Republic Air once again raises doubts about CSeries order, on eve of BBD’s 3Q earnings call

Republic Airways Holdings, a launch customer for the Bombardier CSeries with 40 orders and 40 options for the CS300–the order that prompted Airbus to proceed with the A320neo program, which itself forced Boeing into the 737 MAX–once again raised doubts about the future of its order.

In its 3Q2014 earnings call Oct. 29, on the eve of Bombardier’s own 3Q call on Oct. 30, Republic CEO Bryan Bedford said two carrier certificates would be needed for Republic to operate the CSeries. Republic is moving toward one certificate from multiple certificates to cut costs and simplify operations.

In a transcript of the earnings call prepared by Seeking Alpha, Bedford addressed the CSeries in response to an analyst question:

Michael Linenberg – Deutsche Bank

Good morning, everybody. Bryan, I want to go back to the comment that you made about getting to a single operating certificate by the end of 2016. Based on your agreements with your partners, would that single operating certificate allow you to put the CSeries on it?

Bryan Bedford

No.

Linenberg

Okay, so you would still, in order to take deliver the CSeries, you would still have to maintain two certificates, is that fair?

Bedford

That would be right.

The entire transcript may be found here. The discussion precedes the above segment.

Bedford’s comments come a mere 20 days after BBD took one of the CS100 Flight Test Vehicles to Republic’s HQ in Indianapolis (IN), where Bedford sang the praises of the CSeries in a BBD video (above).

Bedford has, in many respects, been as damning to Bombardier and the CSeries as has Qatar Airways’ CEO, Akbar Al-Baker, has been about the Airbus A320neo, the A380, the A350 and the Boeing 787.

Bombardier’s 3Q earnings call is today at 5am EDT. Bedford’s latest comments are sure to come up.

Republic ordered the airplanes when it owned Frontier Airlines, but when Frontier was sold, the orders did not go with the sale. We understand there is a large cancellation penalty in the Republic contract. Republic could work with BBD to resell the slots–and there are potential customers asking for them–but reselling the slots would not help BBD’s backlog. Still, if the slots are resold and the backlog is maintained, the changing Republic business model should mitigate any perceived black eye for BBD.

 

10 Comments on “Republic Air once again raises doubts about CSeries order, on eve of BBD’s 3Q earnings call

  1. If any airline P&CEO over at the other side of the pond ever was personal-directly briefed by TwinAisleFeeders about the merits of hard-discounted H19QR NEO (vs CS100) and H20QR NEO (vs CS300) for serving intra-US secondary feeder routes, that’s Bryan Bedford ! There are a number of very good reasons – exposed elsewhere – why the fate of the C Series order @ Republic is being chewed upon : suffice to ask handling agents’ HSE and airport docker Unions.

  2. Frequent Traveller: Please help us understand! What makes the CSeries objectionable to those groups? What is unique to this airplane?

    • @curious : C Series is unique in the double sense of Programme Timing and segment pretentions. Bombardier comes to the feeder market in 2015 with the first feeder clean sheet newbuild since 1987 (A320, 28 years before) but conceives the type without CLS, a fundamental error, cause of obsolescence “in the egg” ! The result is an immediate segment discrimination : too small as a feeder, whilst at the same time somewhat outsized/heavy as a Regional Jet, isolating itself like the Ugly Duckling, in pain to precisely define its kin.

      • Your comment appears to carry a very interesting point with it, but as it stands I find it very difficult to comprehend in detail. Could you perhaps explain a bit differently why you think the Bombardier CSeries will be too big for the regional jet/feeder airliner space and too small for the mainline small single-aisle airliner space?

        • If “selling one’s production” equates to “success”, C Series will prove a successful project.

          However not so much due to any Trip Cost paradigm but simply because in the RJ segment, Embraer can’t win them all, whilst for MAX/NEO, better sales margins are netted by B or A as aircraft size increases. Yet, airline Planners very well know type Trip Cost to be non-linearly segment-dependent : for e.g. A319 or A320 whenever applied to thinner routes, Trip Cost drops drastically whereas Trip Revenue remains unconstrained, open to premiums, ancillaries, pay-freight etc these two effects combining into Yield increments vs smaller modules. Ownership costs and Fleet Commonality are additional decision levers …

  3. Embraer took the E2 platform to 136′, which matches up in length with a 720, 707-138, and almost a 737-9. At that length, the CS500 is a nice 150 seat single or two class aircraft. Maybe some new split wingtips for added savings.

  4. Please! Please! I really want this airplane to succeed! I think it will be an awesome aircraft and I really, really hope I can get on one someday. It is my most anticipated aircraft.

  5. As evidenced by the popularity of the A321, and the 737MAX200, the most efficient and in demand aircraft will be at 200 seats. What is the optimal wing for this? A 40m to 45m CFRP wing is really the only next option for both Boeing and Airbus. Bombardier mostly has the market to itself as the prime offering in the 36m wing 150 seat size. How big a piece of the pie is there between the 100 seat MRJ/E190 and the 200 seat A/B offerings of today and the future?

  6. There still looks to be a large segment that needs the regional jets and the same logic should apply, i.e. if 200 seats beats 180 on economics (not a believer but…) then 130 beats 90.

    I am not a CPA but it seems trip costs should be the driver.

    I would like to see this succeed, but the market decides though I detest the artificial slew by Airbus in particular to kill it.

    Airbus and Boeing benefit if you generate more small market flights into larger cities that then carry it on in bigger aircraft supplied by those two.

    It no like Bombardier is going to challenge them in their true market, now or in the future.

  7. The whole solution to this Republic issue seems pretty obvious. They have made some pretty large RJ purchases. They probably could have use these purchases to buy CRJs in return for getting BBD to let them out of the Cseries purchase. But they have even kicked the Q400 out of their fleet. This means one of two things. They expect BBD to be so late with delivery, they can get out of the contract for free. Alternatively, they have a deal with United for them to take the CS300s to replace the 55 aging A319s in the fleet. Indeed by the time CS300 is being produced at a good rate the oldest A319 will be 20 years old… seems obvious to me.

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