Throughout the 20 years, it’s been one constant verbal battle between Airbus and Boeing. And to be sure, this continues unabated, with as much vigor as ever.
But Leahy has a new fight with the “B” and it’s not Boeing. It’s Bombardier. And this took on a new dimension at the Paris Air Show, with Leahy taking shots before the world’s press covering the event.
In reviewing the A320neo orders, Leahy flashed artwork of each airline announcing a deal at the show, including Frontier Airlines (though the order was actually placed by parent Republic Airways Holdings). And Leahy said, “I see no room from Bombardier.””
Given the muscle of Airbus, and of CFM/GECAS which provided “great incentives”, that the A319neo is the same size as the CS300 and Republic’s precarious financial condition, the industry immediately jumped to the conclusion that this will lead to the cancellation of the CSeries.
Republic says the order is intact. Leahy says that the A319neo kills the business case for the CSeries. AirInsight concluded in a study last year the A319neo falls well short of the CS300’s economics.
After the short reference to BBD in the presentation, Leahy was cornered by a number of reporters who asked him about the CSeries. He said that if it were his program, he’d redesign the airplane or kill it. Google News searches will turn up any number of stories on point.
Leahy’s campaign began in May 2010 when at the Airbus Innovation Days when he said the then-pending neo program, if launched, would kill the business case for the CSeries. This has been a recurring theme since. Leahy stepped up the stakes with the suggestion that BBD should cancel the program.
At the Innovation Days, Leahy said Airbus was not going to make the same mistake with BBD that Boeing did with Airbus–that is, not take the threat seriously.
Our take: Airbus indeed takes the threat from BBD seriously. Among other things, we’ve ridden the A320 family, which from a passenger’s viewpoint we’ve always liked better than the 737, with fuselage dimensions dating to the 1950s. The A320 is more comfortable.
BBD is in a niche market (100-149 seats), no question, and for every sale, it’s one most likely taken from Airbus (Boeing seems less protective of the 737-700 than Airbus is of the A319). Airbus stands to lose a lot of cash flow as BBD increases its sales.
In the AirInsight study on the CSeries last December, the biggest threat to BBD was not the neo program, we concluded. As noted, we believe the CSeries has better economics. The threat is the pricing power of Airbus and Boeing and the ability to cut “global” deals that BBD can’t match. This has nothing to do with the “business case.” This is all about market share.
BBD has a 21st Century airplane. The A319 is a plane designed in the 1980s that has a 21st Century engine. Competing against the 737NG, a 1990s airplane with a solid 20th Century engine that has been routinely updated, sales have proved this business case works.
But to say the CSeries should be redesigned or canceled is pure hyperbole. BBD should add a larger CS500. But for now its plate is full.