Oct. 12, 2015, © Leeham Co.: The news agencies, stock markets and aerospace analysts last week went wild when Reuters reported there were talks going on between Bombardier and Airbus whereby the latter would take a majority stake in the CSeries program.
Within hours, both companies said talks had ended. As could be expected, the stock went into another tailspin.
Then United Airlines said it wants pilots to approve a contract, and is dangling a 100-seat airplane order for mainline operations as an incentive. The CS100 fits into this category, as does the Embraer E195 E2.
It is worth recapturing reasons BBD finds itself in its current predicament.
Missed opportunities and bad decisions
Bombardier faced a very difficult task of jumping from the regional airline business to the majors with its CSeries. The airplane was designed with Northwest Airlines in mind, which had a huge fleet of old Douglas DC-9s. But the original concept, the C110 and C130, was “just another airplane,” technologies of the 2000s and engines to match. The market rejected the concept. But when Pratt & Whitney developed the geared turbo fan and BBD decided to use aluminum lithium for the fuselage, composite wings and advanced systems, the design became attractive.
Management believed that if they built it, customers would come, particularly without offering the plane at prices in the $20m-$30m range. Instead, BBD offered the renamed CS100 and CS300 in the low $30m range.
These were two key miscalculations right at the start of the program.
Officials also didn’t hire salesmen with experience with the major airlines, instead sending its regional airline experts into the field. Another miscalculation.
Focus shifted to the CSeries sales to the detriment of further sales of the Q400 and CRJ, which were needed to provide cash for the development of the CSeries.
Officials didn’t think Airbus or Boeing would respond other than by dropping prices on the A320 and 737 families. Instead, the companies put new engines on the airplanes and dropped prices on the existing products.
The miscalculations just kept piling up.
Missed opportunities did as well.
The Great Recession began in September 2008. The CSeries was launched at the Paris Air Show in 2009. Bad timing. Airbus responded with aggressive pricing and a campaign by John Leahy, Airbus COO-Customers, to undermine and belittle the airplane. The Recession caused many airlines to put equipment decisions on hold, and Northwest eventually merged into Delta Air Lines. Poor pricing decisions killed some deals, Airbus killed some with its stiff competition and the economy killed others. Through it all, a weak balance sheet and executive reluctance to approve aggressive deals killed still more.
Poor sales of the Q400 and CRJ suppressed vitally needed cash flow. Program delays ballooned costs by US$2bn and delays stretched to two years.
Key executives left and were replaced by others with no airline sales experiences—and in some cases, no aviation experience at all.
This only scratches the surface. The CSeries is a good airplane. But management made just about every bad decision possible, leading to the position the company is in today.
Category: Airbus, Boeing, Bombardier, CSeries, Paris Air Show, Pontifications
Tags: Airbus, Boeing, Bombardier, C110, C130, CRJ, CS100, CS300, CSeries, DC-9, Delta Air Lines, Douglas, Northwest Airlines, Q400
The question is, will there be a way out of it?
This is the question that I have also. I have been waiting for Scott Hamilton to weigh-in on the latest C Series news from last week. How does he see the future of the C Series program? I trust and respect Scott’s opinions over that of Richard Aboulafia who has been a major-league C-Series detractor right from the day that the program was announced.
No question that a lot of bad decisions have been made by Bombardiers management but also a lot of good decisions were made in order to bring such a technologically advanced airliner to fruition – it is just a few weeks away from certification. Also, lets not forget that Bombardier has been hit by a string of bad luck on this program. Firstly the P&W engine failure which was not of Bombardier’s making sidelined the program for many many months. Secondly the steep decline in oil prices has taken the edge off of the C Series main selling advantage – fuel efficiency.
Hopefully the recent announcement that United is planning on using the “shiny new jet syndrome” to ratify a new contract with its Pilots union will bode well for Bombardier. The contest for a 100-seater is between Embraer and Bombardier. I cannot see pilots getting excited at the prospect of flying an Embraer. In this contest the SEXY C Series has the edge!
Finally I am left scratching my head over the news that Bombardier would approach Airbus and offer them a majority stake in the C-Series program. This seems incredibly stupid on the part of Bombardiers new CEO.
Why throw in the towel when you are weeks away from receiving certification?
Why approach a competitor when such a “deal” would be tied up for many month’s if not years. How does this help liquidity?
Why approach a competitor for a “life-line” when the Premier of the Province of Quebec has made REPEATED offers of financial assistance to Bombardier?
Looking at the last two clean-sheet commercial aircraft programs, the 787 and the A350, the programs continue to burn significant cash at least four years past first delivery. If the C Series follow a similar pattern, we’re looking at more than US$10 billion. At present, the C Series is burning US$0.8 billon per quarter (Reuters, Oct 6), and full production hasn’t yet even begun. These are some pieces of information that may help readers appreciate the difficulties BBD is up against.
In this respect I think it is good that BBD management refused aggressive deals. If you look at what Boeing did with the 787, I really don’t see how they will EVER make money on that program. If Cseries was priced that way, BBD would be FINISHED. I think they are looking for a way to ramp up without all the blood letting that seems typical, and the Canadian Dollar is weak. Question is, what will it cost to build when all is said and done.
This capitulation from Bombardier is simply a realisation of the old saying ‘if you can’t beat them, then join them’. Of course, it’s not just about cash: it’s that Airbus has done its utmost to strangle the CSeries and pretty much succeeded, and now it seems that one of the few ways of the CSeries surviving is for it to go directly under the wing of Airbus.
People talk about certification like it is the solution to all of BBD’s problems; clearly, it’s not. Until BBD can be cash positive on each airframe sold – probably a good while away yet – then the CSeries is going to continue to hang very heavily around its neck.
“Northwest and its huge fleet of DC9s” has become Delta with a huge fleet of B717 (MD95) and still running the MD88/90s.
Boeing has proved orders are King, doesnt matter that the first 1000 you lose big money on every one.
Like airbus doesn’t play the same game.
“Boeing has proved orders are King, doesnt matter that the first 1000 you lose big money on every one.”
Hyperbole much?
Sad reality of the 787 program unfortunately.
Somewhat surprised that you didn’t touch on the utterly idiotic decision to run 3 (yes, three) programs in parallel.
CSeries
Lear85
Global7000/8000
If the billions burned on Lear85 were still on the books, there wouldn’t be an issue.
The Global 7000/8000 was absolutely necessary but the decision to launch it came too late. The C Series was very risky and is perhaps Bombardier’s boldest decision ever. The Learjet 85 was completely unnecessary and will go down in history as Bombardier’s worst decision.
Its not the first time a decision to build a medium sized composite structure business jet has ended in grief for its owners
Agree, doing 3 new programs at once seems risky.
Instead they could have stretched the Q400, modernized it and put some more modern and reliable CRJ900 systems into it. The ATR72-600 is killing it even though it is slower but Airbus can keep its costs under check and have its reliability constanly improving.
The CRJ900 could also have been improved to be even more reliable and cost effective maybe with the new GE Passport Engines that will be installed on the Global 7000/8000 in a modified config to take 20 000cycles on wing between shop visits.
The C-series should be a light weight fuel efficient replacement to the A318/A319/F100/B737-600/B737-700. But it need to handle the pouding of 10-15 cycles/day and make use of the modern structure and systems to stretch times between checks. We still don’t know if the PW geared fan can stay on wing for 20 000 cycles and the Aircraft systems reliability. The 737-800 and A320’s are now pretty reliable and are not that easy to better.
Bad luck and decisions that weren’t the best, in hind sight. The way ahead should be determined ASAP.
United looking for a 100 seat aircraft; the CSeries seems oversized and overprized for that. United express flies E jets already.
Boeing should mount an hostile take over of Bombardier and incorporate the Cseries to its 737 line. The Cseries is a good product but the manufacturer is child in a big boys league that is why it is struggling.
You are thinking too cosntructive.
cue
DC-9 -> MD-80 -> B717 -|
Not too far fetched idea.
http://www.fool.ca/2015/10/14/should-bombardier-inc-form-a-cseries-partnership-with-embraer-sa-or-boeing-co/
Hi Scott,
I agree that this program is a money drag and has been from the start. Many of my clients have asked about this over the last several years, and my main point has been that the CSeries has always faced such stiff competition from the thousands of used A320/B737 families of aircraft out there on offer at ever-cheaper prices and lease rates. Boeing and Airbus are not going to let deals go missing and their new aircraft pricing power is massive as well…especially if they sense a chance to crush this program/company.
With the fall in fuel prices the attractiveness of those used aircraft only increases, and it is tough to see a useful way forward for Bombardier at this point. As the value effects of the NEO and MAX continue to filter through, all of those used (and very capable) aircraft just become cheaper…
Best regards, Bill
I hope Airbus does indeed take the C series on and continue to optimize and integrate it into the airbus FBW system.
The CS is simply beautiful, with a great roomy cabin, and has the a320/321 efficiency in the a319/318 size category… Both the latter types falling out of favor of late as they’re heavy for their size.
Seems a good fit to me… Maybe Airbus is hoping to pick it up under better terms by waiting.
The CS100 could indeed replace the A318, just like the CS300 could replace the A319. But if Airbus acquired a majority stake in the C Series it would be the end of the CS500. For it would compete directly with the A320, which is on its way to become the most successful commercial aircraft of all time. And as we all know there is no market in the 100-150 passenger category, so why bother? 😉
Boeing should be right at Bombardier’s door with an offer. C-series can be their B717 and 737-700 replacement and allow Boeing to focus efforts on the NMS/MOM?acronym of the day jet they are always either doing, talking, or discussing about.
If Boeing let’s Airbus have it, say good night to a nice chunk of the market and see your 737 reduced to the 8Max and that’s it.
To speak from a Boeing perspective, why would Boeing want to throw cash into something so problematic as the CSeries with unreliable PW engines? Surely a CFM fanboy would see it as a terrible idea? *wink* And it is blasphemous of Boeing to promote those sidesticks of doom…
Scott, if Bombardier could have negotiated a period of exclusivity on the P&W GTF (given that it played a pivotal role in getting the program off the ground), would the outcome have been any different in your opinion? If Airbus hadn’t been able to just swing in and snatch up the tech that truly made CSeries different….?
Mary, it seems unlikely that PW would ever put all their eggs in one basket after all their long hard work. BTW they where working with Airbus on the geared fan long before the CSeries came up. But it proved immature late 1999.
https://www.flightglobal.com/news/articles/pw-sets-sights-on-airbus-next-generation-narrowbody-43134/
Years later (2008) Airbus put a geared fan prototype on their own A340-600 testbed. When Airbus engineering green lighted that engine, it’s reliability & performance promises, everybody jumped on.
Well. Airbus testet the GTF on their A346 prototype back in 2008 – shortly after the formal launch of the C-series. Thus, the GTF was IMJ clearly part of an Airbus-planned A32X re-engining effort – long before the official launch of the A32Xneo in December, 2010. At that time, they knew it would be a game-changer – and so did P&W.
Hence, P&W knew they had a winner early on. So, why would they have limited themselves to only powering the C-series – in order to help out Bombardier – when the GTF architecture would work very well for the huge single aisle, 180 – 200 seat market as well.
http://www.aviationtoday.com/regions/usa/Pratt-and-Whitney-Pitches-GTF-Cost-Savings_29667.html#.Vhu_MXY4WUk
CSeries is a plane looking for a market. Kinda like a solution looking for a problem.
“The news agencies, stock markets and aerospace analysts last week went wild when Reuters reported there were talks going on between Bombardier and Airbus whereby the latter would take a majority stake in the CSeries program.”
Leeham News, which is normally very quick on this sort of news, has not posted anything about it. I wonder why. And today it is only mentioned and not commented at all. Not one word about the Airbus deal. I wonder why.
I also wonder why Leeham News has started to talk negatively about the C Series recently. In a previous post about the C Series I noticed the negative tone, and one poster even commented about it. I didn’t know what to make of it though. But today’s post is even more negative. It is actually destructive. And I really don’t know what to make of this change of heart. Bombardier does not have the strength of Boeing and Airbus, and an influential medium like Leeham News can have a significant impact on a vulnerable company that tries to make its way into the big league.
I agree that a number of bad decisions were taken since the C Series was launched at Farnborough in 2008. Bombardier often acted like amateurs. Which they are in a sense because they have no experience of commercial aviation, which is a very different world than regional aviation.
Bombardier Aerospace was created by Laurent Beaudoin when he acquired in quick succession Canadair (1986), Shorts (1989), Learjet (1990) and de Havilland of Canada (1992). This was an extraordinary feat because Bombardier had no experience whatsoever in aviation. When Canadair was acquired most observers thought that this was a big mistake. But it went so well that three years later the UK government sold them Shorts under similar terms. And the rest is history. Laurent Beaudoin is a genius but he made one big mistake. He put his son in charge of the company. The latter is very smart and competent. But I don’t think he was the right man for the job. One of his best move though was to hire Lutz Bertling to run the Transportation division (trains & tramways). But the Aerospace division always lacked this kind of expertise. And I believe that this has to do with the fact that Bombardier was focussed on production. They wanted to become more efficient and lower their costs. But they neglected the business side. And when you are competing with the likes of Boeing and Airbus this is one aspect you don’t want to neglect. But they did so until Alain Bellemare was hired. Although he was also keen on cost cutting he immediately hired the right people that were badly needed to reinforce the business side. But this was only six months ago. Even if the situation is critical we still have to give the new team a bit of time to work things out.
It is a matter of weeks before the C series completes its flight test programme. It might even get its certification before Christmas. It is a fantastic aircraft that is the result of a string of good decisions. I think that on the industrial side they also made very good decisions. It could be argued that it was a mistake to give responsibility for the fuselage to the Chinese. But the idea was to keep the costs as low as possible and open the door to the lucrative Chinese market. But the orders never came. But like the Chinese Bombardier is very patient. They have been very successful in the United-States in the past, and a few big orders for the C Series from any major US airline could change everything. As for Europe and the rest of the world I think the entry into service of the aircraft next year could have a very positive impact. For the performance of the aircraft is more important than the performance of the company. As long as it stays in business a company can always evolve. But when an aircraft is poorly conceived, like we have seen with a number of other aircraft around the C Series category, nothing can be done. For it is almost impossible to correct a flawed design. But it is relatively easy to change an inadequate management. And that’s exactly what Bombardier did.
Indeed, there is here a annoyance, a tension, disappointment, disillusionment, a bother, exasperation, impatience, irritation, and unusual in short …from Scott.
Unusual indeed. I wonder why. 🙁
I’m not sure Scott is the one not entirely objective here. Don’t kill the messenger.
I have always lauded Scott’s objectivity in the past and will likely continue to do so in the future. And I often defend him when he is under attack for his lack of objectivity towards Boeing as the latter’s fans often accused him of being pro-Airbus. Which is completely false. And since you have been following me like I have been following you I shouldn’t have to explain this to you. So I am not trying to “kill the messenger” like you say. I only questioned him on his sudden change of heart. And I am not satisfied with his explanation. I just don’t understand. That is what my word “dumfounded” meant.
When in a family structure and the international business are managed for a short time, this is the type of decision that is taken by believing do well with the good guys. But it took time to Bombardier to understand that markets had become global and that it had to act and decide as a global company. A typical entrepreneur does not give control of his creations to anyone, not at any price. This is the Bombardier Board of Directors that has been slow to react. This is the board that failed to migrate to the governance of globalization. When thinking in whole, there are growing markets, uncertain, crowded and require making poker moves to boost sales. Indeed, I believe this is what has most missed in decision making: for sell at a loss to big aviation names to get a legitimate capital. But on this plan, it is not too late. The new manager team will make that choice: buy a star of aviation without losing too much money. Then accept it will take time for the CSeries to prove itself. Just as it took time for the A320 and the 737 to win and rise as the industry standard.I am still convinced that the CSeries is the regional aircraft of tomorrow, able to land on short runways, and well beyond the clauses pilots that will lapse because of the strong integration of new major aviation players (American and Middle East with their cross participations). And still imagining a little, the CS100 could become the ideal aircraft for a low-cost subsidiary in regional aviation. And then there are the other possible projects CSeries. The question remains this: how to fund pending the actual results of CS100 and CS300 to actual future sales? And how to finance other CS500, Cs700 pending their production?
Looking at the CSeries orderbook I would say that only about 1/3 of orders have a good chance of being delivered to customers.
The rest are either by lessors who still haven’t booked a single customer for them or third tier airlines with iffy prospects at best.
Then there is the Russian issue which even without the animosity towards thew Canadian government has now the Superjet and the Irkut MC-21 to shove down Russia’s airlines throats.
The Chinese and their satellite states-customers have the ARJ21 and the C919.
Then there is the MRJ from Japan and the E2-95 by the boys from Brazil.
All of them going for a market (110-150 passengers) which may well seize to exist in 10 years time by the looks of it.
ceased(!)
@Norman:
1. As to news about Airbus-BBD talks: Within a matter of hours, the talks were on and then they were off. Didn’t see much point in reporting/commenting on this when nothing of value could be added.
2. Your first reference about turning “negative” is, I believe, to the Green-Yellow-Red skyline assessment. We’ve been doing this for three years and it largely hasn’t changed much, except with the Russian sanctions and Ukraine mess, which added Red to the chart. Not much new here. (And lest anyone wonder about Airbus and Boeing, we’ve had our Storm Warning Flag skyline assessment for them the last three years, too.)
3. As for this column: I disagree that it’s “destructive;” it merely recaps things we’ve written in the past into one encapsulated review.
4. Finally, Leeham “News” is about reporting and Leeham “Comment” is about commenting on things as we see them. We’ve gotten in trouble more than a few times with the Airbus and Boeing over out comments. BBD’s situation is hardly a Harvard Business School case model of good and efficient management. It remains to be seen how the new management digs out from the hole that has been dug.
@Mary
As previously noted, the Mitsubishi MRJ was actually first up with the GTF, followed by CSeries. It had always been PW’s business model to step from BBD to Airbus. It made a strong pitch to land Boeing for the MAX, but “Chicago” (ie, ex-GE-McNerney and the ex-GE folk on the Board) remained true to CFM. Contrary to popular belief, there was enough flexibility in the 737 CFM contract that a switch to another engine could have been made.
Thanks for taking the time to answer my concern Scott. But I find it strange that you are turning your back on the C Series at this time when you have always been a strong supporter from the very beginning. And I still wonder why. I don’t really know what to make of the Reuters news and would have liked to have your input on that since you are very well connected on the industry. You often use the expression market intelligence, but you have nothing to say about the talks Bombardier had with Airbus. And both parties did acknowledge having talked to each other. This could be extremely significant since Airbus is Bombardier’s worst enemy, perhaps even more so that Boeing. I have a strong view on this and would like to share it with you and your followers.
The first impression I had last week when I learned the news that Bombardier had offered to Airbus a majority participation in the C Series was that after evaluating the situation Alain Bellemare had come to the conclusion that Bombardier would lose too much money, and for too long a period of time, if they elected to continue with this venture. After all Paul Tellier had come to a similar conclusion in 2002 when he was hired to restructure the company. He wanted to cancel the BRJ-X, the forerunner of the C Series, because he thought it would cost too much money for the risk involved. Perhaps Bellemare has now arrived at the same conclusion. Otherwise what would be the explanation behind the Reuters news? After all this is a highly regarded agency. This story left me dumfounded.
I know that I can be a very naive person sometime, for it is hard for me to imagine that some people could make up stories like this Reuters news just to harm a competitor. And like if this was not serious enough you chose this time to beat on them like you have never done before. That too left me dumfounded.
@Normand: Don’t misunderstand; I haven’t “turned my back” on CSeries. It’s a better airplane than the baby Airbus and Boeing by a wide margin. But a long series of management mistakes, bad calls, aggressive Airbus response, unfortunate timing and circumstances beyond BBD’s control (M&As, the Great Recession) have suppressed sales. It’s the self-inflicted wounds by BBD that have hurt the most. But at no time, nowhere and no how have I ever said the plane is bad, and frankly I don’t know how anyone could come to this conclusion.
“But at no time, nowhere and no how have I ever said the plane is bad, and frankly I don’t know how anyone could come to this conclusion.”
I have never said anything like that Scott! You have indeed conducted a very thorough evaluation of the C Series’ merits and have come to the conclusion that it was the best aircraft in its category. This is well known to me who have been following you for the last five years. And I know that it was this objective evaluation that made you a staunch supporter of the C Series all those years.
In order to reply to your answer I have read your editorial again and like the first time around I have found nothing false in it. But I have found nothing positive either. Had you written something similar say last year I would have judged it to be harsh but fair. But there is a new management in place which changes everything. You just have to give them time.
What took me aback was that your article comes in the wake of an extremely damaging news about Bombardier and the C Series. And you don’t even discuss it. I am one of a handful who has tried to explain what could be behind this daring move. And if you think that the Reuters story is completely made up you have to take into consideration that Airbus and Bombardier were talking to each other until recently. And it is widely recognized that it is Airbus who leaked the news to Reuters. Don’t you think this deserves your attention?
I made a comment here last week immediately after the Reuters news came out. It read like this: “I knew A&B had Bombardier on the ropes, but it now appears that they have knocked them out.” So there is no need to kick them when they are on the floor.
Hello! Normand, the Reuters story was the only information out there, no one else is talking !
You were talking a few months back of some big orders coming through around now- but we get nothing announced. Leeham isnt a good news factory for the aviation business, there are plenty of people doing that.
It’s simple, Bombardier needs more cash to complete the CSeries program, in particular the CS300 and ramp up production. Except for government and pension funding, it has exhausted most funding channels with $9 billion of debt and only $3 billion in cash. It needs money. Airbus could supply that money, and if it replaced the A320neo with the CSeries, Bombardier would get all those orders it has been chasing but lost. More importantly, Bombardier would have stuck it hard to Boeing whom has gone out of their ways to kill Bombardier with their ventures with Embraer and supporting the MRJ in North America by providing them with a duplicate of the Boeing support structure.
Airbus is dealing with its fair share of problems getting the A320neo off the ground (http://www.wsj.com/articles/airbus-a320neo-test-aircraft-suffers-engine-damage-1443602561). Bombardier likely saw a win-win opportunity for them and airbus.
Airbus and Bombardier are kin, both are French.
It’s easy to slam Bombardier for all sorts of decisions, but it made one important market decision (the old management), and that was to build a clean-sheet technologically advanced aircraft for this category when nobody else did, not because there isn’t a market, there is definitely a market in emerging economies and low-cost airlines.
Remember Bombardier is more than a commercial aircraft maker, half the company builds rail products and it would be stupid to let one aircraft befall the entire company.
“Airbus could supply that money, and if it replaced the A320neo with the CSeries, Bombardier would get all those orders it has been chasing but lost.”
Yeah, sure. It makes a lot of sense that Airbus would want to kill the most successful airliner of all time and produced at an increasing rate (A320neo); replace it with an airplane that does not yet exist (CS500); assume all the development costs; and in the end give all the profits to Bombardier. In French we kill this pensée magique.
“1. As to news about Airbus-BBD talks: Within a matter of hours, the talks were on and then they were off. Didn’t see much point in reporting/commenting on this when nothing of value could be added.”
Such talks are never “instant on”.
Public knowledge :: yes.
MY guess would be that the advent of public knowledge terminated these talks.
Who went public with this information?
Or rather, somebody leaked the information to the public after the talks had already broken down. There wasn’t any reason to keep the matter under wraps at that point.
Strategically placed in time ( see the share value impact 😉
Yep. And I think that is precisely why both companies were quick to clarify the matter to the media as soon as the information went public. Airbus immediately put out an “ad-hoc” press release most likely to stop any volatility in their share price.
Happenstance or Enemy Action ?
lol.
Well, the website says Leeham news and COMMENT. I guess there would have been a lot to comment. Scott’s industry knowledge and his opinion would be for sure highly interesting for a lot of people.
I was also waiting and waiting to read here any kind of remark on that rather surprising news. But no, no luck so far…
I wonder what is the dollar figure for delivery delays for the 787, A350, and CS? What’s a year delay penalty for a 787 or A350? One million? What’s a year delay penalty for a CS?
Europe bought the A380, which was probably three times the cost of the CS. The Canadian government can bail out the CSeries.
A lot of free trade agreements wont allow that. The EU wont let it happen either spurred on Airbus.
The program is heavily subsidised anyway, but using common industrial infrastructure methods, just paying them to keep the doors open or the testing going isnt going to work.
Regarding the CS300/CS500 versus A319/A320 case, we have to ask ourselves if bulk loading is the future for air cargo / luggage above 130 seats/1000NM’s.
http://i196.photobucket.com/albums/aa88/ngum_2007/Picture007.jpg
Bombardier and Boeing have an explainable mission to ignore / deny the importance / relevance of this question.
Airlines investing billions in a new type for the next 25 years ask themselves nonetheless. If it’s not a real issue, the C919, NSA, NMA and MC21 will also have bulk loading.
What could save the CSeries is putting a WheelTug on it.
There should be hundreds of orders for the C-Series. Right?
Airlines around the world need to move people between smaller airports, of which there are thousands, and there is a gap between the 60-90 seat turboprop and the 160+ seat A/B offerings. Currently Embraer has this space to itself.
Why the lack of orders? Until a few months ago I thought it was uncertainty about their lack of ability to assure customers about their product, but now they have something to deliver it no longer makes such sense.
Cannot see Bombardier surviving in its present form unfortunately.
Pretty sure it was the Q400 that killed off discussions with Airbus, who own 50% 0f the ATR. Taking on the C series and possibly killing off the Q400 was perhaps a bridge too far.
I can’t understand what value the C Series could possibly have to Airbus. Airbus possesses all the capabilities and technologies of the C Series program, and there are no conceivable synergies between the C Series and, say, the A320. Same goes for Boeing. Perhaps COMAC could be interested in some technologies such as carbon fibre manufacturing and/or flight envelope protection software, but according to Jens Flottau of Aviation Week there is limited interest because the Chinese goal is to develop and build their own aircraft as opposed to a Canadian aircraft.
Airbus once intended to do an AE316 and AE317 ( in a cooperation ) see http://www.civil-aviation.net/flugzeuge/ae31x.phtml and https://en.wikipedia.org/wiki/Airbus_A318#Background
Stillborn.
IMU this market range is the MOM equivalent below viable NB sizes. Both don’t really make sense .
A laminar forward swept wing could be viable for a short body, 6 abreast fuselage. Hence, an A32X derivative with laminar forward swept wings – and with a fuselage as short as the A318 fuselage – would IMJ be able to open up the short and medium range, single aisle, 100-150 seat-market using a viable cross section that allows for 6 abreast seating and LD3-45 containers in the cargo hold.
http://enu.kz/repository/2011/AIAA-2011-3526.pdf
Based on market size and BBDs production aspirations, what size order book would calm people down? I keep hearing comparisons to Airbus and Boeing, but BBD simply does not plan on building planes on that scale. I also hear that A&B will price BBD out of the market. Will they ? I can understand why some NG and CEO deals have been done at unnatural prices to bridge to the new models. But 737 and A320 are THE cash cows for their companies. With Boeing losing its shirt on 787s, the tanker project in the tank and A350 and 380 programs struggling for altitude, can they really just firesale these planes when they have massive backlogs already? Seems irresponsible. If they succeed, the Cseries will end up with Shenyang or some other Chinese company. Then we will know what “C” really means.
Its no surprise the information ‘leaked out’ just before the Canadian election., Im too far away to see if its had any discernible effect.
The dairy and chicken farmers seem to have come up with government aid, and some in Montreal will be saying ‘why not us’. Structuring the aid is the real problem as CS series is already a ‘welfare queen’ who is having money from multiple countries
Bombardier is one of the largest employers in Canada, so the government has the choice to either pay them in Employment Insurance benefits and all the costs associated with supporting hundreds of thousands of aerospace people, or simply making a wise investment in a sure winner?
Sorry, I don’t know much about accounting and stuff, but why wouldn’t Airbus or Boeing want to invest or buy the C-series? It’s not like the plane is a bad aircraft like the A346 or 764, it’s just mismanaged.
Wouldn’t it be better for Airbus or Boeing to acquire a program that can help them fill the size range where they are currently the weakest? The A318/19/736/737-7 range? The C series has shown to be better than their A/B counterparts in that area, I’d think it’d make more sense to acquire that program from Bombardier, kill off the A319/737-7 and just use the C-series to fill that gap
I think Airbus has every reason to kill off the smallest member of it’s A320 family, the A318.
Less so for the A319, because they sold 1500 and those are in operation. The CS300 can do things the A319 cannot do. But also the other way around, the A319 provides A320 fleet commonality, cargo capability, payload-range and global availability that works for operators.
So in any Airbus business case with BBD, this would have to be (more than) compensated. No welcoming the money but stay out of our kitchen. All options should be open. No room for pride & nationalism when in survival mode.
E.g. Canada could be left with 50% of the jobs required for the CSeries & a e.g. cockpit reshuffle delaying the program another year could be on the agenda.
“Officials also didn’t hire salesmen with experience with the major airlines, instead sending its regional airline experts into the field. Another miscalculation.”
People keep slagging the old sales team but so far the score remains that the old team racked up over 500 orders and commitments and the new team (who supposedly are now talking to the right people) have zero orders to show.
As Aviation Week pointed out some time ago, only a few clean sheet designs have ever had as many orders as the CSeries prior to EIS. For all their missteps, Bombardier has produced a world class aircraft that they will be selling for the next 20 – 30 years.
You are right. Moreover, we should say and repeat that Bombardier remains a multinational with 20 billion of sales…
Bombardier does have $20B in sales split roughly $10B for Rail and $10B for aerospace. The CSeries has the potential to bring in another $8 – 10 B a year in additional revenue. What puzzles me is why there is a need for additional capital for CSeries? The factory is built and ready to go into full production. They get paid the majority of the contract value on delivery so between deliveries and additional deposits on sales the program should be self sustaining.
“The factory is built and ready to go into full production.”
The only factory that has been built so far is the pre-assembly hall. It is only 1/2 of what is required to go 10/month and 1/4 of what would be required to go 20/month. But this new building, which contains the existing pre-assembly hall, is a slightly more involved element of the future assembly complex since it has been fitted with a large number of offices that connects it to the main building.
If the sales justify it Bombardier will build another building in front of it where a moving line will be installed. After pre-assembly the aircraft will be moved to the ML building where it will be fitted with engines/pylons, equipment, interior, etc. But that would only be good for 10/month. To double production to 20/month, or one aircraft per working day, an adjacent pre-assembly hall would need to be built along with an adjacent ML building. My understanding is that the Government of Québec is financing a large portion of the aircraft assembly complex.
Your last sentence describes to a tee Bombardiers long standing policy of milking all levels of government to keep the prestige of an aerospace industry at home. The Quebec pension plan is ready to pour more money and that huge airport the Feds built is pretty much at BBD’s disposal. They have drained too much tax money and its time to cut them loose and let them fly on their own.
First I have a background in accounting and I assure you that Bombardier’s debt can not be explained solely by Lear85 and the development costs of Global7000 / 8000 or the updating of other airplanes lines. The question is what the thousands of engineers assigned to the CSeries uh … did during 8 or 10 years! Imagine you are the project manager of this aircraft. Will you order your engineers to work only on two models? And then, all this intellectual capital still in place, is it only directed to Global projects? For now ? And Thanks Normand for this information.
Last rumour a partnership between bombardier and embraer.
According to what i could read in the globe and mail.
http://www.theglobeandmail.com/report-on-business/
It is not a surprise. We should think about it! For a virtual monopoly in sight? Brazilian negotiators are clever. And they are good!
Warning ! There will soon be a CSeries near you! Near United, AA, SW and more…
http://www.marketwired.com/press-release/bombardier-c-series-aircraft-certification-program-over-90-per-cent-complete-tsx-bbd.a-2063616.htm
Having a certified in use product should be quite a boon, shoudn’t it?
Clearly the kind of press release whose only intention is to try and draw attention away from the very bad smell caused by these sell-off reports…
Well, good luck to them, and let’s celebrate the engineering achievement when certification comes. Otherwise, I’ve little sympathy for the plight that BBD finds itself in; they made a bet-the-farm gamble and have probably lost, when they could have taken the far less risky path of increasing revenue by focussing on their existing markets.
Delta’s case is interesting.
They are using their technical expertise to keep older airplanes going. IIRC they’ve done that before (and Northwest had good maintenance capability).
With fuel prices down that seems a good choice.
As for stretching the Q400, I’m laughing – it is already very long, with good technique needed to avoid tail strikes.
As for governments bailing out Bombardier, they are slowly getting wiser, applying conditions. Everyone wants money – even Mr. M. of FiatChrysler tried, despite earlier saying he’d avoid. Bombardier might get lucky with some politicians, OTOH I ask if at some point they’d lose control of the company. Note too that governments have been funding things like training and R&D centres, not direct investment/subsidy – so the money isn’t wasted if the business fails. At this instant people are waiting for the results of the federal election now in progress.
Rumor’s and speculation…..
On twitter someone who has followed the C Series program very closely is Sylvain Faust. He seems to have good insider knowledge .
He tweeted yesterday:
The latest rumour I have: New order of 63+ #CSeries from a Top North American #airlines very soon. #Bombardier @airlinegossip #avgeek
The number “63” caught my attention. WestJet currently operates 63 737-700’s. They have 25 Max-7’s on order but there has been speculation that the CFM Leap is not meeting performance targets whereas we know the P&W GTF has exceeded targets. Just last week a CS-100 (FTV-5) paid a visit to a WestJet hangar at CYYZ! I suspect that this rumored order (if real) will be coming from Westjet.
The only other major carrier with MAX 7’s on order is Southwest. They have 30 on order. Could Southwest be looking at switching to the C Series? If so this would obviously be a huge development since most of their current routes could be served by the CS300.
The first bad decision was when both BBD and Embraer decided to evolve the regional jet from 50 seats to 70 and more seats. Embraer went ahead and green lit the Ejets while BBD chose to push the stretched Challenger, er CRJ. Before long the skies were full of them even flying the national carrier’s livery. I still believe what I predicted a few years ago .. The Cseries will end up wholly or partially in China.
According to Bloomberg Jetblue is in serious talks with Bombardier to order C Series
http://www.bloomberg.com/news/articles/2015-10-15/bombardier-said-to-hold-talks-on-cseries-order-from-jetblue
Also it looks like Air Canada is getting serious!
Airlines will be the saviours of BBD, not any Pension Fund or competitor OEM. It is in the well understood interest of the world’s airline community that BBD not only survives its problematic infance, but blossoms as a teenager and finds its rightful place in the market. Commercial Aviation needs a third (and a forth, and a fifth !?) player(s) and Delta, American, United, some of the big Chinese operators etc… will converge into position to infuse the oxygen BBD needs to overcome its infance ails. BBD are just ringing the bell for its undercover saviours to realise the time has come to do whatever is expected of them. I have confidence in the fact that BBD will not be let down. Loss of financial control is a possibility, but not necessarily. This having been said, I still classify C Series as an osolete-in-the-egg feeder (as is MAX) for lack of a proper CLS, wherefore it classifies into the League of RJ, where it is maybe slightly oversized.
But the market is evolving. C Series will be favoured in China and Africa ?