Leeham News and Analysis
There's more to real news than a news release.
There's more to real news than a news release.
Leeham News and Analysis
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- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
LionAir says CSeries order coming: Montreal Gazette
The Montreal Gazette reports that LionAir of Indonesia expects to place an order for the Bombardier CSeries next year.
Bloomberg has some additional detail.
LionAir already has hundreds of orders outstanding from Airbus and Boeing and is essentially attempting to replicate the business model of AirAsia, with subsidiaries in a number of countries.
Bombardier already has a substantial order from Korean Air. If we add a potential big order from Lion Air and a largely expected one from a Chinese operator, the CSeries should be well positioned in Asia, which is an extremely important market. BBD has always relied on the US market for its CRJ, but commercial aviation in United States is not as dynamic as it used to be and other alternatives must therefore be explored. But BBD has been slow to recognize this new reality.
Today’s announcement of a potential purchase of the CSeries by Lion Air almost sounds like a done deal. But nothing official will come out before the Farnborough Airshow in nine months from now. If ever this transaction is finalized it would represent a huge order for Bombardier. Possibly up to 100 aircraft. And on top of that the order would make Lion Air the launch customer for the CS300.
I wonder if this could mean that Bombardier has decided to lower the price tag. They may have come to terms with the fact that if Airbus and Boeing are cutting prices down they would eventually have to follow suit. On the other hand, if they have resisted the temptation up until now, they should stick with their original plan because the order book for both A & B is quite full right now.
Availability could indeed lure away some A & B customers in favour of the CSeries; at least until its own order book is filled. And that should not take very long because the production capabilities for the CSeries will remain relatively limited for the next few years. That consideration alone should make BBD think twice before lowering the prices too much and too fast. But when the production capability reaches 120 a year they may then have no other choice but to lower the prices in order to maintain a high production rate.
Flight Global says the order will be in double digits and not 100. Under Canadian law, Bombardier has to announce orders as they are signed so Lion Air may not wait until next June if they want the early production slots. I took this with a grain of salt at first due to the way Qatar teased rumors of orders in the press to gain concessions but this one seems a bit more serious than that. I will beleive it when they at least have a letter of intent. http://www.flightglobal.com/news/articles/lion-air-confirms-plan-to-place-cs300-order-in-months-391040/
In the Flightglobal article mentioned above by Trooper, Lion Air says “presently we operate 72-seat ATR 72s and 189-seat 737-800s and 215-seat 737-900ERs, so for us the CSeries fills a gap between the ATR 72 and the 737-800.”
This could signal their intention to acquire the Extra Capacity version of the CS300, which sits 160 passengers in slim seats. That particular variant would fit the Lion Air business model perfectly and could be hugely profitable for them.