May 30, 2016, © Leeham Co.: We at Leeham Co. and Leeham News and Comment take some risk when we make analyses, forecasts, projections and predictions. These often put us out on a limb, open us to criticism and even ridicule and as often as not really pisses off those companies that are the target of such predictions.
Some recent events and news stories caught my eye that validated something I predicted eleven years ago.
First, the set up.
By now, of course, the reader knows I’m talking about the Bombardier C Series.
On March 31, 2005, a guest column I wrote for The Seattle Times was titled, Look out Boeing, here comes Bombardier. Eleven years ago. In the column, I warned that Boeing would be complacent, and rely on too many derivatives going forward–to its error and regret. The column brought criticism and ridicule, as well as disbelief.
There was plenty of turbulence for the C Series to come, which I didn’t forecast. The first iteration was stillborn and had to be relaunched in 2008 to today’s successful design. (Remember that Boeing floated three different versions of a follow-on to the 747-400 before settling on the 747-8 and Airbus went through five iterations of the A350 before coming up with a winner in the XWB.) I certainly didn’t foresee the bungling of the prior Bombardier management when it came to selling the C Series into an entirely different market sector than they were used to in the regional jet and turboprop markets. (The new management has got it right.) Throughout BBD’s trials and tribulations during the development and stalled sales campaigns, critics of the C Series and of BBD continued to cast doubt over the success or failure of the program.
Boeing’s response to the prospect of United ordering the C Series, and now with Delta’s validation, the program clearly is on its way.
In that 2005 column, I wrote, “Today, Bombardier is poised to move up on Boeing as Boeing did on Douglas and as Airbus did on Boeing.” Airbus certainly understood the threat when in 2010, John Leahy, COO-Customers, and Tom Williams, then-EVP of Programs, declared Airbus would not ignore Bombardier as Boeing had ignored Airbus in the early days. Leahy, always the competitor, aggressively priced the A320(ceo) against the CS300 and blocked several potential deals.
I also wrote, “Boeing needs a new commitment from its leadership to the next quarter century instead of the next fiscal quarter. A replacement for the sturdy, but aging 737 product line is needed. So, too, is an attitude that investment in its airliners is necessary to keep Boeing as a premier leader in commercial aviation, not a grudging make-do with derivatives of old, out-of-date planes (757-300, 767-400 and the 737-900).” How prescient has this turned out to be?
The close of that 2005 column was really bold and perhaps the most open to criticism. But who knows: another 20 years may prove it correct. Boeing passes on creating a new, clean-sheet replacement for the 737 and 777. Instead, it pursued derivatives.Only the MAX 8 is selling well of the three family members (four if you count the MAX 200 as a separate model, though it’s just a high-density version of the MAX 8.) Sales of the 777X have stalled.
Boeing today doesn’t want to do a Middle of the Market airplane. Its focus is on a MAX 7.5 and maybe a MAX 10, two more derivatives of a 1950/60s design. Few doubt that once the C Series becomes profitably in the next decade that BBD won’t pursue larger aircraft.
Midway Airport through the decades
I got my start in commercial aviation at Midway Airlines (the first one) at Midway Airport in Chicago. Thus, I’ve always had a soft spot and special interest in this airport. I recently discovered a 2001 30-minute history of the airport that was posted last year on You Tube. It has a lot of piston film footage and traces the history from the 1920s.