April 13, 2015: A campaign that began last year between Airbus and Boeing for a large order of 100 airplanes at Europe’s Low Cost Carrier, Wizz Air, could be the first face off between the “A320neo 195” (our name) and the 737 MAX 200 (Boeing’s name).
Note I said “could be.” I know Boeing is offering the MAX 200. I know Airbus is offering the A320neo. What I don’t know is if Airbus is offering the A320 195.
We first discussed the A320neo 195 last week, after a tip off by Mary Kirby of Runway Girl Network.
Wizz Air, of Hungary, currently operates only A320s and A321s. The competition is for 100 aircraft of the re-engined generation. This is a hot contest, with Boeing looking not only to flip Wizz from the A320 to the 737 but also to get a second customer for the MAX 200. Ryanair was the launch customer for the airplane last year, but no new orders have been landed since. Boeing touts the MAX 200 as the perfect solution for LCCs.
The contest is hot enough that our Market Intelligence indicates the pricing is already comfortably below $40m.
Airbus hasn’t announced a marketing name for its high-density version of the 195-seat A320neo, which last month won regulatory approval of the 195-seat concept. This is at 27-inch seat pitch. The MAX 200, which Ryanair said it will configure for 197 seats, will have a mixture of 30-inch and 29-inch pitch. Airbus believes galley cart requirements means Ryanair will have to go to 194 seats.When we queried Airbus last two weeks ago about the A320-195, Airbus characterized this as the “theoretical” maximum seating, intended for LCCs. Wizz currently has 180 seats at 30-32 inch pitch in its A320s, according to Seatguru.com. Clearly the A320 195 has shorter seat pitch but Airbus claims “equivalent” comfort because of new seat designs.
Sticking with the A320 will simplify Wizz’s fleet and maintenance training, etc. But Boeing really wants this win.
Bombardier’s IFC order in jeopardy
Bombardier’s large order for the CSeries with Russian lessor Ilyushin Finance Corp may be in jeopardy, according to this article in Flight Global. Flight quotes ILC pointing to repeated delays, the sanctions by Canada over the Russian activity in Ukraine and forced annexation of Crimea. We had this order on our watch list since last year because of the geopolitical situation. I doubt whether the CSeries delays are much more than an excuse.
IFC says, according to Flight, it will decide what to do at the Paris Air Show.
Bombardier and air shows just don’t get along well. It’s not had luck in announcing orders. Seeing a large order cancelled at PAS is not what BBD needs (which is why IFC may be tying its decision to PAS). BBD plans to have FTV 5 (CS100 in full airliner cabin configuration) and FTV 7 (CS300) at the show.
Mitsubishi delays first flight again
Mitsubishi for the fourth time delayed the first flight of its MRJ90, which was supposed to take to the air in the second quarter, to sometime toward the end of the year, according to this story. Mitsubishi plans to flight-test the MRJ90 in Moses Lake (WA), in the central part of the state. Airspace is plentiful (unlike Japan) and you don’t have China claiming the airspace, as it does over nearby waters. (At least not yet.) Here’s a story about the MRJ90.
Boeing KC-46A: GAO report raises questions
The Seattle Times reports that the Government Accounting Office, the watch-dog of US government programs, is raising concerns about the Boeing KC-46A program, its testing, its costs and whether the USAF will green light full production.
Boeing pooh-poohs the concerns, but Boeing has a history of denying problems right up until the point it no longer can.
Several things in The Times story caught our eye. The cost overrun Boeing acknowledges vs what the GAO predicts is only $1bn different. The first KC-46A had only performed one test flight at the time the GAO wrote its report (it flew in December). There are now only about three months of flight testing available before the USAF makes its decision to proceed with production.
Unless Boeing pulls the proverbial rabbit out of the hat, this is beginning to look like another program development debacle, after the 787 and 747-8. Let’s not forget
the KC-767 International tanker program debacle for Japan and Italy–only eight of these airplanes were built. This is mind-boggling. Boeing claimed lessons learned from the KC-767 program and adopted the P-8A development model, which actually went pretty well. I’m reminded of the old Casey Stengel lament about the expansion baseball team, the New York Mets. Stengel, the legendary manager of the New York Yankees, was the manager of the Mets, which initially had a bunch of stumblebum-players and the worst record in baseball. Stengel, in a moment of frustration, asked, “Can’t anybody here play this game?”
Having muffed the 787, 747-8 and now, apparently, the KC-46A, it does make you wonder if the 737 MAX and 777X will follow suit.
“Having muffed the 787, 747-8 and now, apparently, the KC-46A, it does make you wonder if the 737 MAX and 777X will follow suit.”
Yes, because their Muffidness was not due to specific, unforeseen and unforeseeable problems but rather willful “Put my fingers in my ears and yell LALALALALA” behavior by management.
and their reaction to the GAO report does not help me think anything was improved.
I’m reminded of the challenger O-ring problem and management-engineer disconnect.
“For a successful technology,” he concluded, “reality must take precedence over public relations, for nature cannot be fooled.”[
Thank you for your pontifications, as always.
A curious comment appears in Aspire’s current story on Malaysian Airlines, “The new carrier is scheduled to commence operations in October this year with a fleet of Canadian-made Bombadier CS100 aircraft.” This is dated April 1oth and “the new carrier” being referred to is FlyMojo. Could they be the launch customer?
Lastly, a minor comment regarding the Bombardier table. There is a typo in Porter, which appears as Potter.
Please note that Wizz has 100+ Airbus on order with only 53 320 in operation. If I am not mistaken they made a flexible 100 plane order around 2004. They are quite moderate in fleet growth.
Even though they call themselves a low cost, their cabins are quite high standard, even more comfortable than most legacies. Therefore, I am not sure if they will now spoil their reputation by the tightest seats in the market.
All other factors being equal, 30-inch or 29-inch pitch for 194 passengers (737 Max 200) is definitely better than 27-inch pitch for 195 passengers (A320neo 195).
CS 100, on EIS, around October 2015 … is simply out of the reality !
If boeing can give an attractive price they can win the order.
“The contest is hot enough that our Market Intelligence indicates the pricing is already comfortably below $40m.”
So, a discount of more than 50%. This will put a lot of pressure on Bombardier with the Cseries, particularly if the manufacturer want to sell the CS100/CS300 at a lower price than Airbus and Boeing.
With a development cost of 5.4 billions (plus a few hundred millions for delays penalty and “deferred production” (terminology not directly applicable to BBD), the CSeries need to be sold to more than 1000 air-frame before to break-even. This mean a profit by air-frame of about 6 millions for a selling price of 30/35 millions for the CS100/CS300 which already represents a huge profit margin of 20%. With a more realistic profit margin, the CSeries need to be sold to more than 1500-2000 air-frames before to break-even. This is probably the total number of air-frame that the CSeries will be sold for its entire life.
I am beginning to feel sorry for BBD, We have a product which is ostensibly of a quality that should gain wide acceptance in the market but there is almost a total lack of headway. It just shows the sporty game at its best/ worst. I am guessing that A and B are so concerned about the future risks that BBD poses that they will do almost anything to preserve the status quo. I am surprised that airlines do not see the massive merits of having a 3rd credible airframer in the SA market to provide competition. Good luck BBD, you deserve it in my opinion
The ugly truth is that the CSeries will probably not cost much less than the A320neo and B-737 to manufacture. It has more expensive, state-of-the art, components (eg: wings) and materials (Al-Li), a fuselage diameter designed for comfort not economy, and lower economies of scale (lower productio rate).
The consequence is that Bombardier can’t afford a pricing war with A & B.
Bombardier will have to convince carriers that the CSeries is worth paying a relative premium for. With proper marketing, it’s not impossible, as can be seen by the growing sales, for example, of premium German sedans. There are a lot of people out there buying Mercedes-Benz, BMWs and Audis, instead of the “equivalent” Accords and Camrys.
Not everybody is buying the cheapest thing all of the time. Despite lower discounts, the CSeries could still be the most economical choice in the right circumstances.
I share the same point of veiw. I pointed several times the low production rate of the Cseries, the learning curve factor at the fact that the CSeries is more modern an expansive than the A320/B737.
I will not be surprised to learn that the CSeries is in fact more expansive than the A320/B737,
With your point in mind, I wonder whether BBD should have spent the money on developing the aircraft centred squarely on A320/737-8 territory.
I know it’s a crowded space, more so with the C919 and the MS21 entering it as well, but would they have done better in sales than they are doing with current design?
I have often asked myself the same question and I still ask myself from time to time if Bombardier had been better to come out with a CS300/500 combination instead of its initial CS100/300 offering. I can’t blame them for being a bit timid at the time though. I wonder how BBD itself view this strategy today.
My own opinion on this is that the CS100 was as unnecessary as the Learjet 85, and no less risky. The question is how much more would have cost a CS300/500 development versus the current CS100/300? And would A&B have reacted differently? Like pushing Boeing towards an early NSA for instance. Or putting Leahy further into a ‘take no prisoner’ mindset.
On the other hand, the CS100 could be viewed as a product designed to one-up the E190/195 in the 100-110 seat segment. There is no comparable CRJ offering in that size range.
Bombardier was probably not willing to leave Embraer without competition in the 100-110 seat segment.
The next logical step up is the CS300. Bombardier seems to be assuming the CRJ-700 and 900 are still competitive enough.
Thus, Bombardier appears to be trying to occupy all possible capacities from the CRJ-700 to the CS300.
An eventual CS500 would stretch this all the way to the smaller models of the A320 and B-737.
You have a valid point Bernard. I guess in the end it will have been better that way. A premature direct assault on A&B’s turf would not have gone well with the Big Two. It’s probably better for BBD to make progressive moves rather than agressive moves. And they are quite good at that game as they slowly went from the Challenger to the CRJ100/200 to the CRJ700 to the CRJ900 and finally to the CRJ1000.
It will be interesting to see how the CS500 fares in the marketplace when it will be proposed, as we all expect it to be. Of course the question is when; but also how will it position itself in relation to the A320neo and 737 MAX 8. How about another four rows of seats to make it into a 155 seater (one class-standard configuration)? This way the Big Two could still brag that they offer more seats and try also to convince their customers that they offer better seat-miles. And their customers will have to agree with them. For anyone can admit just about anything under torture, right? 😉
I think the CSERIES will have good market acceptance as the product are specifically designed for 100-150 passengers. CS100 replacing 737-500, CS300 replacing 737-300/700, 319, MD80. Bombardier believe that the 5-abreast is the most economical and provide the best ergonomic advantage for the cabin crew in that market. However, the CSERIES are perceived as big risks for the buyers, because of some new technologies are still un-tested commercially. After Boeing killed the MD80 productions, currently the only 5-abreast product available is SSJ100 (from non-western country). The CSERIES will provide complete choices for single-aisle market provided by western manufacturers, having 4-abreast (EJet, MRJ and CRJ), 5 a-breast (CSERiES) and 6-abreast(737-320s). Even in 2011, Embraer was eyeing possible development of a five-abreast narrowbody. which validate that the 5-abreast design is the best for 100-150 pax. http://www.flightglobal.com/news/articles/correction-embraer-eyes-possible-quotfive-abreast-356264/
BWIDY: “The CSERIES are perceived as big risks for the buyers, because of some new technologies are still un-tested commercially.”
The risks mainly come from the fact that it is a brand new, unproven, design. But the technology itself is not that risky. Bombardier designed a very modern aircraft but made conservative choices whenever possible. There are no high-risk technologies on this aircraft other than the CFRP wing and empennage. The fuselage is made of Al-Li alloy, which is considerably less risky, and easier to repair, than a CFRP fuselage. This is important for operators as the fuselage is the part of the aircraft that is most often impacted by ground vehicles on the ramp. Another high-risk item could have been the engine but it appears to have been over-designed in order to mitigate the risks associated with its use of a new bold technology. The engine did suffer one major breakdown during testing but the problem was addressed and both the engine and the aircraft have since demonstrated very high reliability during flight testing. Bombardier actually expects 99.5 % reliability at EIS.
What can be viewed as a risk and an impediment by some operators is the fact that in the first few years the aircraft will not be operated in large numbers by various operators around the world. That will make it difficult and expensive for an operator because at the beginning it will be very difficult to pool some expensive and hard to find aircraft parts. But I still expect both the operators and their passengers to be very happy with this aircraft as soon as it will enter service. If everything goes well this exciting new airplane is likely to create an immediate buzz that could generate many new orders. But we will have to wait at least another year to find out.
The latest LOI+OPT (20+20) for CS100s from startup Flymojo doesn’t appear in the above table.
According to Wikipedia, Flymojo is owned by the Government of Malyasia.
That explains why the Malaysian PM was a the signing ceremony. With that backing, this commitment appears more solid than others in the table. I see it in yellow for now.
“But Boeing really wants this win.”
With this craving in mind could we revisit the “Unidentified” Boeing customers? Looks like those are “presales” so to speak
to give the impression of a faster than real order “flood”.
Leeham: “The contest is hot enough that our Market Intelligence indicates the pricing is already comfortably below $40m.”
The 787 has been draining money for a while and will continue to do so for a number of years; the 747-8 is a write-off; the KC-46 is not going too well; the 777X looks like a ‘bigger than we bet for’ undertaking; the 737 MAX is facing insurmountable performance deficiencies and now Boeing has to make unrealistic deals to save face and the programme. After tiny Bombardier it looks like mighty Boeing will need an overhaul as well.
Leeham: “Bombardier and air shows just don’t get along well.”
Indeed. But that is mainly because in Canada there is a law that prohibits sales announcements when they are not signed within a very short period of time, out of respect for investors.
Leeham: “Can’t anybody here play this game?”
Yes, Airbus and Embraer can, while Bombardier is on probation. As for Boeing, it is heading towards its one hundredth anniversary next year and it had already started to show its age long before it turned ninety.
Looking at 737-8 MAX 200 exits I see it is the same as the737-9.
According tobthe OP assumptions we are talking a Boeing 737-8 MAX 220 here.