Leeham News and Analysis
There's more to real news than a news release.
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.
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.
Odds and Ends: Tax breaks and job guarantees; New airline analysis blog
Feb. 17, 2015: Tax breaks and job guarantees: Boeing’s two largest unions in Washington State appear to be making headway this legislative session to get a bill on the floor for a vote that would retroactively tie 2013 tax breaks to a guarantee of jobs.
It’s less likely that the legislation will include a minimum wage component.
The tax breaks, hastily approved by the Legislature in November 2013, provided for $8.7bn in tax breaks to 2040 in return for Boeing locating the 777X assembly line and wing production in Everett (WA). The tax breaks are not only for Boeing, but available across the supply chain.
But there were no job guarantees, SPEEA and the IAM 751 warned legislators, and without them in the bill, they predicted Boeing would move jobs out of state.
That’s exactly what happened.
Regional operations with the Turboprop, propjet or Jet; Part 2.
By Bjorn Fehrm
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Introduction
15 Feb 2015: In Part 1 of this article series we started comparing the alternatives available for turboprop short haul services in the 70 seat segment; ATR72-600 and Bombardier Q400. We also included the closest regional jet, CRJ700 from Bombardier, to compare costs and see where a jet would be 
needed to keep trip times within reason.
In Part 1 we went through the capacity of the aircraft and their basic characteristics. We also did a first check of their typical fuel consumption on a standard mission of 300 nautical miles.
We will now look closer at the economics of the aircraft; we fly them over different sectors with different speed profiles. We will also dissect their Cash Operating Costs (COC) and Direct Operating Cost (DOC). Having done all this we will look at the crossover points; for what market is ATR72 the choice and where does Q400 fit. And finally, what route sectors require a jet?
Summary:
- The ATR72-600, Bombardier Q400 and CRJ700 are quite different aircraft. The monikers turboprop, “propjet” and jet fit them well.
- The positioning of the end of the scale products are clear, the intriguing aircraft is the Q400. When does it makes sense and has Bombardier positioned it correctly?
- How does one explain its recent meager sales? Wrong aircraft at wrong time? Weak sales force? Wrong markets?
Playing number games with the A380
Feb. 15, 2015: Orders for the Airbus A380 have been slow, almost glacial, since the program was launched in 2000. Despite a 20-year forecast then and every year since by Airbus that suggests there is a need for 1,200-1,700 Very Large Aircraft (including freighters), sales of the A380 and Boeing’s 747-400/8 have never reached a point that support the forecast.
Airbus’ latest forecast now is for around 1,500 VLAs, including freighters.
Slow sales hang over the prospect of developing an A380neo. We concluded last year that Airbus had to proceed with the neo in order to spur sales. The commercial viability is a matter of great debate, but Airbus Commercial CEO Fabrice Bregier said last month Airbus will produce a neo, and even stretch the airplane.
Aviation consultant Richard Aboulafia, a critic of the A380 from the get-go, thinks Airbus would be nuts to launch a neo. At the Pacific Northwest Aerospace Alliance conference last week in Lynnwood (WA), in the heart of Boeing country, Aboulafia renewed his decades-long criticism of the airplane.
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.
PNAA Conference: Airbus says A320 cancellations not as bad as numbers suggest
Feb. 12, 2015: Simon Pickup, Strategic Marketing Director, Airbus, took issue (no surprise there) with Boeing’s Randy Tinseth, VP Marketing, at the Pacific Northwest Aerospace Alliance conference today in Lynnwood (WA), and Tinseth’s barb that Airbus had a record year of 340 cancellations.
One hundred fifty of the A320ceo cancellations were swaps to A320neo orders, so the numbers weren’t as bad as numbers appeared, Pickup says. 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
Boeing 757 MAX: why its operating economics does not work
By Bjorn Fehrm
Introduction
Feb 12, 2015: In a series of articles during the autumn we covered the replacement scenarios for Boeing’s 757-200 when used for long haul passenger operations. The series also included an interview with Boeing’s head of new airplane studies, Kourosh Hadi, director of product development at Boeing where he outlined what Boeing studied and why.
This week The Wall Street Journal published an article portraying that Boeing seriously considered launching a re-engined 757 as a response to Airbus A321LR. Boeing has since vehemently denied the story and we have given the reasons why it does not make sense for Boeing.
As a complement we show the operational economical analysis that we did at the time of our 757 articles, now updated to the exact modifications suggested by The WSJ, a new engine and new winglets paired with modern avionics.