Bombardier sees solid future for CRJ

March 20, 2015: C. Leeham Co. Bombardier’s current challenges don’t end with the CSeries. The company has seen its once-dominate positions in the regional jet and turbo prop markets decline precipitously.

Ross Mitchell Fleigerfaust 2

Ross Mitchell, VP of Business Acquisition and Commercial Airplanes, Bombardier. Photo: Fleigerfaust.

The CRJ struggles in its sales against the Embraer E-Jet. The Q400’s market share of the turbo prop sector has declined to a mere 10% of the backlog vs ATR.

Still, Ross Mitchell, vice president of Business Acquisition and Commercial Aircraft for Bombardier, gave a spirited defense and upbeat outlook of both products during last week’s ISTAT conference in Phoenix. In a one-on-one interview the next day, we posed a series of questions about the CRJ and the Q400. We reported on the Q400 yesterday. Today’s report is about the CRJ.

CRJ’s future

Mitchell said the CRJ has a lower unit cost than the rival Embraer E-175 and E190, the direct competitors to the CRJ-700/900 used most in the USA, where labor Scope Clauses limit the size and number of airplanes that may be operated by the regional airlines on behalf of the legacy carriers.

Embraer’s chief commercial officer, John Slattery told the annual ISTAT conference last week that his E-Jets are now dominating the North American market (Canada, USA, Mexico), where sales now have captured an 86% market share of the seats.

Mitchell, in our one-on-one interview the next day, figuratively waved off Slattery’s claim.

“I haven’t had a chance to verify it, but I think [the claim] was a very short sample size, from January 2013 or mid year on,” he said. “The important thing to remember about the CRJ is this: the CRJ provides you the lowest unit costs, period. I think there is always a message that Embraer seems to not want to talk about, which is Scope Clauses. Today the Embraer 175 fits in Scope Clauses. The Embraer 175 E2 does not. It’s too heavy. Our airplanes, in fact our CRJ 1000, is lighter than the Embraer 175 E2. Their 88 seat airplane is heavier, much heavier, than our 100-seat airplane.

“That’s an issue. We don’t know exactly how Scope Clauses are going to change, but what we do know about the CRJ is that all three of the family members fit inside the weight aspect of the Scope Clause.”

The Scope Clauses also restrict the number of seats in a regional airplane. “To the extent [the Scope Clause] moves in terms of seats, we can benefit.”

Mitchell dismissed Slattery’s market share statistic. “He’s looking at a short sample size and over a short sample size, there’s a lot of variability. You get one large order and now you have a much larger percentage in terms of market share. I think you need to look at a much larger picture. I think you need to ask about the future. We have the 700, the 900 and the 1000. We’re competing against one airplane, the 175. The 190 is a competitor for the CS100. It is not a competitor for the CRJ. It will not fit in Scope Clauses.”

Mitchell also prefers to look at global sales figures rather than just North America. “We know from our customers in the rest of the world, they quite like the 1000. If you ask Air Nostrum, they will tell you the 1000 has been vital to their turnaround. They can offer seats in the market at a cost that is very similar to a large airplane.”

Data June 14, 2014 and Sept. 28, 2014.

Indeed, when we last compared backlogs of the CRJ and the E-Jet, as well as the E-Jet E2, the Sukhoi SSJ100 and the MRJ90, the CRJ stacked up surprisingly well given the image Bombardier has of an outdated airplane vs the E-Jet.

“What we need to be doing is getting the right messages out about the CRJ,” Mitchell said. “I think the orders will come on the CRJ. I don’t have any hesitation about that. Ultimately, the one thing you have to do in the airline business is control costs. The CRJ-1000 has the lowest seat costs. It’s lower than the E-175 E2, if they live up to their promises, and it’s lower than the E-195 E2 will be.”

32 Comments on “Bombardier sees solid future for CRJ

  1. When Embraer introduced their(revamped tail engine d to conventional wing-mounted) E-Jets looks and flies like a real plane to Passengers,Pilots,Flight Crews and Carriers,Maintenance crews,etc.

    CRJ/ATR versions now looks outdated, like something one would now see as a down on your luck STARTER private-jet/ Prop-Jet.

    Don’t take a brain-surgeon to figure-out why Worldwide………….everyone wants the E-Jets in-place of the awkward ATR or Bombarier “world war II looking” PBY wing-over or DC9 fuselage.

    Even with Mitsubishi in the Narrow Regional Jet market (pleasing to anyone); CRJ…..with their Rubber-band looking power-plants strapped to the back of the plane leave little confidence to the World’s Carriers.

    • @ D McNamara

      Airlines don’t worry so much for appearance as for the bottom line. Furthermore, unless it is an A380, passengers don’t care for which aircraft they are flying; they’ll invariably just pick the flight that leaves/arrives at the most convenient time and the most convenient place.

      Economics sell aircraft – which leaves you wondering just what Bombardier’s marketing department have been at over the past few years:

      1. The Q400 ~matches ATR72 fuel burn at the same speed – who’d have known given the order disparity? If its true, you’d like to think anyone and everyone involved in Q400 sales over the last 5 years has been removed.
      2. Why oh why was the CS100 prioritised over the CS300? If BA executives really think that the 300 will be turned around in 12 months – they need to get their head out of the asses, dismiss their inept program managers and get down to the engineering offices and ask the engineers designing/analysing the thing.
      3.Have they even gauged market opinion for a re-engined CRJ900?

    • It is silly to call them outdated looking, they look like the most luxurious private jets out there because those are based on them. The E jets look like just any other old plane. Nothing wrong with the CRJs if you use them where they are meant to be used, on segments under 2.5 hrs.

    • I don’t understand your post, but it made me laugh.

      Almost as much as Leahy’s “747 is the zombie of the skies” comment.

  2. There is no doubt Embraer had a fine design in the first generation of Ejet but the E2 will be much heavier. Its all about economics, Bombardier should emphasize the lower fuel consumption of its current CRJ and lower cost acquisition. Looks are not that important when competition is fierce. The E175E2

    • Sorry about the last incomplete sentence. It looks like the only model that seems to gain traction for Embraer is the E175E2, the other two have lower sales number, is Embraer stuck between Crj,Mrj and the upper 130 seats? Embraer a one trick pony.

      • I Guarantee you………..Embraer is gonna turn Boeing and Airbus’ Suits upside-down………..A Convertible/Modular Single/Dual Isle Moderate-Size Wide Body akin to the 767 is on the way…. for high density short hops….or long Duration International Atlantic hops,etc.

        Brazil/South America is a power to be appreciated….decadents at Boeing and Airbus should be worried…………….20 years ago; French/Canadians thought they had the Regional Jet market all to their-selves…and laughed at Brazil.

        Who’s laughing now?

        • Yes and yet still Bombardier has managed to sell 1800 jets and going. How about the fact that Embraer doesn’t want an open battle with the big two. I think Bombardier will rebound and improve, what you’re saying is part of the past, yes Embraer raise the bar but Bombardier has raised it higher. This is the reason for all the changes in the last few years.

          • Brazil is a very large economy………and its prominence and Clout is still growing throughout the World…………they are not intimidated as they have been by the US or Europe a few decades ago.

            Even taking a small chunk of a wide-body Market is better than nothing………plus……..its Air Force (the overseer of Embraer) grows in Strength(Jobs/Political clout).

            US Air Force wanted their Trainer……….yet the powers that be at the Pentagon/Congress…….did a quick panacea………so the American Contractor with a inferior product was able to “land”the deal.

            Bombardier has to change its Management/Customer relations Ideology quickly for its Long-Term survival.

            In a Global Economy where all the players are active, weaker-ones are left-behind……….no one is safe; including previous monopolies such as Airbus/Boeing.

            Bombardier (EXTANT) has very few product offerings or set-in stone Leadership on the Horizon

        • You forget to mention the Embrear project is subsidized by the Military airlifter project. Embrear has done well, but I think BBD has been very conservative with key stats (typically canadian) while Embrear is optimistic, (typically Brazilian) when the real empty weight for Cseries is published, I think Embrear will see how competitive CS100 is against E190 and 195. CS300, will really end the A319 and 737-700.

          • I did mention that in a previous post. Bombardier,Boeing Airbus,makers of ATR, Comac,Mitsubishi Heavy Industries,Russians,etc. are all bankrolled in various degrees by their respective and sometimes Partnering Countries.

          • C-Series are a Different League of Planes……they are not Regional Jets as the E and CRJs are. The C Series will have to prove itself in actual Service. Aircraft manufactures (just like many other Industries) tend to stretch the truth many times. C Series are meant to compete against the 737/A320 variants.

        • “I Guarantee you………..Embraer is gonna turn Boeing and Airbus’ Suits upside-down”

          D McNamara :

          You got any skin in the game behind that guarantee or just hot humidity laden air? (pun on Brazilian jungle)

          If real skin, maybe Scott can hold the stakes?

          • I do believe the Authors of this Journal have already brought-up the subject of Embraer going for more. Naturally, that will happen when the Revamped E-Jets are Introduced and their (if any) hiccups and production glitches are resolved.

            That will be great for the World’s Carriers……….as Airbus/Boeing midsize wide-bodies “suggested retail” and common ACTUAL massive discount price-tag will go down.

            Even if the future Embraer Mid-Size Wide-Body is only minutely-moderately successful…it brings-up National Pride/Promotions to all the folks in Brazil.

            South America and it’s companion Countries (Abroad) will buy the plane………simply because it’s “theirs” and not a Airbus/Boeing product.

            If it’s reasonable-cheap enough(which it will be)…………many of the Asian upstarts and Asian Legacy carriers will buy it too………..a bargain is a bargain after all. UA,AA,Delta will follow and buy it too……….and even Air Canada will want it.

            P&W/ GE will be happy to, as it’s another entity to sell/unload more Turbo-Fans and Spares.

  3. The CSeries is rightly said to have a backlog comprising orders from a lot of dubious, if not virtual, airlines.

    But look at the above table. How many of the 380 aircraft in the SSJ-100 backlog will ultimately be built? The way things are going for Russia, even semi-captive Russian carriers will not have the passenger traffic to justify these planes, or the money to pay for them.

    Mitsubishi has 335 commitments for the MRJ-90 (a big part from US buyers), but even their lightest model, with artificially reduced range, is still 1300 lbs heavier (on paper…) than allowed by scope clauses.

    For the E175-E2, Embraer is clearly counting on the fact that scope clauses will be relaxed before this model’s EIS, as it is projected to be 11,700 lbs heavier than the current 86,000 lbs maximum:

    It is a valid gamble from Embraer’s part. But for a US or Canadian company ordering new regional aircraft in the next couple of years, it is an additionnal risk.

  4. I guess the commitments mentioned in the table are options. Then also the options for the EJets should be taken into consideration:
    E170 12
    E175 353
    E190 135

    If you then compare the current “heart of the market” you get:
    firm firm+options
    CRJ900 57 138
    E175 172 525
    (Data for Q4 2014)

    Of course not all options will be exercised, but that is probably true for both aircraft.
    The massive fuel burn benefit the CRJ900 once had is probably gone since Embraer introduced the new winglets and other aerodynamic ehancements. Bombardier has to do something more radical to the CRJ’s than just a liitle but here and there, but they are financially strained.

    • Confidence is building up for Bombardier and Embraer is playing catch up with the improvement made on the E175 current version, 6.5% fuel is good but still with a heavier plane.

    • DOD Contracts are troublesome to say the least. Boeing could easily assemble the 767 tankers………….However the folks at the Air Force are looking (Congressional Pork Installment) to get more gimmicks-gadgets not approved-aggreed-upon in the Original contract.

      It’s why Airbus was so furious when they lost the Tanker Contract…………because the Military has a way of Stonewalling products already approved and then getting Hundreds/Billions added-on down the Line.

      Cousin worked on the C-17 Program……same deal there……….Air Force purposely postponed build-acceptance to get the increased appropriations……….so their C-17 would/will have all the bells/whistles not originally contracted

      • If we believe the KC46 contract then its frozen on bells and whistles.

        I.e. no add ons which Boeing cannot recover anyway as all extra past the original 4.9 billion is on their dime.

        Ergo, its an execution failure from the specs Boeing agreed to and there is zero noise to the contrary.

        Boeing may not have read all the specs but they are fixed and the wiring layout appears to have been in there.

        • No,that is not the case according to my cousin…………DOD gets Congressional Approval (in the form of Pork-Bill addd-ons) and the public or press never makes anything of it.

          It’s a common practice/ploy the Military does……….secure approval-funding for what they want…….then go back for lots more. C5A, Joint Strike Fighter,F-18,B2 Bomber,Submarines etc. to name a few of how the game works.

          Air Force 787-s will be the same game………get initial approval funding and then get more $………and then only then authorize Boeing to assemble the planes.

          I remember, Cousin (2009) gave me a Insider tour of the C-17 Long Beach,Ca. factory………..they had flaps,floor beams,all other sorts of stuff………….shrink-wrapped on the Floor…………..for planes that were nowhere scheduled to be assembled any time soon(year-two years down the road maybe)………….as the Air Force and Foreign Governments……..were still in the process of getting more dough for Electronic goodies-gimmicks….add-ons

          They did not want their planes assembled then….and Boeing,Lockheed-Martin, Electric Boat Company,etc. (even Airbus/EADS) gets way more in the Scheme……………Tax Payer gets screwed.

  5. Boeing lobbyist will start blaming the bureaucrasy, flagwaving, bring in national interest, the unfair competition, create fear. And in the end the tax payer will pay about double what was orignally put in the contract. And there’s no way back. The tanker competition showed congress is more interested in local companies and jobs then in preserving public money. Claiming us much of it as possible works better for getting re-elected, getting seats in influential places. In case of doubt, check the F22, JSF, C-17, etc. stories.

  6. The CF34 powered aircraft like the CRJ, need to get new engines. The CRJ’s are inferior in cabin comfort and luggage capacity to the Embraers.

    I cannot even stand strait in a CRJ and I have the feeling luggage gets left behind more often, although I don’t have the statistics. But who will give them, not the airline oprators or Bombardier..

    • New Engine ? What type ? Passport ? GTF ? How to improve the confort with a few dollars ?

      • Of course they can decide on no new engines. I think if they had the money, they would. Now they can only deny and look brave.

      • Bernard thank you for this reference . At the end of the paper , the author asks: (CRJ) will it be able to compete (with the E2 without new engine) ? And then, the Passport engine weight versus the weight of the GTF , do you know the difference of the weight ? Technically, is it faisable to adapt the CRJ900 with the Passport engine ? Otherwise, can we believe that GE would have invested so much money in this engine only for Global 7000 and 8000?

        • Engines are closely tailored for the targeted flights the plane will fly.
          A CRJ doesnt do anything like the ultra long range of the Global series.
          While you could have essentially the same core you would need expensive development for the different fan size and number of stages to be optimised for short hops of a commuter jet.
          The CF34 is vastly different in its latest high thrust versions than earlier models.

  7. I look at the Ejets, CSeries, A320, or Delta’s choice for the A330 as similar to car buyers decision for SUVs or larger profile vehicles. There is a tipping point where trading better comfort for slightly less economy makes sense. Look at the size and height of vehicles on the road and one can guage where the population has chosen that point to be.

    • “Look at the size and height of vehicles on the road and one can guage where the population has chosen that point to be.”

      An airline buying an SUV would replace the 4 seats for 6 new ones, put 300kg payload in the back & drive them 14-16 hours a day for 25 years or 7.000.000 miles 😉

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