Bombardier CSeries Exceeds Targets, Improves Efficiency

Bombardier today at the Paris Air Show announced that the C Series will meet or exceed all of its initial targets at entry into service - including an 11.9% increase in range from 2,950 to 3,300NM for both models. Fuel burn for the aircraft is coming in below plan, and Bombardier announced an additional 4% improvement by 2018 - with about 40% of that coming from engine improvements and the remaining 60% from additional aerodynamic improvements, including redesigned and larger winglets. The net of these gains is that the C Series will be approximately 20% more fuel efficient than legacy models, including the AvroRJ, 737-700NG and A319ceo, and about 10% more fuel efficient than re-engined models, including 737-7MAX and A319neo. The improved fuel efficiency of the aircraft means that several other areas see improvements as well - in particular carbon emissions, which are over 20% better, and NOx emissions, which are 50% better. Noise levels will be 20db better than existing aircraft - which on a logarithmic scale means 75% lower noise levels. Bombardier says the C Series is now the quietest jet aircraft flying. The result is that the C Series will be a technically superb aircraft at entry into service, with an additional substantial improvement within two years. With a comfortable interior, well designed ergonomic cockpit, and advanced technologies throughout the airplane, and engines optimized for the airplane, we expect room for further performance growth as the aircraft matures. But the bottom line is how this will translate to sales. And that is the $5 billion question facing Bombardier. The C Series is positioned between regional jets and mainline jets, with the CS300 ideally positioned to replace existing 737-700 and A319ceo models in airline service, and the CS100 positioned to replace aging 100-seaters like AvroRJ and Fokker 100 models in service. The competitive reaction by Airbus in particular, and to a lesser extent Boeing, has been well documented in campaigns that Bombardier lost with several key carriers, primarily due to price. Airbus and Boeing have amortized their development programs thousands of narrow-body aircraft, while Bombardier has not yet reached anywhere close to this milestone. Now that the aircraft are in flight test and even demonstrated at the Paris show, Bombardier can no longer say "wait and see". Customers can see. The aircraft largely seems to be everything Bombardier promised years ago. But the world has changed. Airbus and Boeing responded and so did Embraer. Many of the big gaps that exist between the current competitive aircraft have been closed. So opening the gap again by announcing better numbers is very important. But is this enough? Bombardier cannot hope to compete one on one with Airbus and Boeing. They will out produce and outsell Bombardier ever time. They can also close the gaps by pricing at levels Bombardier cannot match. Is the bar simply too high? Not necessarily. Airbus and Boeing have backlogs that are seven years out. Even if they customer a deal to keep from defecting, getting a delivery soon enough probably can't be done. Ramp ups at Airbus and Boeing are not going to happen that quickly. Embraer's E2 is only going to be out in 2018. Bombardier therefore has a window now which it needs to exploit. But it has no room to stumble. New leadership come from the aircraft selling world. They know what has to be done. The opportunities are there to chase. Bombardier needs to be more aggressive on pricing and keep talking to customers about growing the family beyond the two models. They also must focus on backing up their product. This last item is what Embraer keeps stressing it has done and is the core of the success on their E-Jets. The C Series test program must be moved along a bit faster and executed flawlessly. Airlines and lessors want to be confident in the aircraft. It helps that the first customer is Swiss and part of the Lufthansa combine. They are exacting and will ensure Bombardier's product is at the best level. Now the new sales team leadership must do their part and convince airlines and lessors their bet on C Series is safe and worth the wait.

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