Odds and Ends: BBD sale; MC-21 forecast; “A322”

Bombardier Sale: Financially pressed Bombardier sold its military training unit to Canadian supplier CAE for C$19.8m. It’s not a big cash infusion into BBD, but at this point every little bit helps.

Last week, before today’s CAE announcement, UBS issued an update on its BBD coverage, in which it wrote in part:

We continue to see BBD’s equity as over-valued, even after sell-off, given significant off-balance-sheet liabilities on top of also significant on-balance-sheet debt, pension deficit, and supplier/government advances. In all, we estimate BBD’s net debt to be greater than 8x EBITDA, problematic given our forecast for another three years of free cash outflows and big upcoming debt maturity in 2016.

MC-21 forecast: Irkut thinks it will sell 1,000 MC-21s over 20 years, according to this article.

“A322” seen by pilot: A US Airways pilot sees Airbus building an “A322,” a true Boeing 757 replacement and long-range airplane, according to his special contribution to Aviation Week. A small stretch and a new wing, with other improvements, would truly give a long range, single aisle airplane with even more capability than the 757, he writes.

 

31 Comments on “Odds and Ends: BBD sale; MC-21 forecast; “A322”

  1. NFTC was never a big money maker for BBD and did not fit in with any of its other units so I do not see this as a big issue. Funny UBS would be so negative when they were so positive just a couple months ago. BBD is still making a profit and only adjusted guidance down 1%. Still over $50 B in the backlog and delivered 101 aircraft last year. The CS300 FTV 7 is up and running and most of the capital outlays for the new factory have already been expensed. In any event it is just a matter of waiting and seeing if they can deliver the first CS100 for EIS this year.

    Here is some info on the NATO Flight Training program:

    NATO Flight Training in Canada (NFTC) is a military flight training program for NATO and allied air forces provided by the Canadian Forces.

    Located at 15 Wing, CFB Moose Jaw in Moose Jaw, Saskatchewan and 4 Wing, CFB Cold Lake, Alberta, the program is delivered as a cooperative operation between a civilian contractor, Bombardier Aerospace Military Aviation Training (Bombardier MAT), and the Royal Canadian Air Force (RCAF).

    Two types of aircraft are flown at NFTC: the CT-156 Harvard II and the CT-155 Hawk. NFTC training consists of Phases II, III, and IV. Phase II is subdivided into IIA and IIB.

    All pilots in the NFTC program undertake Phase IIA (Basic Pilot Training), which consists of 95.1 flying hours on the CT-156 Harvard II. After Phase IIA, students are split into 3 streams: fast-jet trainees (future instructors and/or fighter pilots); multi-engine trainees; and helicopter trainees.

    Those moving on to Phase III training on the Helicopter and Multi-Engine tracks go to Portage La Prairie (Southport) Manitoba for those courses. Those selected for the Fast Jet track complete Phase IIB (another 45 flying hours on the Harvard II). Fast-jet candidates then move on to Phase III in Moose Jaw (69.8 flying hours). At the completion of Phase III, pilots are awarded their Pilot’s Wings (Canadian Forces Flying Badge).

    Future fighter pilots move on to Phase IV, still on the Hawk, but now at 4 Wing Cold Lake. Phase IV consists of 48.9 flying hours. Successful graduates of Phase IV are then trained on the CF-18 Hornet (CF-188) at Cold Lake.

    Division of responsibilities between DND (RCAF), Bombardier MAT, and participating Air Forces is as follows:

    RCAF: All in-aircraft flying instruction is given by military pilots from the Canadian Forces. DND oversees training standards, provides Canadian military trainees, provides airspace, and dictates the syllabus.

    Bombardier: The NFTC aircraft are owned and maintained by Bombardier. Academic and simulator instruction is given by Bombardier employees (who must have had previous military flying instruction experience). Bombardier also operates infrastructure (buildings) and provides food services.

    Other participating Air Forces: International program management, foreign military flight instructors, foreign military students, quality control.

  2. The pilot’s comments are interesting and kind of explain why Boeing has not been overly phased by the A321LR and the claims of Airbus market penetration. The A320 is in the sweet spot of single isle a/c, but (just as the 737) when you moved up or down the sweet spot did not move efficiently. The A319 is too heavy, the A318 is way too heavy, and the A321 did not have the legs to perform many missions in its initial design. Over the years performance has improved, but say it can do all the 757 can and does do is asking a bit much. Simply putting a different engine and more fuel tanks will not remove all of the constraints of the initial design. They can compensate for some deficiencies, but a good head wind still impacts the performance of the A321LR. Thanks Captain for making the point so clearly. Sometimes people who design the initial frame do such a good job that the replacement has a very tough road to overcome. The A330 comes to mind, sadly the 757 comes to mind, the 777-300ER comes to mind, and the 737/A320 come to mind as well. All are frames that the competition (or internal shops) have done all they can to get very small improvement gains, but finding them has not been as simple as the commenters on here say it is to do. Clean sheet have not done it to the levels that a real +20% performance improvement is eve close to achievable. We’ll see what the real sales numbers are for the A321LR.

    • Hi,

      The way I see it is that he is asking for MORE than a 757, it actually states that:

      “The European airframer just announced an A321LR that Aviation Week called “a Boeing 757 replacement.” Its advertised range of 4,000 nm is indeed in 757 territory.”

  3. “A small stretch and a new wing, with other improvements, would truly give a long range, single aisle airplane ”

    A brilliant idea!

  4. The comments by the pilot are funny. No consideration of weight or cost, he simply looks at performance. A typical pilot’s view. The gap between the largest single aisle and the smallest widebody is no random occurrence. It is caused by a wide capacity region in which any larger aircraft than an A321 is disadvantaged in cost per seat.

    • Schorsch, from an airline network perspective, there no natural capacity region above the A321 in terms of capacity and range. Aircraft like the 757, 767, A300 and A310 have operated succesfully there for decades. There’s just no replacement in the market at this point in time. Not because of the market. Because OEM’s can’t cover the complete market within a certain timeframe and have to prioritize.

      • Perhaps Bomardier should have tried for this market, single aisle 200- 240 seats instead of around the 100-125 seats which has quite a bit of competition. The 757 did quite well with 1000 sales there

      • Airlines would prefer a complete range from 100 to 1000 seats. However, due to aircraft design constraints some capacities are tougher to realize than others. Depending on the actual cabin standards, 185 seats may:
        – be covered by a wide body (see B767-200)
        – by a large single aisle (B757-200 in classic US layout)
        – by a B737-800 in dense Eco
        In fact, the “sweet spot” for 3000nm range aircraft lies somewhere in the 160-220 seat region. If aircraft get larger in capacity, they become undesirable in terms of turnaround (boarding) or weight (when transitioning towards a twin aisle). Small twin aisles suck as they waste precious floor area and provide useless body volume. The next “good” region starts when you can have genuine 8-abreast and full LD3-capability (A330, B787). In-between is no man’s land. Or to be more precise: this region would result in an aircraft which is inferior in economics compared to single aisles but lacks the productivity of the larger widebodies. A classical niche aircraft, and airlines would be sort of unwilling to order as they don’t know how to use it (compare C-Series, great aircraft but no 1-on-1 replacement for any type).
        With recently reported cash shortfalls up to 2020 neither Airbus or Boeing would fire their precious powder into a niche, a modest 321-stretch with technical upgrades is the most possible variant. Boeing simply lacks the money (having MAX, T7X and 25bln deferred B787 cost to recover).

        • I think this is all spot on. What surprises me is that we don’t see TA combis addressing the mid 200s gap. Beyond that, and on a separate topic, I realise there is a cost involved in developing the variant, but I would guess that an A380 combi would offer Airbus a way to ween airlines up from 773s etc and also rebalance the pax/freight balance of the airframe.

          • Because Combis are dead and would only work on a few routes.

          • Certainly 330 combis would work only on some routes, but if that number is sufficient….

            Also, why are they dead? I recall something about US regulations re fire safety. Is that the reason?

        • Which is why Boeing has taken SO long to come up with a 757 replacement. 1000 sales for that program were very tough to achieve. When the program as blowing and going the A321 had NO sales, but then the 57 saturated the market and it had NO sales. When the first ones reached 20 years the A321 began to have traction. Prior to the end of the line Boeing had two options for replacement (improve the 767-200 or do something through the 737 line). They killed the 767-200 and did two attempts with the 737-900, neither of which has been effective. Airbus knew the A321 was not going to do it but they worked the frame, with a host of upgrades and made it a far more effective alternative than the 737-900. I remember when the old UA had a single A321 in their fleet in the late 1990s to early 2000. Think it lasted less than a year and no others followed. Anyone know why its tenure was so short? An aside Mr. Wolf, had such a love affair with Airbus that carried over to two airlines. John should thank Mr. Wolf for his willingness to give that upstart from France a shot.

          • In relation to the basic A320 the A321 never sold badly. Though for a while the A319 sold in equal numbers to the A320 ( and thus better than the A321)

            Over time you see the basic Airbus improvement process. Do detail improvements, MTOW raises on the family and leverage efficiency gains in engine tech.
            The product scope grows significantly.
            Note that 757 and A321 did not initially compete closely.
            Boeing seems to revamp their models intensely in leaps and bounds. They have to add the grows in a different way from Airbus.

  5. CFRP wing for the A320 seems like the next logical step, if it works out for the 777x.

    How much did Embraer invest in updating the wings to the E2 series? Maybe that route is an option for the A320.

  6. Option yes, do, hard telling

    It partly depends on what is in the both mfgs pipeline (if anything)

    the pilot is right, but also the play off of pax numbers vs revenue and cost of the aircraft playing into it. The dance continues

    • Bob the Pilot thinks in scope of things he has not in scope of what an Airline could really use.
      That kind of thinking will IMHO not progress beyond a better 757.

  7. This type of aircraft (between 220 and 330 seats single class, with 3000-5000nm range) would be the ideal C929 candidate, a widebody type for the Chinese.
    Why?
    – no direct competitor
    – strong demand in home market
    – easier to achieve than an A350/B787 competitor
    I bet some of my recently weakened Euros that they will launch such aircraft when C919 had its first flight.

  8. “In-between is no man’s land.”

    I think there will be an inbetween, because there is a huge market and a 787/A330 weigh/costs twice as much as a A321s.

    http://www.pprune.org/tech-log/303170-real-a300-310-757-767-replacement-aircraft-idea-2.html
    2007

    From what I’ve seen in different studies a narrow 2-3-2 fuselage with LD3-45 container capability is the most likely road ahead. Because it offers efficient 2-2-2 or 1-2-1 premium options too. It will be right in the middle of the 757, 767, A300, A310 segment where many larger 787s and A330 are now operated.

    It will probably end the 787-8 and A330-200s use on medium range destinations. Ranges up 5000NM enable operators to cover ASIA, EMEA, Atlantic and Americas at much lower costs then widebodies where narrowbodies do not offer the required capacity & range.

    I wonder who’ll jump first Airbus or Boeing. I think Boeing cannot ignore the position the MAX has against the NEO. The MAX won’t hold on for the next 15 years. Hence the dual approach they communicated, a smaller and bigger aircraft using the same systems/ architecture.

    • An A321LR could do a 4000nm trip with 200 people at lower cost than any semi-widebody. Especially when I update the A321 wing and give it more area.
      If one looks at aircraft demand from the pure range-payload view and O&D flow of passengers, one gets confused. Who would have predicted 15 years ago that most A380 fly in and out of Dubai, a city which neither has many inhabitants nor offers anything worthwhile to visit?

      A 240-seat semi-widebody is too small to compete with a 300-seat widebody. Even if the latter is over-engineered for a 4500nm trip, that extra range usually doesn’t hurt. The airline that offers a daily 240-seat flight is busted by the airline that offers a three-weekly 350-seat connection, because the latter can offer better CASM. Most airlines operating on thin routes would rather cut an arm of than throwing too much capacity into a market which is strong on Mondays and non-existent on Tuesdays. That is – in essence – the core of the A380 problem. Hub-centric networks that combine many markets equal out such effects (see Emirates).

      • You mean that all that sand and blazing hot beaches is not attractive?

        Drats

  9. “An A321LR could do a 4000nm trip with 200 people at lower cost than any semi-widebody. ”

    We are talking 4000NM year round 200-240 passenger two class (Sleepers & 32 inch), 5 lavs, full catering & a usefull cargo capability to assist the route profitability. The A321LR ain’t that aircraft.

    “The airline that offers a daily 240-seat flight is busted by the airline that offers a three-weekly 350-seat connection, because the latter can offer better CASM. ”

    Daily is the holy grail because it means business traffic / yields that easily wipe away the CASM disadvantage.

    • Sometimes, less is more.
      The B757 on TATL routes is a marginal business. Because it is paid of and cannot be used for anything else, it is used for such missions. I concur that such an aircraft with 20% more range-payload than an A321LR is useful, but I doubt that airlines can be convinced. Most established airlines are rather shy of new business models, and why would European flag carriers risk their hubs?

  10. To me, the A321 is more successful than the 757 and 737-900/ER combined. This year, it’ll most likely surpass the 757 in deliveries and, in few more years, it will deliver as many as both Boeing airplanes (not counting the A321neo and 737-9MAX).

    So, why the worry about trying to find a 757 replacement if Airbus already have the numbers on its side? It seems that this niche is just a bonus to A.

  11. It all still comes down to economics not talk

    If people are willing to pay enough to hire the plane, pilot etc and a profit, then its viable.

    If they aren’t it isn’t.

    Seems to be a pretty iffy area so you need to expand it (small twin) but then the airframe cost goes up a lot (and fuel burn penalty)

    If someone hits a sweet spot and it takes off then the fun begins.

    Will see but the reality is that the 757 market has been picked off a lot so you have to created (or find) one above that and below existing and that’s iffy.

    Of as Airbus has done, use existing and expand its capabilities to where a low cost airframe can compete and no competition. Competition and it does not work as you them split it to one degree or another.

  12. Airbus has a patent aimed at folding wing tips for small aircraft. That would be the next logical step to expand range for A321/2. Future ngine development will also expand range.

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