Daily Insight – 17 January 2019 – AIRBUS INVESTS IN MIRABEL AND MOBILE FOR A220

News:  Airbus has broken ground for a new A220 final assembly line in Mobile as well as undertaking a major expansion in Mirabel, Quebec.  The A220 has finally broken into the big leagues, with major orders from Air Canada, Delta, JetBlue, and Moxy, as well as repeat orders from Air Baltic and Delta.  The aircraft has been well received by operators, is performing better than promised, and has been well received by customers.

Analysis:  Airbus

has substantial orders in the US market, with 90 firm plus 60 options at Delta, 60 for JetBlue and 60 for Moxy.  At a capacity of four aircraft per month, this should provide adequate backlog at Mobile for more than four years, and Airbus is actively seeking additional orders.  The facilities at Mirabel are being expanded as well, for the international market, and we anticipate major orders for this aircraft in the near future outside the US.  Paris 2019 could be interesting for the A220.2019 could be the year that begins to define the competitive balance between A220 and E2

Insight:  The A220 is a superbly engineered airplane, offering seat-mile economics that are as good or better than the A320neo delivered in a smaller package, enabling less dense routes to be profitably served.  Route expansion into smaller markets will see the A220 replacing both large regional jets and older A319 and 737-700 models currently serving those markets.  Airbus sees a substantial market of 7,000 jets in the 100-150 seat range over the next decade, while Boeing sees 5000.  Our AIR colleagues expect the A220 deliveries to reach at least 1,500 to 2,000 to 2035. Airbus now has the right airplane and capital to capture that market, something Bombardier could not accomplish on its own.