From war to partner: Airbus and the CSeries

John Leahy

Oct. 18, 2017, © Leeham Co.: It was the annual media day in 2010 that Airbus declared war on the Bombardier CSeries.

Lufthansa Group in 2009 was the launch customer of the CSeries with an order for 30 CS100s and options for 30 more.

Bombardier had won a major order from Republic Airways Holdings, which then owned Frontier Airlines, an exclusive A319/320 operator. Republic ordered 40 CS300s and optioned 40 more. It was this order that spurred Airbus’ wrath. It was this order that would push Airbus into launching the re-engined A320neo family.

John Leahy, Airbus COO-customers, and Tom Williams, then EVP of programs, declared to the assembled international media that Airbus would aggressively compete against Bombardier.

Now, seven years later, Airbus and Bombardier are partners.

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What has Airbus got in the CSeries?

By Bjorn Fehrm

October 18, 2017, ©. Leeham Co: Bombardier and Airbus changed the airliner landscape yesterday. Analysts say it’s the largest industry change since Boeing bought McDonnell Douglas in 1997.

So, what has Airbus bought for no money? A me-too, or a world-beater?

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Assessing the Airbus-Bombardier deal

Oct. 17, 2017, © Leeham Co.: The Airbus-Bombardier transaction announced yesterday has implications well beyond the United States, which has been much of the focus of analysis post-announcement.

The analysis focused on the US is natural, given the Boeing trade complaint involving the CSeries sale to Delta Air Lines.

But it’s important to step back to see what this means for CSeries.

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Airbus-Bombardier CSeries deal means no tariffs on US-assembled aircraft, says CEO

Oct. 16, 2017, © Leeham Co.: The stunning Airbus-Bombardier partnership for the CSeries program guarantees the future of the new airplane, kills off the A319 and thrusts a big stick up Boeing’s tailpipe.

Boeing won big victories in its trade complaint filed with the US government, winning 300% tariffs on every CSeries imported into the US, throwing into doubt a big deal with Delta Air Lines for up to 125 aircraft.

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Trump decertifies Iran nuke deal, throws Airbus, Boeing orders in doubt

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Introduction

Oct. 16, 2017, © Leeham Co.: President Donald Trump announced Friday he will decertify the Iran nuclear deal, throwing into doubt a host of related commercial deals, including huge aircraft orders.

Iran Air Airbus A330. Photo via Google.

Trump hasn’t gone so far as to withdraw from the pact, but he still threatens to do so unless Congress makes changes he wants.

Here in the US, focus is, of course, on the commitment by Iran for Boeing aircraft—none of which are firm contracts, but “commitments” to order.

Of less focus here, if any, is on the outstanding orders placed by Iran for Airbus and ATR aircraft, which are subject to US licensing.

Summary
  • 30 Boeing 777s, including 15 Classics are at stake.
  • 50 Boeing 737 MAXes to Iran Air and 30 to Iran Asesman are also at stake.
  • ATR has 11 aircraft scheduled for delivery in 2018.
  • Airbus sold 114 A320s/321s, A330s and A350s to Iran Air. A few white tails already have been delivered.

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To Kill a Better Bird

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Introduction

Oct. 12, 2017, © Leeham Co.: Boeing’s brash and controversial move to file the trade complaint with the US Department of Commerce is a bold gamble designed to kill the Bombardier CSeries entirely, not just block it from the US market, people familiar with the strategy tell LNC.

The threat Boeing fears from the CSeries is not really about the 737-700 or 7 MAX, they say, but truly about the future of the 737-800 and 8 MAX.

While Boeing as clear in its filings with the US International Trade Commission (ITC) and Department of Commerce (DOC) about the alleged threats, some insight to Boeing’s thinking explained by people familiar with the situation was provided.

Summary
  • Boeing hopes blocking the CSeries out of the US market will have a ricochet effect on Bombardier’s pricing strategy elsewhere.
  • With a higher price, Boeing believes it can successfully compete head-to-head in acquisition campaigns.
  • Boeing’s fear is really about the CS300 dragging down the price against the 7 MAX, which will have a cascading effect on the 8 MAX.

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US declared Bombardier impeded trade probe, uncooperative and found dumping as a result

Oct. 10, 2017: The US Department of Commerce concluded Bombardier was uncooperative, didn’t answer its questions and impeded the trade investigation in the Boeing complaint.

Accordingly, under US law, Commerce could draw negative conclusions toward Bombardier and found it “guilty” (our word) of violating anti-dumping laws in its sale of the CS100 to Delta Air Lines.

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Boeing’s Bold Ambition, Part 2

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Introduction

Oct. 9, 2017, © Leeham Co.: When Boeing launched the 787 program in 2003, an after-market maintenance program called Gold Care followed.

It wasn’t successful. Few customers signed up for it.

Stan Deal, CEO of Boeing Global Services.

But the lessons learned are important for Boeing’s drive to vastly expand its presence in the global commercial airplane after-market business.

Boeing Commercial Airplanes and Boeing Defense, Space & Security (and the latter’s predecessor, Integrated Defense Systems) provided services to the airlines, lessors and government customers, but now there is a dedicated business unit.

Boeing Global Services was announced nearly one year ago, on Nov. 21. When Boeing reports its third quarter earnings at the end of this month, for the first time revenues and profits for BGS and its predecessors will be a line-item in the earnings statements.

Stan Deal, the CEO of BGS, acknowledged the poor start of Gold Care in an interview with LNC. But from this unhappy experience, Boeing learned what officials hope lays the foundation of a new, robust business.

Summary
  • 787 Gold Care didn’t start out well.
  • Gold Care is rejigged and rebranded.
  • BGS services Airbus aircraft, too.

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US finds “dumping,” adds 80% tariff to CSeries

Here it is, the press release from the US. The tariff is what Boeing originally asked for, 79.82%. A far higher one was expected, following last week’s subsidy determination.

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Bjorn’s Corner: Laminar flow aircraft, Part 2.

October 06, 2017, ©. Leeham Co: We introduced the Airbus “Blade” laminar flow research program in the last Corner. Now we continue to look into what this research is all about.

We will explain the difference between laminar and turbulent flow (really, laminar and turbulent “boundary layer” flow) and discuss some of the work that has been done with laminar flow structures.

Figure 1. The “Blade” equipped A340-300. Source: Airbus.

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