Exclusive: CSeries performance better than guarantees, “favorable” to brochure; range better than advertised

Rob Dewar

Rob Dewar, program head of the Bombardier CSeries.

March 3, 2015: c. Leeham Co. Flight test results for the Bombardier CSeries show that the economics of the airplane not only are meeting the economic and performance guarantees, they are “favorable” to the marketing brochures that have promised 15% better operating costs and 20% better fuel burn than today’s in-production Airbus A319s and Boeing 737-700s, Leeham News and Comment confirmed.

Three sources told us the CSeries flight tests were turning in better-than-guarantee results. Rob Dewer, vice president and general manager, CSeries Program, confirmed the information today in an exclusive interview.

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CS300 first flight

CS300

The first flight of the Bombardier CS300 occurred Feb. 27, 2015. The five hour flight was in cold but clear weather, with the moon joining the event. Source: Sylvain Faust in a Special to Leeham News. Click on image to enlarge.

The first flight of the Bombardier CS300, the 149-160 version of the new generation aircraft, came off without a hitch on Feb. 27. The flight lasted five hours.

The CS300 is a direct challenge to the Airbus A319ceo/neo and Boeing 737-700/7 and comfortably outsells the A319neo and 737-7. The economics of the CS300 are substantially better than the Airbus or Boeing, according to Bombardier claims and validated by our analysis.

This CS300 is Flight Test Vehicle 7 (FTV 7) but actually precedes FTV 5 and FTV 6 into the BBD test fleet.

 

Odds and Ends: CS300 first flight delayed; PW GTF; Boeing enters MidEast fray

Baby, it’s cold out there! Bombardier delayed the first flight of its CSeries due to the cold. Click on image to enlarge. Source: Sylvain Faust.

CS300 first flight delayed: When Bombardier says it’s too cold for the CS300 first flight, you know it’s cold up in Montreal. It’s -21C at Mirabel (-6F) and partly cloudy, but that was too cold for the guests, according to our man on the scene, Sylvain Faust. Canadians know how to dress for this cold but visitors don’t. A rescheduled time hasn’t been definitively announced.

Bombardier doesn’t have an open-faced tent and outdoor heaters set up, according to Faust.

PW GTF: Flight Global has a report about Pratt & Whitney’s “new aggressiveness” in competing with CFM International in the battle of the Pure Power Geared Turbo Fan vs the LEAP-1A. These engines power the Airbus A320neo family.

Boeing enters MidEast fray: American, Delta and United airlines want Open Skies revisited in order to curb competition by the Big Three Middle Eastern carriers. Boeing, FedEx and JetBlue, have entered the fray, opposing any such action. Here is the story.

CS300 first flight Wednesday, direct challenge to 737-7 and A319neo

Feb. 25, 2015, c. Leeham Co. Bombardier’s direct challenge to the Big Two duopoly in the 125-149 seat sector is scheduled for its first flight Wednesday, weather and gremlins permitting.

CS300

Bombardier photo.

The CS300, challenger to the A319neo and 737-7, is to take to the skies as Bombardier’s flight testing program enters the final stretch. BBD still claims it will deliver the first CS100 by the end of this year, though most analysts (and we) believe it will slip into 1Q next year.

The CS300, 135 seats in two classes and 149 in standard one class, matches the 31-inch pitch configurations of the “baby” Airbus and Boeing products.

Bombardier claims large operating economic advantages over these competitors. Our analysis shows economics probably a bit closer than Bombardier would like.

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Order cycle may have peaked for mainline single-aisles, but smaller jet cycle booming

Feb 24, 2015: The mainline jet orders get the headlines, and the focus on the order cycle, but the smaller jets have yet to see their order cycle peak.

Goldman Sachs downgraded Boeing to a Sell this week, in part on the theory that orders for the single-aisle, mainline jets have peaked and an oversupply is developing in its competition with Airbus.

The oversupply—if it develops—will only get worse as Airbus and Boeing ramp up production. Airbus has announced plans to take A320 family production to 46/yr next year. It’s notified the supply chain to be ready to go to 54/mo in 2018.

Boeing has announced plans to go to a firm rate of 52 737s per month in 2018. It’s considering 58/mo in 2019 and 63/mo in 2020, according to supply chain sources. We expect Airbus to match.

Given the long backlogs for mainline jets, out to 2020 and even beyond, it’s natural to conclude the order cycle has peaked for the time being. At the Pacific Northwest Aerospace Alliance conference Feb. 11 in Lynnwood (WA), Boeing’s VP Marketing Randy Tinseth said the company sees the need for 4,000 more orders for the A320/737 class in the next five years. This averages 800 per year, or about 440 per year for the A320 and 360/yr for the 737 at the recent split of 55%/45% for the two airplanes. This is down dramatically from recent order history and well below the book:bill of the production rates.

If the mainline order cycle has peaked, it’s a different story for the smaller jets in the 70-130 seat sectors.

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Is next airliner a single or dual aisle?

By Bjorn Fehrm

19 Feb 2015: There has been much speculation over the last weeks and months what Boeing is up to in the segment 200 to 250 seats, also know as the “757 replacement market“. The speculations over Airbus response are also vivid. One of the reasons is that apart from this segment the landscape of which civil airliners will be produced over the next 10-15 years is pretty much settled; Cseries is on final stretch of development, A320neo is flying while 737 MAX flies next year. A330neo will fly 2017 as will 787-10. A350-1000 start testing in 2016 with deliveries in 2017 and 777-9X flies 2019 with deliveries 2020.

Apart from an announcement by Russia and China that they will design a 250-280 seat widebody there is only the “757 replacement” segment which can result in a clean sheet approach from the major OEMs. Around this questions has arisen a lot of speculation about possible short and long term solutions. Having done a lot of checking of these alternatives with our proprietary model, we have learned that:

  • The 757 has an attractive capacity but is around 25% less efficient than the new generation of single aisle, A321neo or 737 MAX9, on the routes they can fly.
  • Airbus could stretch the A321 into something we called A321neoLR and indeed Airbus was working on it, it is now in the market as A321LR.
  • While 737 MAX9 limitations prohibited a response from Boeing we compared Airbus A321neoLR to what Boeing might come up with in their clean sheet design studies NSA (New Single Aisle) and NLT (New Light Twin)
  • Subsequently a 757 MAX was proposed but Boeing immediately declared that it does not work for them and we explained why.
  • Based on Boeing’s statement that the market is looking for something “a little larger than a 757” we looked into a 767 MAX with 767-200 as the airframe (it would be readily available from the KC-46 program) with GEnx-2B engines (from 747-8, they would fit). Once again it does not pass the first check, efficiency would not be much better than 757.

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Bombardier’s crisis of confidence perhaps the biggest challenge for CSeries

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Introduction

Feb. 18, 2015, c. Leeham Co.: Alain Bellemare, Bombardier’s new president and chief executive officer, has his work cut out for him.

CSeries EIS v A320neo

Figure 1. The CSeries was supposed to enter service in late 2013, two full years ahead of the Airbus A320neo. This market advantage has been lost with repeated delays. BBD is sticking to its public statement that EIS is now the second half of this year (most put EIS in the fourth quarter), but there is growing belief EIS will slip to the first or even the second quarter of next year–after the A320neo EIS. Source: Bombardier, Airbus, Leeham Co. Click on image to enlarge into a crisp view.

We outlined the corporate and market perception challenges ahead of him in our Feb. 13 post. Investor and media reception to the CEO leadership change was mixed. Although Bellemare’s appointment was seen as a positive, stock traded down and Bombardier took a pounding in the press (see some reaction at the bottom of this post).

He also has challenges with a changing market place, driven by two years worth of delays in the CSeries program and exacerbated by a changing global political environment.

Summary

  • Bombardier faces a crisis in confidence from customers that has to be fixed.
  • The CSeries has lost its entry-into-service advantage over the Airbus A320neo and has reduced its advantage over the A319neo, the Boeing 737-8/7 and Embraer E-190/195 E2 EIS due to delays.
  • A changing global political environment poses additional risks to the CSeries skyline.

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Lufthansa fleet exec praises top-level change at Bombardier

Feb. 13, 2015, c. Leeham Co.: The appointment of Alain Bellemare as president and chief executive officer of Bombardier is viewed positively by the largest and most influential customer for the slow-selling CSeries, Lufthansa Airlines Group.

Nico Buchholz, EVP Fleet Management, Lufthansa Group.

Lufthansa has a firm order for 30 CSeries and options for 30 more. The Group’s subsidiary, Swiss, is to get the firm orders. The market anticipates that the Group could eventually exercise options for its other subsidiaries.

Nico Buchholz, executive vice president for fleet management for the Group, told Leeham News and Comment today that he has worked with Bellemare as a supplier-customer for years in his previous position as an executive of Pratt & Whitney.

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Bombardier 2014 earnings, 4Q negative cash flow at Aerospace, debt/equity plan

Feb. 12, 2015: Struggling under the strain of two years of delays for the CSeries, poor sales of the Q400 and CRJ and a disastrous LearJet program, the world’s commercial airplane maker shuffled its very top leadership and announced it would seek more than $2bn in new debt and equity as the fourth quarter negative cash flow exceeded $1bn.

Bombardier said in its press release: Read more

Alain Bellemare, ex-CEO of United Tech division named Bombardier CEO

Feb. 12, 2015: Alain M. Bellemare, 53, was named president and CEO at Bombardier , it was announced today ahead of the company’s 2014 earnings call. The appointment is a move to restore confidence in Bombardier, its Aerospace division and the CSeries program.

Stakeholders in the CSeries program we had talked to expressed a desire for Pierre Beaudoin, who has become executive chairman, to step down.

According to Bloomberg Business, Bellemare has been consultant at United Technologies Corp. since January 31, 2015. He previously was President and CEO of UTC Propulsion & Aerospace Systems from July 26, 2012, to January 31, 2015. He also served as the president of Pratt & Whitney Canada and a number of other executive positions. Read more