March 26, 2018, © Leeham News: With the decision by Boeing to let last week’s deadline go by without filing an appeal in the Bombardier trade complaint, eyes turn to “what’s next” for the CSeries.
LNC broke the news on Twitter that Boeing would not appeal the 4-0 decision finding it suffered no harm in the 2016 BBD-Delta Air Lines order for 75 CS100s and options for 50 more, with conversion rights to the CS300.
Boeing filed a trade complaint a year later with the US International Trade Commission and the US Department of Commerce.
The ITC found cause to send the case to Commerce, which found for Boeing on its allegations of illegal subsidies and price dumping. Commerce determined that tariffs of 292% were to be levied on airplanes imported from Canada to the US.
The ITC then had to rule Boeing suffered harm with the sale. Industry observers, Bombardier officials and most at Airbus believed the ITC would find for Boeing.
In a stunning move, the ITC ruled unanimously that Boeing suffered no harm because it didn’t compete for the Delta order and the 737-700/7 didn’t compete with the CS100.
Boeing officials nevertheless refused to say whether they would appeal the decision. They had until the end of business March 22 to do so.
The deadline passed quietly and without any announcement from Boeing. LNC was the first to report (via Twitter) that no appeal was filed. Boeing declined to issue a formal statement why.
Boeing spokesmen tried to put a positive spin on the defeat, however, claiming a win of sorts. The groundwork has been laid to refile the complaint should another US sale be made at price-dumping levels.
But with a US plant planned to assemble the CSeries, Airbus and Bombardier say there will be no importation of an “airplane.” It will be made is the USA, they say
Airbus recently stated it hopes all regulatory approvals for its acquisition of 50.01% of the CSeries program will be received in advance of the Farnborough Air Show, which begins July 16. Until approvals are received, Airbus and Bombardier can’t discuss marketing, pricing, cost-cutting or anything else of consequence.
Construction planning for the new CSeries final assembly line next to Airbus’ A320 FAL in Mobile (AL) continues, however. Last month, Airbus and Bombardier held an event in Mobile to promote it with local officials.
The market appears to be waiting for the Airbus-BBD deal to close. Bombardier last year announced a letter of intent from an unidentified European airline for 31 firm orders and 30 options for the CSeries. The stated value suggests the airplane is the CS100, but the aircraft type wasn’t specified.
Bombardier officials said they expected the deal to be finalized by the end of the year, but it wasn’t. The customer remains unidentified. Speculation centers on International Airline Group (British Airways), Lufthansa Group and even Air Baltic. The deal still isn’t closed.
Initially, the cloud cast by the Boeing complaint over the CSeries—even though this LOI is a European carrier—was cited by some as a possible reason for delay. Now, it’s perhaps waiting for the Airbus deal to close and possibly getting better terms.
Just what Airbus will be able to do once it gains control of the CSeries program is speculative. What is known is that Airbus plans to use its leverage on CSeries suppliers to lower costs. The marketing prowess and worldwide support system Airbus has is assumed and stated to be a big boost for the CSeries.
Beyond these rather broad generalities, however, little is known.
There is no commonality between the CSeries and the A320 family beyond both cockpits use a sidestick. Even the cockpit technologies and the flying “laws” are different, though Bombardier based its cockpit software in part on Airbus—while building in new technology in the process. After all, the A320 entered service in 1988 and the CSeries nearly 30 years later. Changes in the technology are a given.
Embraer is known to believe there isn’t enough gap between the seating of the CS300 and the A320 to justify an airline taking on a new fleet type, the CSeries. Nominally, the two-class seating for the CS300 is 130-135 passengers. The two-class for the A320 now is typically 156 seats, up from 150. This is only a 15.5% difference, when 20% is the typical rule-of-thumb for up-gauging.
But would a combination of the CS100, at 110 passengers, and the 156-seat A320 or the 186-seat A321 make an attractive package for an airline needing a small airplane—along with the benefit of being able to up-gauge from the CS100 to the CS300 should traffic in the smaller markets support a larger airplane, but not a 156-seat model?
LNC is told Airbus salesmen are itching to be set free to market the CSeries.
Perhaps by the Farnborough Air Show, the industry will see whether the itch is real and just how well it will be scratched.