Pontifications: Good A220 endorsement, but Airbus still has cleaning up to do

By Scott Hamilton

Aug. 5, 2019, © Leeham News: Airbus last week won a big, validating commitment from Air France-KLM Group for 60 orders and more options for the A220-300.

The contract won’t be firm until later this year, but the AF Memorandum of Understanding (when converted) brings the A220 order book to 611. There are some other commitments that haven’t yet been converted to orders.

Through mid-July, there were 86 A220s in service. There were 465 Letters of Intent, MOUs and Options before the Air France deal was announced.

But of those firm orders, 110 of them aren’t so firm. In fact, some of them really shouldn’t even be on the books.

Ghost orders

Republic Airways Holdings has an order for 40 A220s and 40 options, a transaction dating to 2009 when Bombardier owned the program.

Republic then owned Frontier Airlines, and the CS300s were intended for this low cost carrier.

But in financial trouble, Republic later sold Frontier to Bill Franke’s Indigo Partners group. Republic now had no airline to use the airplanes. Republic later declared bankruptcy, yet did not shed the orders through reorganization. The airplanes remain on the order book, but deferred indefinitely.

Odyssey Airlines is a UK start up with an order for 10 A220-100s, which also began as a BBD deal for the CS100. The carrier planned to use the aircraft to fly from London City Airport to New York and other cities.

The order was suspect from the beginning because Odyssey was crowd-funding its finances. Unsurprisingly, it hasn’t raised the money needed to start operations. The website doesn’t even come up anymore. Yet the orders are still on the books.

Braathens Regional Airlines has an order for 10 A220-100s. This, too, is a leftover Bombardier deal. The carrier cited poor domestic market conditions for deferring the aircraft.

Lease Corp International, a tiny lessor, was one of the first customers for the C Series—still under Bombardier at the time—but has repeatedly deferred the order. It has 20 on order.

A changing business plan and a contract price that by today’s environment is well above market, LCI is in no hurry to take the airplanes. This, too, is an indefinite deferral.

Ilyushin Finance Corp, a Russian leasing company, and Saudi Gulf Airlines have 30 airplanes between them that are indefinite deferrals. Sanctions against Russia affect delivery to IFC. Saudi ordered Airbus A320neos, with suggestions these would be in lieu of the A220, but the order remains for now.

Like the others, these were also Bombardier deals.

Near bankruptcy

It’s clear the move by Bombardier in 2017 to sell a majority share of the C Series (as it was then known) to Airbus is paying off. Airbus owns 50.01% of the program; Bombardier owns about one-third and a Quebec Province pension fund owns the rest.

Bombardier and the pension fund stand to gain when these recent orders under the Airbus leadership begin delivering.

Teetering on the brink of bankruptcy, Bombardier couldn’t gain traction with airlines and lessors who questioned the company’s ability to survive.

Airbus sealed deals with JetBlue and “Moxy” Airlines at the 2018 Farnborough Air Show, but both were transactions that began under BBD. These were for 60 airplanes each.

At this year’s Paris Air Show, Airbus won an important endorsement from lessor Air Lease Corp, which ordered 50.

But it’s clear Airbus still has some cleaning up to do. And the order book is inflated with the ghost orders.

67 Comments on “Pontifications: Good A220 endorsement, but Airbus still has cleaning up to do

  1. Is there some sort of “set of rules” for what stays in an order book and what gets deleted?

    It seems that both Airbus and Boeing have orders on their books that are all but dead and these orders still being there are probably, within the airline community, more of an embarrassment than anything else.

    Maybe these orders lack some sort of official cancellation to allow them to be removed form the books?

    Just wondering if there was a logical reason as to why they might keep them around.

    • They keep them around because deposits have been paid. Taking them off the order book probably means they’d have to reimburse the deposit.

      • Contracts involve 2 or more parties.
        If there is no meaningful access to some “other” party
        you can’t terminate the contract.
        As an example Airbus held A300 contracts for Iraq Air for ages.
        nobody there to talk to.

    • The only way Airbus deletes an order, is if the program is terminated…. The a380 is an obvious example….comical how they finally had to delete Doric ,or Amedeo (whatever they call themselves)..order that had no chance of ever being filled..
      Or invent an entity called “Air Accord” , just to keep the backlog solid… I’m sure they’re very disappointed about not receiving there’s anty time soon!!!

  2. There is a lot more to do to get the A220 programme running smoothly. But the same applies to the A32 programme. Both are jewels in Airbus’ crown. The rest are humming along nicely. In particular, if there is an unturn in widebody orders, Airbus are well placed to increase production of the A350 and A330.

    I think next year we will know where the A220 and A321 are going for we will see Airbus begin to emerge from it’s production problems. They will sell both, if they can produce them.

    We could also see the launch of the A220-500 next year, but no later than the year after. I also think Airbus will stretch the A321 to create the much talked about A322 in the next two years.

    My prediction, 1000/year narrowbody and 200/year widebody deliveries by 2021/2022 with more production capacity to come.

    • They are already past 200 widebody per year even excluding Boeing’s freighter only lines for 777, 747 and 767

      • But not Airbus. Airbus don’t do 200 widebodies/year. But, they are now in a position to do it. I think it’s about 160/year at the moment.

        I think, like narrowbodies, Boeing’s widebody numbers will slowly deteriorate.

        For example, 787 orders have not been far greater than orders for the A330 (ceo & neo) since the launch of the A330neo. Using Wiki, it’s 380 A330 and 411 787. I admit Iran Air is daft. But even so the numbers are comparable.

        We were told that there would be an uplift in widebody orders starting in 2019/2020. Interesting times given the launch of the A321XLR.

        • 52 wide-bodies wiped off the books is more than just a brush off .Iran air orders should have immediately been cancelled, not drawn out as the norm for ab.. you might as well erase Kuwait’s 5 a350’s…..Air Asia x’ s 10 a350’s ,and srilanka’s 4 a 350’s as well.. Don’t think Yemenia is in any hurry for their 10 a350’s either.. C’mon ab, clean up those phantom orders!!!

          • Wiki says it’s 36 not 52. The 787 has a similiar number of bad orders, 27 according to Boeing’s website. But that number is not likely to include Ethiad.

  3. Airbus most likely is working hard to reduce the A220 manufacturing cost and get new suppliers on board, like Spirit, so they probably do not want to deliver too many of the “expensive hulls” but move deliveries forward when the cost cutting with new contracts and suppliers has been kicking in and Mobile is up and running. Right now the monthly deliveries of A220 is like a good days deliveries of A320’s.

    • Spirit is already an A220 supplier with various fairings.
      The main suppliers are

      AVIC SAC Commercial Aircraft Company Ltd
      Centre fuselage, centre fuselage wing box, tailcone structure
      Bombardier Belfast
      Composite Wings
      Duocommun
      Fuselage skins
      Leonardo/Alenia
      Horizontal/vertical stabilisers
      All the others are mostly Airbus suppliers too. Not too sure getting a large section made in China has produced the orders they could have expected

      • Yes, Think Spirit are bidding om more parts. It will be interesting to see what happens to Bombardier Belfast.
        There are many Airbus supplers that could be more involved into the A220 like: EFW, Diehl, Siemens, Thales, Telair, Liebherr, Chemetall, Akzo, GKN, …

  4. Do anyone know what the current A220 production capacity at Mirabel and Mobile is? If A220 orders increases at least a 3rd site could be required somewhere.

    With legacy airlines the A223 is a good replacement, will be interesting if LCC’s will be interested in the A220, maybe in the A225.

    With a seriously big squeeze LCC’s in Asia could give it an 3-3 layout, it will be tight but could work for <2 hour flights.

    • Supposedly planning for Mirabel 10, Mobile 4.

      Current rate, based on deliveries the past 2 months, at Mirabel is 4-5.

      • > Supposedly planning for Mirabel 10, Mobile 4.

        And max capacity is around 14 and 8 respectively.

    • If Airbus market forecasts of 7000 over the next 20 years are right, it will need to be 200/year just to get to 4000 over the next 20 years.

      So I agree, 10/month and 4/month. But more capacity will come, if Airbus follow their forecasts.

      • It must be quite a delicate balancing act, scaling production capacity to orders. Have too small a capacity to build them, you won’t get the orders. Have too much capacity and it’s initially wasteful, but with the right aircraft could work out.

        So striking the right balance, giving the right “if you order it I can deliver it” message without that being implausible seems key.

        Apart from when it comes to A320; seemingly delivery times on that no longer matter, airlines will order them regardless…

        I wonder how much spare land is there at Mobile. Could Airbus expand massively there in the fullness of time? Or how about Mirabel, is there land to ramp that up too should the market support it? The limit on available land could indicate their ultimate manufacturing rate…

    • Ending of CRJ final assembly at Mirabel ( once had 2 FAL) will provide more space along with new buildings
      “Airbus confirms it has kicked off construction of two new buildings in Mirabel that will enable the company to boost production of A220s.”
      https://www.flightglobal.com/news/articles/airbus-begins-building-new-a220-assembly-facilities-454148/

      One of Bombardiers problems was assembly lines all over the place and rather than consolidating at say Dorval, opened its new facilities at Mirabel in 2000. They seem to be further reducing their footprint at the old Cartierville site (Canadair) in Montreal.

      • Dorval and Cartierville are way too small too expand significantly. in fact, they initially moved their assembly lines from Cartierville to Dorval but then Mirabel beckoned.

  5. If any of the doubtful orders have delivery slots would think a few airliners would be happy to take them up .
    Max is opening up a few potential opportunities.

    • If Airbus told Southwestern that they could have 50+ A220s in the next few years, I’d bet they’d snap them up if the MAXes continues to sit on the ground.

      • I don’t think Southwest would buy A220 – it’s to small for them, A321 would be a right size.

        • The scenario I had in mind was that should the MAX never fly again Southwest wouldn’t have a choice. The A220 is smaller, but it is more available than A321. Some market share is better than no market share…

          It’s been reported that Southwestern folk have been seen giving the A220 a look over in Europe, so they’re interested enough to at least go do that.

          • > Southwestern folk have been seen giving the A220 a look over

            Of course they have, means nothing. Imagine you and a competitor are operating equipment supplied by one of two vendors. Your competitor’s vendor invites you over to give you a detailed briefing on the equipment your competitor is using, perhaps even some insight into future plans and, almost certainly a very nice dinner out.

            Would you say no? Would your boss say no to you?

  6. I also wonder about those STLC Redwing A220-300s on order. They seem to be by-passing the Redwing planes and getting ready to deliver the planes to the Egyptian airline… But overall, the delivered A220s appear to be quite a hit with the operators and passengers, and like the article states: Air France is buying quite a few. That is big.

    • Self-correcting… The first STLC / Redwing A220 is now in flight testing. I think this order was complicated by a reduction in planes and maybe the aforementioned Russian thing.

      https://www.abcdlist.nl/cseries/cseries.html

      As also mentioned, I would think open slots would be snatched up by DAL, AC and others. In the DAL situation, they would probably be thinking “that’s one less MD-88 we need to maintain. But it is complicated by seat count. Course for the old DC-9 based planes, they are bringing in 180 seat A321s, too. Oh, would I struggle to be an airline scheduler. Maybe computers help them do their jobs. I think a DAL A220-300 will have 134 seats. The MDs, about in the middle with 150.

  7. I think some airlines are still light footed about potential reliability issues around the P&W-GTF’s. Ones confidence is established it could be likely to see orders from smaller?

    • I feel the PW1100G/PW1500G are typical P&W commercial engines with initial problems, broken promises and later massive amount of SB’s during a few years and you have a pretty good engine. This time they did not have to chase TSFC just reliability and if you get deliveries now all these SB’s are incorporated. If you get an early sn you need to get it into major shop visit to get those SB’s incorporated.

      • The A220 hasn’t suffered from the same rotor bow issues as the GTF on A320neos so far as I’m aware. That’ll probably help confidence somewhat.

        Swiss have been flying theirs for quite some time, haven’t they? Must be beginning to get lots of hours on the clock. Certainly it seems that the P&W GTF performance is pretty good, certainly well worth getting any reliability issues thoroughly worked out.

        • Think most SB’s are out by now and I would not be surprised if the PW1500G got most of the PW1100G SB’s as well. Personally I would only buy a new fleet of P&W Engines after SB 72-404 is issued and incorporated into new production…

  8. If BBD had been doing gangbuster they would not have sold the program.

    Nor is Airbus now eating into the Sklyine.

    So the book is messy? How long did the Virgin Air A380’s linger on?

    Or better yet Hong Kong and Amedeius or whoever they turned into?

    That is why we learned how to subtract in school, total order minus it ain’t happening orders = semblance to reality.

  9. Delta certainly seems to like them.

    I do wonder if the Airbus intervention was as pivotal as all that, important though it clearly was. Delta had ordered C-Series prior to Airbus showing up, they’re a serious airline, and they were confident in it. Had Bombardier delivered to Delta it was always going to be a hit. A happy Delta is always going to be a good recommendation for whichever aircraft is the cause of such bliss, along with Swiss, etc. So I think the wider market confidence would have come along anyway, but perhaps not quite so quickly.

    Good in-service reports coming out of Delta and other operators would have been pretty good collateral for Bombardier to have raised more cash, and in a sense this is what’s happened; they’ve got a healthy share of a near certainty of a much bigger and likely long lasting program; arguably better than a bank loan. Clearly convincing a fellow airframer of the aircraft’s merits was far easier than explaining it to a bank loan clerk.

    Airbus coming into the program certainly cemented the commercial side of any deals; orders were certain to be fulfilled, probably on schedule at the agreed price, without having to second guess financiers. All in all a really good deal for Bombardier, Airbus and A220 customers.

    Scott makes an excellent point about the number of real orders, but it’s somewhat less important now I think than 2 years ago. In a few years time the ghost orders will likely be a small blip.

    Oh how I bet Boeing wish they’d acquired the program.

    • Before the first C-Series was delivered they took one of the FTV’s around North America to test for compatibility with a bunch of different airports. You could follow it around on Flightradar24 as it hopped around testing different routes. It visited most places once or twice and some places not at all (Vancouver, sob!) but it went to Seattle 7 times. It looked suspiciously like they were showing it off to BA for some reason, probably financial investment.
      I’m glad BA ended up not being involved. They seem to screw up everything they touch these days.

    • Delta, Swiss, now Air France but there is also Air Baltic a hybrid company that is phasing out 737s to be as soon as possible only A220 airline, they are so enthusiastic about this plane – comfort, economics, range etc.

  10. It would have been hard for BBD even if they had the cash to properly launch the C series because Boeing and Airbus control the supply chain as well as their purchasing power.

    • Airbus and Boeing do not control the supply chain.

      They are the two players present (and BBD and they are gone)

      Its not like they can tell Rockwell (that changed now its Raytheon?) don’t sell to these guys.

      Those suppliers can also have military contracts.

      And those suppliers make better returns than Airbus or Boeing do, so if they want they can accept less money than the quantity buy from say BBD would normally be driven by as a way to diversity and spread out the R&D and base costs.

      My cycle now has a Keihin Fuel Injection system. Probably 3000 sets a year, but they have the R&D paid for, build an adapotor and you can sell it for a reasonable cost and make good money.

      Its not a binary choice aspect.

  11. The Airbus takeover of the C series caught the industry by surprise and will prove to be a very astute business decision.
    With the problems for Boeing and the Max, would it be too radical to suggest that a Boeing A320 could offer a low cost and relatively fast track solution?
    I think somewhere between two and three years could see a Renton production line for a suitably Americanized version of the Airbus for a fraction of the cost of a Boeing NSA which on todays technology could only offer marginal economic benefits which in themselves could be readily countered by Toulouse. Apart from perhaps SWA, could see most current Max customers happily taking the alternative solution.

    • Boeing was very much so more focused on stifling competition, than having a good, safe single aisle airplane. Their overall behavior was without ethics.

      • To me, it’s a complete riot for you to be talking about BA’s ethics, as we been patiently waiting for the long overdue Billions in AB fines, and which former AB execs will be carted off to jail.

        • @Montana Osprey

          And we are also patiently waiting fir the long overdue billions in Boeing fines.

          But first of all please see that @sam was referring rather to Boing wanted to kill Bombardier for A220 by antidumping actions without a base – “if you can’t beat fair – cheat”.

        • @MontanaOsprey

          There are ethics and ethics, I fully take your point regarding the dubious sales practices that AB are being collared for. This however pales into insignificance when the practices in BA suggest wholesale ethical issues in development, certification, response to crashes etc etc. This gets to the fundamental reason for them being in business. BA have been caught treating their clients with contempt when it comes to the core product they produce and deflecting blame and attempting to reduce the amount of correction to what is a fundamentally flawed design.

          As I said there are ethics and there are ethics and the bloodletting at AB has occurred whereas the day of reckoning is yet to be had at BA

          • That is the truth.

            I personally doubt Boeing ever will see that point.

            The 787 management debacle was swept under the wing and the MAX will be.

            Been watching this for a long time and the MO is to screw up, throw lots of money at it, then move on.

            Not alwyas with the same people but the attitude and how the board runs things does not change.

          • This was foreseeable when Boeing relocated its head office to Chicago. At that point it stopped being an airplane maker and started being a holding company.

    • Boeing A320 is laughable and shows no understanding of aviation at all, let alone how business works. The competition regulators would go through the roof at any Boeing-Airbus collaboration. It’s presposterous.
      Then there is the 737-8 and Max itself, offering longer range, more pax and with a lower thrust rating maybe even better economy ( hint to self. Look up LNR comparisons of the two models).
      Boeing is better off going with a brand new NSA rather than like China is doing, a copy of a 35 yr old plane

      • You do understand the word “irony”, don’t you?

        I had to read it twice before I started laughing.
        Probably not so humorous for some folks, I guess.

  12. Now that they are building up the order book, is the wing plant in Ireland still up for sale?

    • Bombardier have made nothing out of the sale. The wing plant is valuable, especially the intellectual property.

      I’d say yes, the plant is up for sale, but at a hefty price.

      Be interesting if Boeing put in a bid. That will stir the pot a bit, just a bit

    • Interesting thing about that CSeries (A220) wing. I just read that the base of the new 777X carbon fiber wing, is from the 787. Boeing just increased the size of it. Consequently, that A220 carbon fiver wing maybe going places, too.

      • I’ve seen years ago (nearly a decade) a central wing box for a single aisle aircraft built out of carbon fiber. Not in a skunk works but on public display at an university. The point is not to build a carbon fiber wing but to build 50 a month in an economic way. A400 and A350 already have carbon fiber wings.

        Will the customer pay a premium price for a carbon fiber wing? According to latest surveys even today some CEOs like to buy 737 MAX.

    • I think Airbus has the A220 sorted out, the ramp up is going to take some time.

      Suppliers were not going to make investments that would bite them, now they can in a solid program.

      The 500 is probably further off than many think, Airbus has some issues on the A320 to get fixed. IAG is unhappy for a reason.

      Some hits coming on the A380 (AF/KLM dumping more of them sooner)

      • See Mobile is gearing up for the A220.
        http://c.newsnow.co.uk/A/995591287?-303:3665

        The late deliveries of the A32N’s are not good but also think Mr.Walsh is looking for motivation for the MAX decision. See Mr Cruz says it will be based out of Gatwick.

        Can see that AB will focus on the A321X family and A220-500 production in less than 5 years?

        With A380’s and B747’s going everybody thinks 779 but I won’t be surprized if the 35K eventually could be aircraft of choice.

        • The DC-9 / MD 80/90s were built in 8 lengths. 737s – 9? The CRJs – 4. The EJets – 3 or 4? Like TW suggested, it may take awhile, but they get 1000 A220s flying, history suggests a stretch. BTW, A320s, 4.

        • Mr.Walsh story is possibly more personal than technical, if IAG doesn’t order A223’s to replace at least 50% of their current fleet of ~65 A319’s it will be the writing on the wall.

          Saw the story about the 787-10 quality issues. It must be remembered that most of 787’s that will be delivered over the next 3(?) years or so were sold at (very) low prices to kill the 330NEO.

          • For me it’s rather dirty Boeing PR campaign accorded by Walsh & AIG by 200-MAX-LoI “if you can’t beat fair – cheat”

          • Wow, welcome to the world of business

            I believe back in the day that was an accurate assessment of Airbus as well.

            If you can’t get money to build an aircraft get government hand outs.

            Which in US business culture used to be Cheating (no longer of course)

            The old saying of “If you can’t stand the heat don’t go into the kitchen ” still applies though.

            Oh and the other one, Whine, squealing wheel sometimes gets greased (see Bill Lambier, center for for the Bulls)

  13. Bombardier is a study in contrasts. On the one hand it developed an apparently superb airliner in the C Series. On the other, it is poorly run, can’t get by without the governments of Canada and Quebec contorting themselves into pretzels to find new ways of throwing money at the sinking ship, and seems largely to exist to bankroll the lifestyles of the descendants of the company’s founder. Airbus got a screaming deal with the A220. The Canadian taxpayer got the geared shaft.

    • Bombardier did not get more subsidies (in proportion) than some other Canadian manufacturers, like Ontario’s auto makers, or worst those two designated shipbuilders of the National Shipbuilding Program -> for under specs, massively overpriced and massively late ships.

      Now in the commercial aircraft manufacturing business, do you really believe Bombardier’s competitors got less subsidies?

      Including Boeing’s sole source military contracts, Washington state massive tax breaks, etc…

      How about Comac, Sukhoi, Embraer (old ProEx financing)?

  14. Speaking of “ghost” orders whatever happened to the order from Porter Airlines? It’s unlikely these planes will ever be delivered since Porter’s hub at Toronto Island cannot accept these aircraft “thanks” to left-wing opposition. Of course this doesn’t matter in the least since MAJOR Airlines have placed orders since Porter, i.e. Air Canada, Jet Blue, Delta, Air France and others

    • Of course if it was left wing and right wing opposition then it would balance out and they could land!

      I love those puns.

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