Airbus buys into CSeries

[Guest]

 

 

5 hours ago, rudder said:

This is not political. There is no comparison between a 737 and the 321NEO. I am certain that Boeing was even willing to hack the price to seal the deal (ironic). But that does not change the fact that the 737MAX is not in the same league as the 321NEO.

Delta seems to be blazing its own path and not wrapping itself in the US flag. Good for them.

Quote

This article would seem to say the dispute influenced the decision. 

The carrier first disclosed plans for a significant A320neo family or Boeing 737 Max family order in October. At the time, chief executive Ed Bastian called it one of the largest request for proposals underway in the market.

Analysts and reports forecast an order for the Airbus narrowbody over the 737 Max. They cited a number of factors, including the trade dispute between Boeing and Bombardier over Delta's order for 75 CS100s in 2016, and an A321neo configuration more suited to the airline's needs.

"We'll look at both aircraft on their merits and ultimately make a decision accordingly," said Gil West, chief operating officer of Delta, in October on the evaluation process.  Source of this quote  : https://www.flightglobal.com/news/articles/delta-picks-a321neo-for-narrowbody-replacement-444153/

 

 

[Super 80]

The bad blood between Delta and Boeing goes back nearly a decade and there are some strongly partisan Airbus proponents who joined Delta in the merger.

[J.O.]

I'm shocked there hasn't been a Twitter storm over this yet.

[Maverick]

 

Opinion: Why Boeing’s C Series Concerns Are Justified

 

Dec 15, 2017 Loren Thompson | Aviation Week & Space Technology

 

Next week, the U.S. International Trade Commission will hear arguments concerning whether the importation of Bombardier C Series jetliners into the U.S. could cause material damage to American companies. If the commission rules early in 2018 that the answer is “yes,” then duties already calculated by the Commerce Department will quadruple the cost of every C Series aircraft sold within U.S. borders.

Such a ruling would effectively preclude C Series sales to U.S. carriers, and potentially doom the whole project since Bombardier’s own forecasts indicate that penetrating the American market is essential to its profitability. Boeing, the sole surviving producer of commercial transports in the U.S., has been widely criticized for initiating the trade action that has brought the C Series to this precipice. Critics allege that the world’s biggest aerospace company is trying to strangle an innovative alternative to its products while it is still in the crib.

The one thing these critics all have in common is that they are not responsible to Boeing’s shareholders and stakeholders. Boeing’s management is, and what it sees in the C Series is a government-subsidized attempt to subvert its most important product line: the single-aisle 737 jetliner that has dominated commercial air travel for half a century. In fact, 737s are so ubiquitous that on average, one takes off every 5 sec. around the clock. Boeing would like to keep it that way by continuously improving the product.

 

Airbus A320neo: Credit: A. Doumenjou/Airbus

 

But one challenge that is beyond its capacity to deal with internally is the willingness of foreign governments to subsidize homegrown aircraft-makers so they can get into the trillion-dollar market for narrowbody jets. Canada is not the first country to mount such a challenge. That honor belongs to the four European governments that founded Airbus. The latest version of the Airbus A320, known as the neo—for new engine option—got a head start over Boeing’s 737 MAX in the marketplace, and has accumulated more orders.

This is arguably the biggest threat to 737 market dominance that Boeing has ever faced. However, what tends to get lost in the noise of daily news coverage is that the A320 probably would not exist at all had it not been for illegal subsidies from those European governments. In fact, the World Trade Organization (WTO) ruled in 2010 that Airbus itself might not exist in the absence of this chronic illegality, because every transport it has ever brought to market was supported by billions of dollars in improper “launch aid.”

See Also

Opinion: Enough With The Hypocrisy, Boeing

The WTO has repeatedly rebuffed appeals from Europe to rethink that ruling. With the appeals process now exhausted, Europe faces the prospect early in 2018 that billions of dollars in retaliatory tariffs will be imposed on exports to the U.S. The purpose of these tariffs is not to punish Europe for destroying tens of thousands of U.S. aerospace jobs, but to force compliance with the WTO’s ruling that illegal subsidies to aircraft-makers must end. 

The U.S. has long since eliminated any program that might be construed as improper assistance to Boeing (although one minor program remains in appeal). Obviously, the issue of illegal subsidies extends far beyond the latest version of the Airbus A320, but it is through the lens of this earlier experience that Boeing views Bombardier’s C Series— a product line begun with the explicit aim of challenging the Boeing-Airbus “duopoly” in single-aisle jetliners. Like the A320, the C Series has received massive illegal subsidies from Canadian federal and provincial governments.

Most of these subsidies came about because Bombardier was facing bankruptcy in 2015 due to chronic mismanagement. To avert the collapse of Canada’s biggest aerospace enterprise, local governments stepped in with infusions of cash aimed at keeping the C Series and other programs on track. That plan prevented thousands of aerospace jobs from disappearing in Canada, but only because the C Series was expected to take market share from Boeing.

In other words, Ottawa and Quebec’s provincial government aimed to save Canadian jobs by destroying American jobs. And if their plan succeeded, they would undermine the most important franchise Boeing has, the 737 jetliner. The 737 is the only single-aisle transport Boeing makes, and the company’s market forecasts estimate that nearly three-quarters of the jetliners ordered worldwide over the next 20 years will be single-aisle aircraft. 

So what seems to critics like the efforts of an aerospace behemoth to crush an upstart competitor looks to Boeing’s managers like something very different. They think the long-term survival of their enterprise is at stake. If Airbus, and then Bombardier, and then who knows what other companies can take market share by relying on illegal subsidies from their home governments, then it will just be a matter of time before Boeing loses its ability to innovate and price its products competitively.

 

Bombardier C Series (left) and Boeing 737 MAX: Credit: Bombardier and Boeing

 

When Boeing had to cut the list price of its 737s by 70% to beat a competing offer from Bombardier in the United Airlines competition last year, it knew it had a problem. And when Bombardier then offered the C Series in the Delta Air Lines competition for over $10 million below the cost of production, Boeing decided it had to act. There is no way a company like Boeing can match the price of a foreign competitor that is subsidized unless government steps in. So Boeing did what it had to do to protect its workers, its retirees, its shareholders and its future.

None of this is changed by the recent agreement of Airbus to partner with Bombardier in building and marketing the C Series. Bombardier will not be able to escape the tariffs coming its way by setting up shop in Alabama, because keeping jobs in Canada is central to Canadian government support for the deal. The Alabama move is thus a transparent attempt by two recipients of illegal subsidies to circumvent U.S. regulation. If and when the deal is consummated and the Alabama site is opened, there should be a follow-on action by Washington to assure the playing field remains level for America’s biggest exporter.

Aerospace analyst Loren Thompson is chief operating officer at the Lexington Institute, which receives funding from a number of aerospace companies, including Boeing. The views expressed are not necessarily those of Aviation Week.

 

http://aviationweek.com/commercial-aviation/opinion-why-boeing-s-c-series-concerns-are-justified?page=1#comment-986671

 

[boestar]

oh boo hoo.  Boeing is a big company that has not "innovated" in the single aisle market in decades.  The 737 MAX is just a hodge podge of technologies that are not well integrated all wrapped up in a pretty new paint job and winglets.  fundamentally it is still the same 737 we know and "love".  As I said before its just makeup on a pig.  

Boeing has been milking that cow for a long time and now there is a better cow and they run crying fowl.

 

[Maverick]

5 minutes ago, boestar said:

oh boo hoo.  Boeing is a big company that has not "innovated" in the single aisle market in decades.  The 737 MAX is just a hodge podge of technologies that are not well integrated all wrapped up in a pretty new paint job and winglets.  fundamentally it is still the same 737 we know and "love".  As I said before its just makeup on a pig.  

Boeing has been milking that cow for a long time and now there is a better cow and they run crying fowl.

 

That's a lot of animal cliches!

[rudder]

44 minutes ago, boestar said:

oh boo hoo.  Boeing is a big company that has not "innovated" in the single aisle market in decades.  The 737 MAX is just a hodge podge of technologies that are not well integrated all wrapped up in a pretty new paint job and winglets.  fundamentally it is still the same 737 we know and "love".  As I said before its just makeup on a pig.  

Boeing has been milking that cow for a long time and now there is a better cow and they run crying fowl.

 

No ULD. No EICAS. Brake energy issue on larger, heavier models. Comparing a 737-600 to the CS300 is like comparing an Edsel to a Tesla.

The market asked for a single aisle 200 seater that was ETOPS capable with a 7 hour range. Airbus came up with the 321NEO. Boeing marched out the MAX9. Unlikely that a fully loaded 200 seat MAX9 can fly over 5.5 hours.  The market seems to be placing its chips on the 321NEO. Even AC has converted MAX9 orders to MAX8.

Boeing should go look and see if the 757 jigs are laying around the factory somewhere......

[J.O.]

4 hours ago, Maverick said:

 

Opinion: Why Boeing’s C Series Concerns Are Justified

 

Dec 15, 2017 Loren Thompson | Aviation Week & Space Technology

I'm surprised the bi-line isn't shared with the Boeing PR department.

[rudder]

6 minutes ago, J.O. said:

I'm surprised the bi-line isn't shared with the Boeing PR department.

And no mention of cross subsidization for Boeing from Federal defence contracts.

[Fido]

4 hours ago, boestar said:

 

Boeing has been milking that cow for a long time 

 

Bombardier has been milking the Canadian public even longer;

[J.O.]

1 hour ago, Fido said:

Bombardier has been milking the Canadian public even longer;

Not really.

[boestar]

Bombardier hasn't  DeHavilland and CAnadair Maybe.  But Boeing Owned DeHavilland before Bombardier did.

[mrlupin]

From the Economist...

 

https://www.economist.com/blogs/gulliver/2017/02/comfort-strangers?fsrc=scn/fb/te/bl/ed/

[boestar]

The first paragraph bugs me... It matters not, how many aircraft have been built of each type.  What matters is how many are still in OPERATION.

 

[conehead]

Most passengers don’t know, or care, who built the airplane. Passengers only want the cheapest ticket.

[dagger]

Followed the hearing today a bit via a tweet storm from an aviation writer. Boeing certainly didn't overwhelm the commissioners, but we'll see if Bombardier can overcome the politics.

[mrlupin]

An interesting read from The Economist about Boeing protectionism.

https://www.economist.com/blogs/gulliver/2017/12/protectionism-doesn-t-pay?fsrc=scn/fb/te/bl/ed/americasdepartmentofcommerceimposesatariffof292onbombardierscseriesjetsprotectionismdoesntpay

 

[Kip Powick]

50 minutes ago, mrlupin said:

An interesting read from The Economist about Boeing protectionism.

https://www.economist.com/blogs/gulliver/2017/12/protectionism-doesn-t-pay?fsrc=scn/fb/te/bl/ed/americasdepartmentofcommerceimposesatariffof292onbombardierscseriesjetsprotectionismdoesntpay

 

Link is a "Pay to Read"....

[mrlupin]

It opens for me from a smart phone...

I think The Economist limits the monthly articles you can read...

 

[mrlupin]

Protectionism doesn’t pay

America’s Department of Commerce imposes a tariff of 292% on Bombardier’s C-Series jets

But Boeing is the real loser from the decision

Gulliver

Dec 20th 2017

by C.R.

 

A YEAR ago Dennis Muilenburg, the chief executive of Boeing, the American aerospace giant, had a problem. Tweets written by Donald Trump, America’s newly elected president, were hitting Boeing’s share price. Initially buoyed by Mr Trump’s promise of extra spending on defence, the firm's share price fell in December 2016 when he suggested in a tweet that an order for new presidential planes worth $4bn should be cancelled. After the president elect picked a fight with Lockheed Martin, a rival planemaker, Boeing’s executives were left in fear of being the next target.

And so, it seemed, Mr Muilenburg came up with a plan. Boeing would snuggle up to Mr Trump’s “America First” agenda to avoid the flack. Boeing started to stress in its press releases how many American jobs it was creating; it asked the president to unveil the first 787-10 jet produced in February. In April it filed a trade case against Bombardier, alleging that its Canadian rival had received unfair subsidies from Britain and Canada for the development of its new C-Series jetliners.

But as Gulliver pointed out in September, Boeing's accusations against Bombardier smacked of hypocrisy, as the company has itself received billions of dollars of state assistance, from generous military contracts placed by the federal government to $8.7bn in handouts from the Washington state government. And it has not made planes the size of those Bombardier wants to export to America since 2006. Pursuing the case would alienate Boeing’s international customers and would do it more bad than good, Gulliver warned:

Canada has also threatened to cancel a likely $5bn order of military jets from Boeing if the American company prevails against Bombardier; Britain could follow its lead. Several airlines, fearing less competition among planemakers, are unhappy with Boeing’s behaviour and privately threaten to shun its jets if it continues to bully its smaller rival. This may be the trade case that ends up costing Boeing much more than it has to gain.

That is exactly what has happened. Even though America’s Department of Commerce ruled in Boeing’s favour on December 20th—setting tariffs of 292% on imports of the C-Series from Canada—it is a Pyrrhic victory. In October Bombardier gave away half the C-Series for free to Boeing’s arch-rival Airbus, weakening the American firm’s position in the market for smaller jetliners considerably. Then, in early December Canada announced that it was not going to proceed with an order for 18 Super Hornet fighter jets made by Boeing, costing the firm up to $6bn in revenue. A week later, on December 13th, it received another slap in the face, this time from Delta, America’s second biggest airline, which shunned Boeing’s 737 MAX aircraft in favour of buying 200 aircraft from Airbus, its arch-rival from Europe, worth around $25bn at list prices. Bosses from other airlines have also told Gulliver that they plan to favour Airbus’s jets until Boeing stops “bullying” Bombardier. They suspect Boeing is attacking Bombardier to protect its market power.

Airlines and flyers realise that they benefit from more competition in the market for jetliners, as it increases innovation and lowers the cost of buying aircraft. Aviation executives think that Boeing is attempting to destroy the competition with trade cases against both Bombardier and Airbus. But worst of all, in the process of pursuing these, the American firm is hurting its own shareholders and employees by alienating its international customers. Boeing predicts that around 80% of orders for civil jetliners over the next twenty years will be from outside America. But they won’t stick around to buy from Boeing if it continues to follow a nationalist agenda. As Adam Pilarski, the former chief economist of McDonnell-Douglas (now part of Boeing) astutely notes, if the global aerospace giant wants to “act like a little whiny American company”, it will eventually end up as small as one too.

[Kip Powick]

58 minutes ago, mrlupin said:

It opens for me from a smart phone...

I think The Economist limits the monthly articles you can read...

 

I don't recall reading three articles as it's not one of my "favourite"  media outlets

 

Thanks for posting it....here's what I get at the link.

[J.O.]

6 hours ago, mrlupin said:

But they won’t stick around to buy from Boeing if it continues to follow a nationalist agenda.

This has the potential to be the strategic blunder of the decade. Talk about throwing your saddle on the wrong horse ...

[Guest]

EgyptAir finalises the first firm CSeries order in 18 months

• 29 December, 2017
• SOURCE: Flight Dashboard
• London

North African carrier EgyptAir has firmed an agreement to order 12 Bombardier CS300s and take purchase rights on a further 12, the Canadian manufacturer has disclosed.

This converts a letter of intent announced during the Dubai air show in November.

"Welcoming EgyptAir to the family of CSeries operators is another landmark moment for Bombardier," states Fred Cromer, president of the airframer's Commercial Aircraft unit.

Bombardier asserts that the order will "enable EgyptAir to better serve domestic and regional destinations as well as several European and African destinations".

Safwat Musallam, the Star Alliance airline's chief executive, credits the CS300 with a "unique profitability profile" which "will allow us to open up new opportunities and fits perfectly into our growth strategy".

The order gives the CSeries its first confirmed new customer since June 2016, when Air Canada finalised an order for 45 CS300s.

EgyptAir's interest in the small narrowbody was revealed in the weeks after Bombardier announced an agreement in October to give Airbus a majority stake in the joint venture that manages the CSeries.

In November, Bombardier disclosed a letter of intent covering 31 firm CSeries aircraft – plus 30 options – for a European customer, but that deal has not been finalised.

This story has been updated to clarify a figure in the final paragraph

[Maverick]

Boeing wants to buy Embraer to turn it into a subsidiary but is facing objection from the Brazilian military, Reuters reported on January 19, 2018.

Boeing wants to get the green light for a tie-up with the world’s third-largest plane maker. But the deal is objected by the Brazilian military, which fears that Embraer’s ownership by an American company could affect the country’s defense programs, Reuters is told by sources familiar with the matter.

The news that Boeing and Embraer are looking for a ‘potential combination’ broke out in December 2017. Both companies confirmed the rumors on December 21, 2017. They stated that are “engaged in discussions regarding a potential combination, the basis of which remains under discussion” and noted that there is “no guarantee a transaction will result from these discussions”.

As a response to Airbus and Bombardier collaboration on CSeries, announced earlier in 2017, the talks appeared logical, although unlikely to be carried through.. For instance, Canaccord Genuity aviation analyst Ken Herbert said in a note to investors, "We are not surprised the two companies have held talks, but we view an eventual agreement as unlikely, and we do not see the benefit for Boeing aside from as a defensive move." 

Herbert pointed out that while Boeing is likely feeling a pressure to accelerate its Services business growth, “we are not convinced Embraer is the best fit or use of capital for Boeing. Based on ERJ’s most current FY18 guidance, the company is looking for revenues of $5.3B-$6.0B, EBIT of $265M-$360M, and FCF of a negative ~ $150M. We do expect BA will be very active on the M&A front in 2018 and understand the company is staffed up to significantly increase its due diligence efforts”.

On October 16, 2017, Airbus announced plans to buy a majority stake in the Bombardier C Series jetliner program. The CS100 seats 100-110 and the CS300 135-145 passengers, while Airbus’ 126-seat model, the A319, hasn’t seen a sale since 2012, according to Airbus CEO Tom Enders. Boeing, on the other hand, offers the 737-700, which will be phased out with the 737-7 MAX. Poor sales of the 7 MAX prompted a redesign, adding 12 seats. Now, if Boeing / Embraer collaboration comes true, the two manufacturers would have a “leading share of the 70- to 130-seat market” thus posing a tough competition for Airbus/Bombardier.

 

https://www.aerotime.aero/en/civil/20741-rumor-boeing-wants-to-buy-embraer-faces-military-objection

[Guest]

10 minutes ago, Maverick said:

Boeing wants to buy Embraer to turn it into a subsidiary but is facing objection from the Brazilian military, Reuters reported on January 19, 2018.

Boeing wants to get the green light for a tie-up with the world’s third-largest plane maker. But the deal is objected by the Brazilian military, which fears that Embraer’s ownership by an American company could affect the country’s defense programs, Reuters is told by sources familiar with the matter.

The news that Boeing and Embraer are looking for a ‘potential combination’ broke out in December 2017. Both companies confirmed the rumors on December 21, 2017. They stated that are “engaged in discussions regarding a potential combination, the basis of which remains under discussion” and noted that there is “no guarantee a transaction will result from these discussions”.

As a response to Airbus and Bombardier collaboration on CSeries, announced earlier in 2017, the talks appeared logical, although unlikely to be carried through.. For instance, Canaccord Genuity aviation analyst Ken Herbert said in a note to investors, "We are not surprised the two companies have held talks, but we view an eventual agreement as unlikely, and we do not see the benefit for Boeing aside from as a defensive move." 

Herbert pointed out that while Boeing is likely feeling a pressure to accelerate its Services business growth, “we are not convinced Embraer is the best fit or use of capital for Boeing. Based on ERJ’s most current FY18 guidance, the company is looking for revenues of $5.3B-$6.0B, EBIT of $265M-$360M, and FCF of a negative ~ $150M. We do expect BA will be very active on the M&A front in 2018 and understand the company is staffed up to significantly increase its due diligence efforts”.

On October 16, 2017, Airbus announced plans to buy a majority stake in the Bombardier C Series jetliner program. The CS100 seats 100-110 and the CS300 135-145 passengers, while Airbus’ 126-seat model, the A319, hasn’t seen a sale since 2012, according to Airbus CEO Tom Enders. Boeing, on the other hand, offers the 737-700, which will be phased out with the 737-7 MAX. Poor sales of the 7 MAX prompted a redesign, adding 12 seats. Now, if Boeing / Embraer collaboration comes true, the two manufacturers would have a “leading share of the 70- to 130-seat market” thus posing a tough competition for Airbus/Bombardier.

 

https://www.aerotime.aero/en/civil/20741-rumor-boeing-wants-to-buy-embraer-faces-military-objection

See also https://theairlinewebsite.com/topic/430035-is-this-boeings-answer-to-airbus-and-bombardier/