04 January 2019

Airbus A220

Author: Richard L. Aboulafia, Drawn From: World Military & Civil Aircraft Briefing

Airbus A220

The decision to surrender control of the CSeries to Airbus represents the final stage of a 12-year long slow-motion story that’s best described as a noble and heroic farce. Bombardier, Canada, and Quebec bit off way more than they could chew. Poor management and decision-making compounded this reality. Once Airbus and Boeing re-engined and upgraded their single-aisle models (as a reaction), the CSeries didn’t stand much of a chance. Since the CSeries began in 2006 and through the decision to surrender, Airbus and Boeing racked up 17,264 single aisle jetliner orders (8,104 Boeing, 9,160 Airbus). The CSeries got 360.

When new (and vastly superior) management arrived in 2015, it was probably too late to save the situation, barring a massive increase in aid from Ottawa. Given these circumstances, giving the plane to Airbus is the best possible outcome for everyone involved (for a run-down of what Bombardier needed to make a long-term go of the CSeries, see what Airbus brings, directly below). For Bombardier, getting 31% of a winner sure beats owning 100% of a bleeding ulcer.

Summing it up, Bombardier, and Canada really shouldn’t have launched this jet. But it’s still a very good jet. And it convinced everyone else to re-engine their offerings, ultimately saving the world billions of gallons of fuel, reducing emissions, and cutting noise levels too.

What Airbus Brings To The Table

Oh, a few things...

  • A massive sales network, which Bombardier didn’t have.
  • A massive support network, which Bombardier didn’t have.
  • China. Due to the previous fac-tors, Bombardier had been unable to leverage the CSeries’ China industrial content, and there were exactly zero sales there. Airbus has a much greater presence in-country.
  • Scale (and deep pockets). In an industry predicated on volume, watching Bombardier try to build and sell this jet at prices and costs that matched Airbus and Boeing, with their 600+ per year single aisle rates, was like watching a guy who brought a crème brûlée torch to a flame thrower fight. Airbus, of course, has the financial flexibility and a giant pro-duction system that can build jets with low unit costs, so they can discount prices lower than almost anyone too.
  • Airbus ownership removes all airline fears of buying an orphan jet. You can get fired for buying an orphan jet.
  • Airbus has agreed to prioritize the CS300 over the A319neo. This effectively means that Airbus has agreed to kill the A319neo, leaving the CS300 largely alone in its segment, aside from the 737MAX7.

Our forecast rose considerably as a result of this new ownership. It may go higher still. In part, that depends on whether Airbus expands the CSeries product range.

CS500? And the Others

Right now, our assumption is that the CS500 concept dies because Airbus has its A320neo. We also assume that a future Airbus single aisle will look a lot like the current A320 family, with 3-3 seating. Thus, Airbus will have two families, the 110/130 seat CSeries, and a 150/210-seat single aisle family (A320/321 now, with a clean-sheet replacing it around 2030).

But there’s another possibility. It’s not our baseline scenario, but Airbus could expand the CSeries to 150-seats, and then use a new twin aisle family to pursue the middle market (180/250-seats). We aren’t big believers in smaller twin aisles, but we’ll see what technology can do as Boeing unveils its 797/NMA.

As for the two current models, we expect demand to be roughly divided into 70% -300, 30% -100. The -300 is now largely unopposed, while the -100 still faces Embraer’s strong E190/195 E2.

However, we also expect Embraer to be able to compete effectively in this space, thanks to help from Boeing. If it’s planned JV falls through, Embraer will have a much harder time of it, and the A220-100 will enjoy larger numbers.

The Future Is Written

Within the next five years, Airbus will take complete control of this program. However, Bombardier will likely continue to build structures for the aircraft. And it will be remembered as the company that created a promising new-generation single aisle jet that Airbus effectively got for free.

About the Author

Richard L. Aboulafia

Richard L. Aboulafia

Richard is Vice President of Analysis at Teal Group. He manages consulting projects in the commercial and military aircraft field and analyzes broader defense and aerospace trends. He has advised numerous aerospace companies, including most prime and many second- and third-tier contractors in the US, Europe and Asia. He also advises numerous financial institutions on aerospace market conditions.

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