,693 lbs 30,139 lbs Fuel and oil, FL 510 1,500-mile stage length