Boeing executives had harsh words for the Bombardier CSeries at their press briefing in Paris, indicating an underlying concern about the new competitor to the 100-149 seat category.
Mike Bair, Boeing’s 737 VP of Advanced Development, said that the CSeries “has still not flown, is still in design, and high risk.”
His planning counterpart, Nicole Piasecki, VP of Planning, pointed out Boeing‘s advantages in customer support and that it will continue to compete vigorously in the 125 seat market.
This is an interesting statement, given that designs for the all-new 737 replacement have been north of 150 seats, perhaps indicating that Boeing will need to re-engine the 737NG to remain competitive. The follow-up question should have been for how long? With Airbus gaining new orders daily for the neo, Boeing will need to evaluate how long it can remain with a product that offers higher operating costs in a high fuel cost environment. Because Boeing has paid back development costs for the 737NG long ago, it can afford to cut price in order to remain competitive. Aircraft and engine manufacturers are masters at pricing to the point of economic indifference, and we expect significantly lower margins for the 737NG in the next couple of years as Boeing struggles to compete with neo in the marketplace.
It is sad to see a once proud competitor that would never bash a competitor, because it was confident in its products to be reduced to these levels. Bombardier’s design is lower in risk than the 787, and Bombardier has a longer history in managing international supply chains than Boeing. Yes, the Cseries hasn’t flown yet, but its on target and the program is currently on schedule. Bombardier also has an extensive support network on all continents supporting its CRJ and Q turboprop series, and has more turbine aircraft in service with airlines than Boeing had when the 737 was launched.
Airbus’ previous comments about the CSeries, basically that the neo obviated its business case, led to the production of our report “The Business Case for the Bombardier CSeries” which provides our assessment of the aircraft and its potential market niche and concluded that CSeries retains an economic advantage over the heavier neo models with older technology systems.
As expected, Boeing had little to say about its own 737 product decision, except that it was going to take its time to decide whether a new product, re-engining, or incremental improvements to the existing model will be offered. While a decision by the end of the year is expected, Boeing offered no guidance on timing for their decision-making process. In the interim, it is expected that Airbus will continue to generate orders for the A320neo at record levels, and has several major announcements slated for Paris that should bring the backlog for the recently announced program to more than 500 by the end of the show and 1,000 by the end of 2011. Boeing is facing pressure to announce a decision externally, and its Board has prohibited new programs internally until the 787 and 747-8 problems are solved. As a result, the hopes for clarity in the market rest on the 787 first deliveries and trouble free production line, which we hope will happen in the next quarter.
As a C-Series fan, I love seeing these competitors self immolate with envy. Keep it coming.