First production CSeries reveal March 7; BBD sees Russia as ripe market

Bombardier earnings call today:

CSeries: Bombardier will reveal its first production aircraft March 7, the company said on its earnings call today. First year production will be 20-30 aircraft, and up to 120 a year by 3 1/2 years. BBD is still holding to its first flight target by the end of June, EIS of the CS 100 a year later and EIS of the CS300 by the end of 2014. Pratt & Whitney, BBD and Transport Canada announced certification of the GTF 1500G this week. This is the engine that will power the CSeries.

Russia a ripe market: BBD sees Russia as a ripe market for the Q400, CRJ and CSeries. (And for rail, but we don’t cover rail.) Ilyushin Finance yesterday announced it signed a firm order for 32 CSeries and optioned 10 more. This compares with 10+10 announced in an MOU at the Farnborough Air Show last year. On the earnings call, BBD said the Q400 already is operating in Russia and has proved to be a good cold-weather airplane there. CRJ-200s, which have fallen out of favor in the USA, are being remarketed in Russia with success.

American/US Airways, SkyWest and United targets: These three airlines are major targets for RJ sales campaigns this year.

Program Accounting: “Boeing averages the costs over 10 years. We don’t do that. We take the real price and the real cost.”

Unrelated:

Politico has an article on the impact of Sequestration on the air travel industry: long lines at security, delays on the tarmac.

Boeing hopes for March or April return for 787; we think this is challenging

Update: Aviation Week’s Guy Norris has this detailed article in which the third week of March is identified as a target date for the 787 to re-enter service.

Original Post:

Boeing hopes to return the grounded 787 to the skies in March, according to  customer briefings, or April, according to news reports, following a planned briefing to the Federal Aviation Administration tomorrow.

See The Wall Street Journal (subscription required) and The Seattle Times for details of the FAA briefing and Boeing’s planned program for a permanent fix. These articles suggest an April return to revenue service. The New York Times has this report. Reuters has this report.

A customer we talked with who has been briefed by Boeing said the target date is next month, which squares with another customer briefing we previously reported.

Either date sounds aggressive. The FAA has to review the proposals and satisfy itself that the approaches proposed by Boeing are safe to precede a redesign of the battery. Having been proved wrong once before, we think the FAA isn’t going to rush to judgment this time and (in any event) being the government, nothing moves quickly.

Then there is Sequestration, due to take effect March 1. The FAA’s track record on approving changes proposed by supply chains on unrelated matters that require Supplemental Type Certificates is already excruciatingly slow. Layoffs following Sequestration are expected to hit the FAA’s research and development and will this affect Boeing?

Also an unknown is the investigation into the 787 JAL fire by the National Transportation Safety Board. The NTSB’s preliminary findings are expected in the first half of March. Will the FAA want to wait for this before moving? Furthermore, the NTSB has already criticized the FAA certification of the battery and related systems in its press briefings and is examining the certification process as part of its investigation. The tension between the FAA and NTSB is long-standing. Will the FAA take more time because it’s one of the targets of the investigation?

Having initially declaring the 787 safe, only to ground the aircraft within days, Transportation Secretary Ray LaHood said the plane won’t be returned to service until the FAA (which is part of Transportation) is “1,000%” sure the airplane is safe. It’s a ridiculous statement, but has LaHood painted the FAA into a corner that will delay a decision about Boeing’s proposals?

Finally, having issued Special Conditions in approving the battery in the first place, will the FAA want more Special Conditions for the fix and the battery redesign?

Any and all of this will take time. There certainly is a recognition on the part of the FAA about the economic impact to the airlines from the grounding.

We don’t think this will move quickly. March-we don’t think so. April-maybe, but challenging.