By Bjorn Fehrm
May 2, 2016, © Leeham Co: Bombardier announced a game-changing order from Delta Air Lines for its C Series program last week. In the midst of the celebration and well wishing came the news that this order, one to Air Canada and seven firmed up options to airBaltic, would result in a charge of $500m next quarter.
One analyst wrote in the wake of the Delta deal that “I understand that to get Delta and Air Canada you need to give attractive pricing, but that it would cost Bombardier $500m is a bit stiff.”
The comment shows that at least this analyst had no idea about the realities of aircraft programs financials. The announced onerous loss is nothing special; it is business as usual.
29April 2016, ©. Leeham Co: With the order by Delta Air Lines, the Bombardier C Series has taken the step up to be a viable alternative to Airbus’ and Boeing’s single aisle 130-150 seat aircraft.
In my description of airliners’ flight control and Flight Management Systems (FMS), I have focused on the established mainline single aisle players. Time to change that; C Series has arrived and will stay in the mainline segment.
Why 130 seats as a limit? Because below 130 seats there are a number of additional players (Embraer, Sukhoi, Mitsubishi…) and we can’t describe them all right now.
Now to how Bombardier has implemented the flight controls, autopilot and FMS for the C Series. In fact, we will look at how they have made the C Series cockpit, Figure 1.
I haven’t flown the C Series yet (working on it!) but I have been able to glean quite a bit over time and spent quite some time in the cockpit with the Bombardier test pilots at the Paris Air Show.
So here is a shot at describing the C Series control philosophies and capabilities and how they mimic/differ from Airbus and Boeing.
April 28, 2016: “Our turnaround plan is gaining traction,” said Alain Bellemare, BBD CEO, to lead off the first quarter earnings report for Bombardier.
“This is a big win for Bombardier,” he said. “This is a strong endorsement for the C Series.” He said BBD is finalizing the agreement with Air Canada for 45 firm orders and 30 options for the CS300. “We significantly improved the quality of the backlog list.
“Looking ahead, we are seeing increased customer interest in C Series,” Bellemare said.
The Air Canada, Air Baltic and Delta orders will result in a 2Q2016 charge of $500m, or nearly $4m per aircraft, BBD announced in its press release. This means the aircraft were sold at a loss, but the gain of these blue chip customers were needed. This is about the learning curve and unit accounting (see below).
Delta deliveries begin in 2018.
Belleman said the C Series will be the largest driver of future growth for BBD.
The CRJ and Q400 saw soft orders in the first quarter. Bellemare sees a stronger second quarter. He vowed increased attention by management this year.
April 28, 2016, (c) Leeham Co.: At long last, after years of disappointment for that big, breakthrough order, Bombardier finally got it: a huge deal from a blue chip
airline, and one from North America: a firm order for 75 C30S100s and options for 50 more from Delta Air Lines.
Delta has conversion rights to the CS300. Bombardier now has more than 300 firm orders, although many of these are iffy, and commitments for up to 500 more.
This is the order that observers, analysts and aviation geeks have been waiting for during much of the development and production of the C Series.
The announcement came concurrently with highlights of BBD’s first quarter results.
April 27, 2016 © Leeham Co.: News that Boeing plans to develop a “737-7.5” MAX, following on the prospect of a “737-10” stretch of the 737-9 illustrates just how weak its single aisle product strategy has become.
The Wall Street Journal revealed last week that Boeing is planning the airplane, which is larger than the current 737-7 but smaller than the 737-8. Jon Ostrower, the reporter, dubbed the plane the 737-7.5. Internally, it’s called the 737-7X.
April 25, 2016, © Leeham Co.: Airbus, Boeing, Bombardier and Embraer having their first quarter earnings call this week. Bombardier also has its Annual General Meeting concurrent with its 1Q earnings on Friday.
The big anticipation will be with Bombardier.
Earlier this month, The Wall Street Journal reported Delta Air Lines was going to order 75+50 C Series from BBD. Delta, on its 1Q earnings call, said it had nothing to announce but would have more to say at its investors day. This is May 16.
But at the same time, BBD postponed its AGM and 1Q call from the 28th to the 29th. Delta’s board of directors meets on the 28th. Previously, BBD postponed by one day its year-end earnings call to coincide with Air Canada, which announced an order for 45 C Series, plus options.
Is Bombardier’s rescheduling another harbinger of the Delta order, or will Delta hold off any announcement until that May 16 investors day?
Or could Delta announce the Bombardier order Friday and the widely reported, expected order for 30-37 Airbus A321ceos?
The world aviation geeks wonder.
April 18, 2016, © Leeham Co.: Bombardier, if it didn’t dominate the news cycle in commercial aviation last week, must have come close. Consider:
While on balance, it seems likely Delta will order the C Series, Bombardier has been down this road before. Only a few months ago, the market and others were excited over the prospect that BBD was close to landing an order from United Airlines, only to see Boeing swoop in and grab the deal.
By Bjorn Fehrm
April 14, 2016, ©. Leeham Co: Bombardier is working hard to get additional mainline airline customers for its C Series project. The latest discussion is whether Delta Air Lines would replace its fleet of Boeing MD-88s with the C Series.
In this context, it’s also discussed if the largest model, the CS300, Figure 1, is large enough for Delta. This aircraft seats 135 passengers in a two class configuration and up to 160 passengers in an all economy high density version.
The question is whether this is sufficient for Delta and other mainline customers, or if a still larger version is needed in the program, the oft-discussed CS500. We decided to use our proprietary aircraft model to see if a CS500 would be straight forward for Bombardier to develop, should Delta or any other customer ask for a three model C Series program.
By Bjorn Fehrm
05 April 2016, ©. Leeham Co: We are at the Aircraft Interior eXpo, AIX 2016, to check out what’s new where the aircraft meets the passenger. We got to the expo in Hamburg on a full Lufthansa A320 flight. It was the usual struggle for the last passengers boarding to find place for their roller bags in the overhead bins.
Airbus showed the new overhead bins for the A320 at the show, Figure 1. They will be a big relief for the airlines and passengers, just like the Space-bins announced by Boeing at last year’s show.
As can be seen in the picture the passengers don’t get quite the nice airy feeling which is part of Boeing’s Sky interior. The shape of the bins are rather like the present day product but with the A350 style curvature to the other section.
It thereby will bring a bit lighter feel to the cabin but most importantly more space for carry on luggage. Roller bags can be stored standing on the side and this increases the capacity with over 50%. The first delivery of the new bins was to Delta for their new A321 last month. As can be seen in the picture mood LED lighting is also part of the A320 cabin upgrade. Read more
March 29, 2016, © Leeham Co.: A report that JetBlue and Alaska Airlines submitted bids to buy Virgin America spurs the thought: this isn’t as wacky as it appears on
When news emerged last week that VA was shopping itself after interest was expressed, many thought, quite naturally, why?
Dan Reed neatly summarizes this argument in his column at Forbes.
Virgin America has few tangible assets. It leases all but about seven of its 10 Airbus A319s and 50 A320s. It’s not dominant in any city or route it serves. The leases are probably, on a relative basis, rather costly.
It has few slots at the few slot-controlled airports it serves (Chicago O’Hare, New York La Guardia and JFK airports and Washington Reagan National Airport), and only a few gates at any given airport—hardly enough to really boost presence of either Alaska or JetBlue.
Why should either airline want Virgin America?