Jan. 16, 2019, © Leeham News, Mobile (AL): Groundbreaking for the Airbus A220 final assembly line today might be viewed as a bittersweet moment for Alain Bellemare, CEO on Bombardier, designer of the C Series.
The program nearly bankrupted Bombardier. A sale of 50.01% of the CSLAP limited partnership to Airbus was necessary to save the program and Bombardier.
Bombardier’s share in the program was reduced to about a third after the Airbus sale. (A quasi-government Quebec pension fund owns the rest.)
But in an interview following the groundbreaking, Bellemare was almost giddy with excitement.
“I’m very proud,” he said. “I’m proud for the great product we’ve designed. I’m very proud to see that it’s getting full traction in the marketplace. I’m very proud to see the backlog is so strong. I’m very proud to see that we’re expanding our footprint globally.”
Bellemare said people were asking him in 2015 about the future of the program.
“Here we are four years later. Nobody’s talking about that,” he said. “The backlog is solid. “You’ve got Delta. You’ve got JetBlue. You’ve got Moxy. You’ve got Air Canada. You’ve got Swiss in the backlog. You’ve got Korean Air. And now we are expanding our global footprint by building right here in the US.
“We are very, very proud to have designed this aircraft. Having it under the leadership of Airbus, where we have the expertise and knowledge, they are going to take it to the next level and make something fantastic out of it.”
Bellemare said Bombardier had to do the Airbus partnership to give the C Series a chance for success. The company didn’t have the balance sheet to support the growth of the program.
“We did an amazing job, and now with Airbus, we take it to the next level,” he said.
The Mobile A220 FAL is intended to serve the US market.
Knittel sees the US as the largest market for the A220, which formerly is the Bombardier C Series.
Delta Air Lines now has an order for 90 A220s and options for more. Initial deliveries will come from the former Bombardier C Series production plant at Montreal’s Mirabel Airport, which has been rebranded as an Airbus A220 facility.
The first delivery, likely to Delta, from the Mobile plant is targeted for mid-2020.
JetBlue and “Moxy” Airlines, the working name for a new US start-up, each ordered 60 A220-300s with options.
Knittel, while typically declining to talk about specific campaigns, said Airbus is pursuing orders from other US airlines. The obvious targets are American and United airlines, but Spirit Airlines has previously publicly been mentioned.
Other potential targets would be Frontier Airlines, Alaska Airlines and Southwest Airlines, though these would seem to be long shots.
“We believe between Mirabel and Mobile we have the capacity going forward to satisfy our customers,” Knittel said.
Mirabel expects to produce 10 A220s per month by the mid-2020 decade. Initial capacity of the Mobile plant will be 4/mo.
Knittel said Airbus now has more than 1,500 aircraft in the US. Airbus has 71% of the backlog in Latin America and 57% share of in-service fleet, said Jeff Knittel, chairman and CEO of Airbus Americas.
Over the last two decades, air traffic has doubled in Latin America, he said, with a lot more potential.
In 2017 inter-regional traffic grew faster than domestic travel, Knittel said. Only 20 of largest cities are connected. The prospect of direct, cross-border traffic will drive growth.
He said 2,700 aircraft valued at $350bn in today’s list prices are needed in Latin America over next 20 years.
Airbus is investing in the region to help, he added.
“We’re investing in training and maintenance centers in Mexico, Brazil and Argentina,” he said.
Groundbreaking for the Mobile A320 FAL was in 2015. Since then, Airbus delivered 103 aircraft from this facility to US airlines. In 2018, Airbus delivered 50 aircraft, exceeding targets. Currently, the production rate is just above 4/mo, and trending toward 5 by the end of next year.
Airbus has 700 jobs today in three Mobile facilities, including an engineering center. There are another 250 with contractors, plus indirect jobs at a ratio of about 5 to one, said Gov. Kay Ivey, who was present for the groundbreaking,.
The A220 FAL will be add about 400 more jobs, plus the supply chain.
“One of the largest markets for the 220 is the US,” Knittel said. “[Mobile] is our industrial base in the US.”
Airbus spent $600m for the A320 FAL. With the 220 FAL’s $300m, Airbus will have invested almost a billion in Mobile. Some of this is offset by state and local tax incentives and cost-sharing by Bombardier.
The Mobile engineering base does global engineering for wings.
Bombardier’s presence in the commercial airliner business is diminishing.
The C Series program sale was the first step, although it retains a 33% share for now.
In November, the company announced an agreement to sell the Q400 program to Canada’s Viking Air parent.
It also announced simultaneously it is exploring “strategic options” for the CRJ regional jet program.
“What we want to do is build the backlog first,” Bellemare told LNC on the sidelines of the groundbreaking event. “We are working with airline customers to see how we can strengthen our backlog past 2020. We’re working with the supply chain to see how we can take the cost down. We’re doing our part internally to take our costs down. We’re streamlining our operation to make it more efficient and we’re looking at other options to see how we can unleash value.
“The reality is that when I announced we are considering our options, people are really engaged with us positively because they like the aircraft and they especially like the new [Atmosphere] cabin.”