April 27, 2017, © Leeham Co.: The Boeing Co. late today filed a petition with the US government, charging Bombardier with “dumping” the CSeries in its deal last year with Delta Air Lines for 75+50 CS100s. Delta can convert the order to the larger CS300, which competes with Boeing’s 737-700/7 MAX.
Boeing claims Bombardier sold the airplanes for about $20m, against a cost to build the airplanes of about $33m.
The 1,039 page complaint cites as one of its references Leeham News and Comment. A redacted, 147 page version may be downloaded here: BBD Complaint 042717.
Boeing’s press statement is below the jump.
Boeing competed in the Delta competition, offering a combination of used Boeing 717s and, LNC believes, new 737-700s. The fully amortized -700s can be offered at a very low price, compared with the new 737-7 MAX (which at that time was the 125-seat, two-class version, not the 149-seat configuration it has since become). Boeing beat Bombardier in a hot contest at United Airlines, predating the Delta deal, by offering the -700 at a rock-bottom price believed to be in the $24m range, a price Bombardier could not then match. (A United official denied the $24m price to LNC, but others cited this number.)
Since the United deal, Bombardier received investments from the Quebec provincial and federal governments specifically tied to the CSeries, and more than US$1bn from a quasi-government pension fund for a stake in Bombardier’s rail unit. The investments are widely considered to be bailouts that prevented Bombardier from declaring bankruptcy due to cost overruns and delays from the CSeries and Global corporate jet development programs.
Bombardier took a US$500m “onerous contract charge” in connection with the Delta order and one from Air Canada.
Rival Embraer immediately cried foul and alleged the government monies violate World Trade Organization rules. Bombardier says the financial structures comply with WTO rules. Brazil, at the behest of Embraer, filed a formal complaint with the WTO. Boeing, while not filing its own WTO complaint, joined in the action, according to press reports at the time.
Boeing’s action today so far is limited with the US government.
April 12, 2017, © Leeham Co.: Delta Air Lines today said on its earnings call that it is reviewing its wide-body order with Airbus.
At face value, the Delta statement might seem alarming. But as so often becomes the case, the “review” may not be what it seems.
April 3, 2017, © Leeham Co.: Sir Richard Branson came to Seattle last week to promote the new service by Virgin Atlantic Airlines to London. In a hissy-fit, he promptly pissed on Alaska Airlines for the business decision to drop the Virgin America brand in 2019.
Alaska, of course, acquired Virgin America last year. The acquisition didn’t sit well with Branson, who nevertheless made out well in the deal.
Although Alaska officials said they would decide later whether to retain the Virgin brand, only those with wishful thinking gave any chance of this happening.
Branson certainly knows this. In 1997, Virgin Group acquired the low fare carrier Euro Belgium Airlines for $60m and promptly dropped the name in favor of Virgin Express.
VE lasted only nine years; it ceased operations in 2006 when it was sold and merged into the new Brussels Airlines.
Branson’s whining over Alaska’s decision to operate the merged operations into the Eskimo’s image smacks of hypocrisy.
Let’s also remember that his Virgin Atlantic is 49% owned by Delta Air Lines, which is building a hub in Seattle in competition with Alaska. The fight between Alaska and Delta is sometimes bitter.
Branson’s criticism of Alaska might have as much to do with Virgin Atlantic’s partnership with Delta as it does his own bruised ego.
Pontifications is off this week.
March 20, 2017, © Leeham Co.: There are some major fleet decisions that will probably come down the pike this year at American, Delta and United airlines. Not all of them are going to be viewed positively by Airbus and Boeing.
March 13, 2017, © Leeham Co.: The soft launch of the Boeing 737-10 and the prospective Boeing “797” Middle of the Market aircraft easily were the headline news items to come out of the annual ISTAT conference in San Diego last week.
The “797,” as the MOM-sector aircraft was unofficially dubbed, brought enthusiastic reaction.
The MAX 10, not so much.
March 7, 2017, © Leeham Co.: If Boeing builds the 737-10, which appears increasingly likely, will customers come?
This is always the multi-billion-dollar question for any aircraft and engine manufacturer.
For Boeing, launching the 737-10 is a low-risk, and in the eyes of many, futile effort to stem the bleeding of market share between the MAX 9 and its rival, the Airbus A321neo.
Depending on who’s counting and how the numbers are calculated, the A321 sales outpace the MAX 9 by a factor of four or five to one. LNC calculated last year that the ratio is more likely 3:1, identical to the market share split between the predecessor airplanes, the 737-900ER and the A321ceo.
March 6, 2017, © Leeham Co.: Boeing rolls out its 737-9 MAX tomorrow.
Last week, I received a call from one of the network/cable news organizations asking, What’s special about this airplane?
The answer is: Nothing.
By Bjorn Fehrm
February 23, 2017, © Leeham Co.: We previously described how new generation engines make the Boeing 737 MAX 8 a trans-Atlantic aircraft. The MAX 8 is smaller than the Airbus A321LR, but not the smallest single-aisle with trans-Atlantic capability. This distinction goes to the Bombardier CSeries.
We wrote about the CS100 capability to cross the Atlantic from London City Airport last year. After the article, we received new and improved data from Bombardier. The CS100 can now fly directly to US East Coast on the difficult westward leg with a business cabin of 42 seats. The updated article is here.
When we look at the improved capabilities of the CS300 (announced at Farnborough Air show last summer), this aircraft can also cross the Atlantic with a full cabin of 130 passengers.
Bombardier arranged so we could discuss this deeper with the VP CSeries program, Rob Dewar.
Feb. 8, 2017: Brazil, on behalf of Embraer, filed a complaint with the World Trade Organization over Canadian government investment in Bombardier’s CSeries.
“Brazil notified the WTO Secretariat that it had requested WTO dispute consultations with Canada regarding alleged subsidies provided to Canadian aircraft manufacturer Bombardier,” the WTO announced today. Coincidentally, today it was also revealed the federal government will provide C$372m in loans to Bombardier. Most will go toward the Global 7000 corporate jet program but some will go to the CSeries, which competes with Embraer’s EJets.
By Bjorn Fehrm
January 23, 2017, ©. Leeham Co: The Airbus A380 was introduced as the flagship aircraft for an airline’s fleet. Legacy carriers with a large long-haul network introduced the aircraft on the routes with the most traffic in the network. After an initial rush of inductions, only Emirates continued to buy the aircraft in larger numbers. The aircraft had become too large for the airlines which sought frequency over capacity at their hub airports.
Airbus and its leasing partner, Amedeo, are convinced the aircraft will have a second spring when airport congestion has grown in the next decade. Until then, both are seeking the market niches that will keep production at minimum one aircraft per month.
We sat with Amedeo’s CEO, Mark Lapidus, at the Air Finance Journal conference in Dublin to find out what market will require a new or used A380. Lapidus has spent the last two years in meetings with the world’s major airlines, discussing all aspects of operating an A380. He presented some surprises.