Canadair Builds on Success With New Commuter Planes

CANADAIR is stretching its success.

The Montreal-based aircraft manufacturer has taken its bestselling Challenger executive jet and has transformed it into two more products. And it is planning a third.

The reason is simple: Making a new plane from an existing airframe - known as "stretching" the plane - means lower research and development costs and a shorter waiting period for certification from agencies such as the United States Federal Aviation Administration.

"They can make a new aircraft for a minimum investment," says John Rider, an analyst with the investment firm of Richardson Greenshields in Montreal.

The latest version of the Challenger design, the Regional Jet, is a 50-seat plane aimed at the commuter airline market. Canadair displayed the jet at the recent air show in Farnborough, Britain.

Canadair is a division of Bombardier Inc. of Montreal, the transportation conglomerate that got started making snowmobiles and now manufactures New York City subway cars and aircraft at plants in Montreal, Toronto, and Belfast.

The Regional Jet fills a niche between the small 35- to 50-seat turboprop and the larger 100-seat passenger jet. The plane will allow airlines to serve smaller airports, bypassing hubs and making direct connections. Luftthansa City Line, a German commuter airline, is taking delivery of 13 planes this year. Comair, a regional carrier out of Cincinnati, will receive 20 aircraft next year.

Now Canadair is going to rework the design one more time. The company is spending $1 billion to develop a plane it calls Global Express. The plane, designed for the globe-trotting chief executive, will be able to fly nonstop from Los Angeles to Tokyo or Tokyo to London. It will offer such luxuries as a full-sized bed and a shower. The company already has 30 deposits on the Global Express.

Bombardier is the seventh-largest maker of civilian aircraft in the world, the company says. The aviation side of its business accounts for more than half of its $3 billion (Canadian; US$2.4 billion) in sales. The company built its aerospace empire by picking up bargains from governments privatizing their holdings or by buying troubled private firms.

Canadair was purchased from the Canadian government in 1986 in a deal that is now seen as a bargain.

"Canadair has been the major success story for Bombardier," Mr. Rider says. "It was important as a strategic move because it opened up the aerospace sector for them." The Challenger was conceived by aircraft entrepreneur Bill Lear, the man who developed the Lear Jet. He sold the idea of a wide-body executive jet to Canadair in the mid-1970s. The firm has built more than 250 Challengers.

In 1989 Bombardier bought Short Brothers of Belfast from the British government. Bombardier turned the firm from a loss-maker into a profitable operation, Rider says. Among other contracts, the Belfast firm makes components for Canadair's Regional Jet.

Bombardier picked up Learjet Corporation from Integrated Resources in 1990 and this year it added de Havilland Aircraft of Toronto, buying it from Boeing Company of Seattle. Boeing had purchased the firm from the Canadian government; de Havilland's Dash 8 commuter turboprop aircraft was successful, but Boeing had trouble with high wages and overmanning enforced by the tough Canadian Auto Workers union.

The purchase has left Bombardier's aerospace divisions with a family of jets and and turboprops aimed at the short-range commuter airline market, along with its original corporate jet business.

"Bombardier has also diversified into subcontracting, and that has been very profitable," Rider says. At its Montreal plant the firm makes parts of the fuselage for the Boeing 767, and it manufactures similar parts for the new Airbus 330 and 340 of Europe's Airbus Industrie. -PATHNAME- /usr/local/etc/httpd/plweb/DBGROUPS/paper/database/tape/92/sep/day30/30072.

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