April 28, 2016, (c) Leeham Co.: At long last, after years of disappointment for that big, breakthrough order, Bombardier finally got it: a huge deal from a blue chip
airline, and one from North America: a firm order for 75 C30S100s and options for 50 more from Delta Air Lines.
Delta has conversion rights to the CS300. Bombardier now has more than 300 firm orders, although many of these are iffy, and commitments for up to 500 more.
This is the order that observers, analysts and aviation geeks have been waiting for during much of the development and production of the C Series.
The announcement came concurrently with highlights of BBD’s first quarter results.
The C Series program was launched in 2009 with an order for 30+30 from Lufthansa Group, for its Swiss International unit. After two-and-a-half years of delays and $2bn in cost overruns, the first CS100 is to enter service in July. Korean Airlines also ordered the aircraft, but other top-flight, blue chip orders proved elusive until January. That’s when Air Canada placed an order for 45+30 CS300s.
But the Air Canada order was viewed skeptically as a government-pressured deal that included a quid-pro-quo in dropping requirements of the Air Canada Act of 1988. This law required AC to maintain certain facilities–and jobs–in Western Canada as part of government approval of AC’s shift from a government company to a private one. AC wanted to eliminate these in cost-savings move, but was blocked from doing so by the Act. The government agreed to drop the Act, although this challenged in court and remains an overhang.
Air Canada hasn’t firmed up its January Letter of Intent, although it’s expected to do so this year. Air Canada and Bombardier denied any government pressure or nexus for the order.
BBD missed winning a highly anticipated deal with United Airlines the same month when Boeing swooped in to win an order for 40 737-700s for a remarkably low price reported to be around $22m. Other considerations were involved as well. Having missed this blue chip customer, eyes turned toward Delta. Anticipation was high, and this became the must-win deal for Bombardier.
The CS100 has been a slow seller compared with the CS300. The Delta order is a boost for the CS100. The conversion rights to the CS300 validate what was likely a key element to the deal: the ability to upsize in the future. This probably helped reduce the chances for Embraer to win the deal with the E195-E2. There is no growth opportunity for the E195; the E2 was stretched 12 seats to a maximum 133 in all-coach configuration. The CS300 is a 149-seat two class airplane and 160 seats in a shoe-horn configuration.
There was no mention of the prospect of an even larger CS500 in the press releases from BBD and Delta.