Conservatives attack ExIm Bank again; Embraer v Bombardier

Conservative tax groups are once again attacking the US Export-Import Bank and its funding of US exports, including Boeing aircraft.

ExIm was created during the Great Depression to support US exports. It get attention because Boeing is the most visible beneficiary. The think tanks believe ExIm financing amounts to corporate welfare–a position that is 180 degrees from their usual approach to corporations.

Delta Air Lines is leading corporate attacks because it contends that foreign airlines get preferential financing and put it at a disadvantage.

Delta says that carriers like Emirate Airlines hardly need ExIm support, and it has a point. But less well-capitalized airlines like LionAir certainly could use it. Some further reform may be needed; international rules to bring ExIm fees and interest rates to market rates were already adopted. Tightening eligibility may be fair.

Delta had this to say in an Op-Ed piece in Forbes. You have to click past the advertising page to read it.

But eliminating ExIm? We disagree, as we have written on several occasions. The think tanks would hand this market support over to Airbus, which benefits from the European Credit Agencies export financing and this wouldn’t go away. This would put Boeing and its supply chain at a disadvantage to Airbus in international sales.

Embraer vs Bombardier: Here’s an interesting article explaining how Embraer sees the market a bit differently than Bombardier.

Odds and Ends: Avoiding risk; Avoid 787 goofs with 777X; Anticipation for the 777X; CSeries expectations

Avoiding Risk: Jetmakers avoid risk by revamping existing models.

Avoid 787 goofs with 777X: This Reuters article reports how challenging the brand damage has become with the 787 issues, and it’s not the first time we’ve heard the link.

Looking forward to 777X: Akbar Al-Baker didn’t say much during the grounding of the 787, but he’s back in the news now. He looks forward to the 777X but couldn’t resist complaining about the GE90 on the current 777. That’s odd: the GE90 has only been in service since the creation of the 777-300ER and is well regarded in the industry. But Al-Baker being Al-Baker–need we say more?

CSeries Expectations: Bombardier says first flight will be next month. Expectations are beginning to increase, according to this article.

Odds and Ends: Boeing helps create new competitor; Home for the 777X; CSeries backlog

Mitsubishi MRJ: The Seattle Times has this profile of the Mitsubishi MRJ and Japan’s emerging role in global aerospace.

What particularly struck us was the narration about the benefits Mitsubishi gained from Boeing in designing and building airplanes. The next point is old news: the MRJ will use a metal wing and fuselage, not composite. Mitsubishi said long ago it would forgo a composite wing, and a metal fuselage was never in the cards for this small aircraft.

We recall that during the 2008  IAM 751 strike, Boeing CEO Jim McNerney sent an email to all employees justifying the need to cut costs because of the new competitors. We wrote at the time, Well no kidding: Boeing is helping create these competitors with its outsourcing. Although the MRJ is currently a 70-90 seat aircraft, a 100-seat version is envisioned. If these are a success, we certainly see the day when Mitsubishi will have ambitions for a 150-seat class of aircraft.

Thanks in no small part to The Boeing Co.

Building the 777X–in Everett? The Puget Sound Business Journal has this story trying to read the tea leaves where Boeing will build the successor to the popular 777-300ER.

Then there is this story from Reuters about the prospective launch of the 777X.

CSeries Backlog: Richard Aboulafia likes the design but otherwise has never had much good to say about the Bombardier CSeries. Take a read of this, Rich. (For those who don’t know, we’re good friends with Aboulafia and have a friendly and public debate over the viability of the CSeries future.)

Odds and Ends: The Space Shuttle; Porter’s community challenge;

The Space Shuttle: As the world knows, the US discontinued the Space Shuttle program. The shuttles were highly sought by museums throughout the country, including by Seattle’s Museum of Flight. The Museum lost out on receiving one of the Shuttles but it received the trainer, a full-size replica of the Shuttle on which astronauts trained prior to going into the real thing. Seattle was disappointed in not receiving a space shuttle, but frankly we think the Museum–and enthusiasts who visit the Museum–got the better deal.

The real Shuttles, and the prototype Enterprise, are on display but access is restricted. Nobody can get inside one of these. On the other hand, the Museum of Flight offers tours into the crew compartment and cockpit (for a fee) and anyone who purchase admission to the general Museum can get into the cargo bay.

We went to see this last weekend. We’d previously seen the Enterprise at the Steven Udvar-Hazy Museum at Washington Dulles Airport and couldn’t get very close to it. As impressive as it was to see this ship, being able to go into the crew compartment, cockpit and cargo bay of the trainer was much more

interesting.

Read more

Gov vows to keep 777X in Washington

Gov. Jay Inslee vows to keep assembly of the 777X in Washington State, a development that gained even higher profile this week with the announcement by Boeing Tuesday that it will spend $1bn to expand its Charleston (SC) facility.

In a press gaggle last week following Boeing’s opening of the Everett Delivery Center at Paine Field, where the current generation 777 is assembled, Inslee repeated his vow to win assembly of the successor airplane for Everett.

“Boeing management understands we’re the jewel of aircraft manufacturing in the world,” Inslee said. “We have to understand that every single model from here on, including the 777X, is going to be competed. We need to do our job to be competitive, to improve the skills training from machinists and engineers, to improve the transportation system so that we can move products and Boeing can move their engines back and forth. If we can do these things, we’re always going to be on top and I intend to do that.”

We asked Inslee about Washington’s strict environmental regulations compared with Southern states, including South Carolina, where regulations are much more lax compared with here. Inslee, a strong environmentalist during his tenure in Congress and who has a strong “green” agenda as governor, replied:

“I am firmly of the conviction that we can have a sound environment and a booming economy, including aerospace. What we can do is maintain our standards but I do hope we can find a way to expedite our permitting decision-making. I think we can make these on a more timely basis and I am working with my regulatory agencies to do that. I believe Boeing values the environment as we do in Washington, and we’re going to have both.”

The press gaggle then shifted over to Pat Shanahan, VP of Aircraft Programs, who was the ranking Boeing representative at the Delivery Center’s opening. In his position, he is also keenly involved in new aircraft development.

Given the now-paranoid nature of Washington politicians and media over Boeing’s future here, Shanahan was asked if the new Delivery Center had any bearing on Boeing’s commitment to Puget Sound.

“We wouldn’t build a facility like this if we weren’t committed to it,” he said. We then asked if the Everett facility has enough room to seamlessly integrate the 777X, or whether an expansion would be required, or whether another airplane program would have to be discontinued to make way. We noted that the Renton facility had to displace some staging areas for parts and equipment currently serving the 737NG production to make way for the 737 MAX line start-up.

“We have a lot of options,” replied. “You saw in Renton we had a lot of options. Over the course doing any kind of development, or laying out a program, you go through every one of those as well as what kind of investments are required and what kind of business case you need to make. We’re in the midst of the 777X doing lots of studies.”

Shanahan declined to answer a question from a reporter whether the 777X will kill the stagnant 747-8I.

Separately:

Porter said to be CSeries customer for use at Toronto City Airport

Jon Ostrower was rather prolific tonight with the Tweets:

  1. .@scottdeveau Not disagreeing with the content of the Tripartite, just saying there’s a political fight coming for the future of YTZ.

  2. Bombardier advertises the CS100 & Q400 with a 70 dBA noise contour. This will be the foundation of Porter’s argument for YTZ jet service.

  3. .@scottdeveau Porter is counting on a Q400-like noise footprint for the CS100. You can count on a political fight.

  4. From Dec: Air Carrier in the Americas Signs Letter of Intent for up to 30 Bombardier CSeries Airliners http://bit.ly/Y99J3R  // Porter.

  5. The order from Porter – expected to be confirmed Wednesday – will make the carrier the first Canadian customer for Bombardier’s CSeries.

  6. A 34in pitch config. on a CS100 (same as Porter’s Q400) is 100-105 seats and it’s only 1,100nm to Miami from Toronto.

  7. Edge of envelope CS100 operation is 4,950ft TOFL@MTOW 110 pax to 2,950nm. Porter won’t need that much range or that many seats.

  8. .@crankyflier Porter is counting on serious performance and noise targets on the CS100 to operate in and out of the island.

  9. It’s understood that the CSeries jets will remain based at the island Toronto City airport, whose longest runway is just shy of 4,000ft.

  10. The deal for 12 CS100s +18 options is set to be announced by Porter as early as Wednesday morning, say two people familiar with the deal.

  11. Breaking: Toronto-based Porter Airlines is set to buy up to 30 Bombardier CSeries. Dec. order attributed earlier to an “Americas” customer.

    And the Financial Post’s follow-ups:

    1. Porter Airlines to announce Bombardier CSeries order: report http://natpo.st/XA5wvd 

    2. @jonostrower No doubt about that. I believe the Tripartite Agreement explicitly prohibits jet engines though.Doesn’t matter the sound levels

Odds and Ends: 787 service return; LionAir’s A320 order; race to Paris; 777X v A350

787 to fly soon: Jim McNerney, CEO of Boeing, says the 787 will be back in service soon. Tests should be completed within days and he is confident in the fix.

LionAir’s A320 order: In case you wondered what LionAir is going to do with all those Airbus A320s now on order, this story tells you. As we suspected, LionAir will follow the AirAsia Group model of setting up airlines throughout Asia. Some will obviously compete with Tony Fernandes’ airline.

The race to Paris: AirInsight won the race by three minutes over Aviation Week. AirInsight posted at 1:24pm EDT and AvWeek at 1:27pm. That might be about the result between Bombardier and Airbus.

777X v A350: Aspire Aviation has an analysis of the forthcoming Boeing 777X and A350-1000 competition.

Odds and Ends: CSeries, 787, A320neo v 737 MAX, First vs Business; Southwest Air

CSeries Powers On, Compresses Schedule: Bombardier is racing toward its first flight. The company powered on the CS100 Flight Test Vehicle 1 yesterday and Jon Ostrower had this article about BBD compressing the schedule to stay on track for launching the CS300. Static testing of the wing has been completed.

Next phase for 787: With yesterday’s successful test flight of the 787, Boeing is ready to move on to the final series of tests to return the aircraft to service. The Wall Street Journal reports that the new battery containment system will be tested once again by pushing the battery to destruction. Boeing hopes to get the airplanes back in the air by May 1.

The National Transportation Safety Board will hold public hearings April 21-22.

A320neo vs 737 MAX: Following the recent round of orders, Airbus now has a 65% market share for its neo vs Boeing’s 35% share for the MAX.

First vs Business: Here’s a piece we did for CNN International on the merits of First vs Business Class.

Herb and Lamar would roll over: Southwest Airlines finally acknowledged what we’ve been whinging on about for years: it’s not the airline of Herb Kelleher of Lamar Muse any more. We’ve written many times that this “legacy LCC” drifted away from its low cost model, its focus on simplicity and its point-to-point strategy in a series of steps. It took the mainstream media a long time to catch up to what we wrote so long ago.

Bombardier investors’ day: CSeries focus

We’re pretty tired of the Boeing 787 stuff, but it’s a story that simply is a daily occurrence. So it’s with some relief we have something else to talk about today.

Bombardier held an investors’ day today (March 21). Here are some links and documents. The day was for all of Bombardier, but we’re just focusing on Aerospace.

Aviation Week has this article from the March 7 CSeries “reveal.”

Here’s a link to a 43 page PDF (PPT) presentation about the Aerospace division. This includes Business Aircraft and the entire commercial line.

One graph shows the current line-up of single-aisle aircraft (click to enlarge):

Graph_of_100-149

BBD has been under cash flow and stock price pressure in recent years, and terms this year as a “turning point.” The first flight of the CS100 is scheduled for June; officials say the end of June but we believe they will move heaven and earth to have the plane flying by the Paris Air Show mid-month.

BBD hopes to have power-on for the CS100 Flight Test Vehicle 1 (FTV 1) this week or next. Fly-by-wire testing has been underway this week.

At the investors’ day, Ben Boehm, VP Strategy and Business Development, said much of the up-gauging we’re seeing in aircraft selection today is in the 150-210 seat segment. Within the 100-149 seat sector, Boehm says BBD has yet to lose a competition to Airbus or Boeing.

Philippe Poutissou, VP Marketing, said that as an airline gets to 20 or 30 aircraft, fleet commonality benefits diminish. The biggest aircraft is the benefit of pooling and spares. “As you get into the 20s, 30s and 40s, the incremental benefit of commonality gets quite small.”

Bombardier rolls out CSeries FTV 1 and more

Bombardier last week rolled out (sort of) CSeries CS100 Flight Test Vehicle #1 and revealed FTVs 2, 3, 4 and the start of FTV5.

Officials are sticking with their timeline that the first flight will be by the end of June. We think they’ll try to get FTV 1 airborne in time for the Paris Air Show, but we’ll see.

It seems that it will be a race of sorts between Bombardier and Airbus’ first A350-900 test airplane as to which will be airborne first. (And before wags weigh in, we certainly hope that Boeing 787 ZA005 will be airborne for its test flights before either of the other two.)

The CSeries is running about six months later than originally planned, but well ahead of the recent programs at Airbus and Boeing. The A350 is now two years late; its A400M–we’ve lost track of how many years late this is. And the A380 wound up about two years late, too. Boeing’s 787 was 3 1/2 years late entering service, and the current grounding of the fleet is another black eye. The 747-8 was delayed two years, affected by a diversion of resources to the 787 and its own design issues.

If BBD truly gets its first flight in the air by June, and maintains schedule for Entry-Into-Service a year later, it will have a great deal to boast about that neither Airbus nor Boeing can or could do.

A great deal of the lethargy in sales–though BBD professes to be satisfied, with slots sold out into 2016–is because disappointments in the Airbus and Boeing programs have impacted the confidence in BBD’s ability to perform. Although a six month delay doesn’t help, BBD (unlike Airbus and Boeing) pretty well telegraphed one would happen. Boeing’s “creeping delay” on the 787 maddened all stakeholders. Airbus, while more forthcoming on the A350 program than Boeing on either the 787 or 747-8, nonetheless found itself playing catch-up on more than one occasion to information emerging from customers and suppliers on the 350’s program progress.

In addition to FTV 1, BBD revealed FTV 2, 3 and 4 and the beginnings of FTV 5. While the web-cast “reveal” didn’t match the hoopla created by Airbus and Boeing for their events (and nobody does it better than Boeing), the headline news was what by now has been well reported: the confirmation of a 160-seat CS300 “Extra Capacity Seating” (ECS) option. The CS300 now has a five foot fuselage stretch for a baseline seating of 135 vs the previous 130. Gross weight has been upped to maintain a 2,950nm range. We don’t have the figures and so far we haven’t found them on the CSeries website, though the floor plans of the ECS are there. The 160-seat model is with 28 inch pitch, using slimline seats that BBD says effectively feels like 29.5 inches. A 150 seat ECS has 30 inch pitch, which should feel like 31.5 inches. The high-density seating reduces cash operating costs by 8%, BBD says.

Whether it’s a 150-seat or the 160-seat model, Low Cost Carriers now have a real choice of CSeries family members. We’ve been saying for more than two years BBD needs a 150 seat aircraft (albeit we were thinking dual class, but one step at a time) to have a good family.

Here are two related, long stories about the CSeries rollout.

Part 1

Part 2