Bombardier just released this: Delta orders up to 125 C Series aircraft – Largest C Series order yet
Bombardier also announced today that Atlanta-based Delta Air Lines, Inc. (Delta) has placed a firm order for 75 CS100 aircraft with options for an additional 50 CS100 aircraft. Based on the list price, the firm order is valued at approximately $5.6bn. Deliveries of the state-of-the-art aircraft to Delta are scheduled to begin in 2018. As a result of this order, the program is expected to enter into service with a backlog of more than 300 aircraft or up to 800 aircraft including all options and commitments. The other agreements consist of conditional orders, letters of intent, options and purchase rights.
The fact that the order is for CS100 will have many looking for details. Of the 250 backlog now, CS100 is 21.2% of the business. Post the Delta order, this rises to 29.4%. The order is a major boost for the CS100 and indeed the entire project.
Delta reported that with the CS order, it will no longer induct the E-190. That is a huge statement. Today’s news brings Bombardier’s program a crucial fourth tier one customer. This is the critical mass the big lessors have been waiting for. And more than a few customers, Bombardier has described as “waiting in the wings”.
Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.
Great news!
This is very good news but a surprising news, right? I thought it was the CS300 which was a challenge ! What does that mean ? The CS100 will replace what type of aircraft in Delta? There are many unanswered questions, it seems to me … Does this mean that Delta will buy other Bombardier aircraft ? Otherwise, in fact, now we will see happen all those who had signed letters of intent to show up in the coming weeks ! Production slots are closing slowly … pending an expansion of production capacity …
Really interesting that its the CS100 as the primary.
That would indicate this order supplements (and will eventually replace) the (A)717 fleet [110 seats, 2.5 class] and (B)A319 fleet [126/132 seats, 2.5 class] of which Delta have (A)80 and (B)57.
80+57 = 137… not too far away from an order of 125.
It does not appear at this stage to be a supplement/replacement for the (A)MD-88/90 fleet [150-160 seats, 2.5 class] and (B) A320 fleet [150 seats, 2.5 class] of which Delta have (A)181 and (B)69.
181+69 = 250. Is this a potential order that is still up for grabs at some point?
Oh and as pointed out elsewhere, BBD took a $500m USD charge (“onerous contract provision”) for this order and Air Baltic*… and maybe Air Canada.
*I expect the Air Baltic orders were at better margin than Delta, so Delta must have got them cheap.
Question is now I suppose; what manufacturing cost estimations did BBD include in their accounts calcs?
Great news, but nobody wants the E190, 8 years old Embraer are up for grabs, what is the main culprit?
I’ve heard talk of the Ejets having pretty poor reliability….
Maybe someone can confirm?
There are two interpretations of the “onerous contract provision”: One is the suggested that it covers ‘loss-leading’ prices for both the Air Canada and Delta orders. The other is more interesting in that there are stories – for want of a better word – that the Delta for sure and perhaps the Air Canada contained requirements for Bombardier to fund the development of the CS500 variant for future consideration or conversion of existing options.
If the latter it would be an adequate public justification for the Federal Government to contribute repayable funding as research, assuming of course that it is willing to accept the current byzantine ownership and control structure of the company. In terms of national politics that would be acceptable, especially if matched with funding for Alberta for research into more efficient heavy oil production and purification.
http://aviationweek.com/commercial-aviation/jetblue-ceo-laments-embraer-190-costs
What could possibly go wrong?
Where is our Aviation Doctor now?
The Delta and Air Canada orders show if you have the correct product for the space the airlines will order it.
Yes BBD ‘dropped their pants’ for the order but this common in any industry to secure new top shelf clients.
United you missed out on a great product…. Good luck with those fire-sale 737-700s…. I will avoid you at all costs and enjoy my Platinum status flying Delta and the CS100s!!!!
I’m inclined to agree that the MD-88 replacement is still up in the air, although not entirely certain. They could instead be restructuring to shift lighter-volume MD routes to the smaller CSeries and higher-volume MD routes to 737’s or A320’s. Alternatively, the choice of the CS100 could be part of a larger regional upgauaging strategy – as they shift routes with 50 seaters to 76 seaters, they could simultaneously shift some of the routes with 76 seaters to mainline, 110 seaters.
Delta will have the most comfortable cabin. The CS100 is the most versatile aircraft, long and thin routes or short hop, hot and high altitude take off, A and B and Embraer don’t have anything close.
It’s almost certainly low prices and potentially additional free support commitments. Development costs shouldn’t be a write-down unless they were to expect a CS500 to be a long term loss justified only by supporting the market for the CS100 and CS300. R&D is its own cost category, either accounted in the year the cost is incurred, which for the CS500 would not have happened yet, again unless Bombardier expected the CS500 to never pay back, or else amortized as a long term program cost.
We don’t know the seating specs so its premature to say what comfort level will be offered. Other aircraft can do what the CS100 is purported to do, its real test will be in day in and day out operations.
I still feel Delta would have been better off with Boeing’s planned 737-7.5 Max. Fleet commonality is a major cost factor that means millions in training,and parts.
Fleet commonality is a major asset but after 30 years of the same old technology, Delta made a clever choice in offering his customers the latest technology and the best traveling experience available in the regional market. Not to mention the new flexibility to explore new thin routes on continental markets.
Since they ordered the CS100, not the CS300, I disagree. Delta seems to have wanted an aircraft smaller than 130 seats, so the ordering a 150 seat aircraft would have been a questionable move. I certainly grant that the reliability of the CSeries remains to be proven, and fleet commonality has substantial benefits. However, offsetting those benefits would be higher fuel consumption flying around extra capacity that Delta apparently doesn’t think they can fill on the routes this order is intended to serve. Also keep in mind that Boeing can’t offer the same level of discounts on the MAX, which needs to generate healthy profits for Boeing, as they have been on the Next Gen’s, where slim profit margins can be justified in part for helping keep the production line running at an optimal pace through the Next Gen to MAX transition, so the purchase price will also almost certainly be higher.
Besides, the 737-MAX 7 stretch is reportedly (according to the WSJ) still just a design study. I can’t imagine it will be available in the time frame Delta is planning to start taking CSeries deliveries. On the other hand, it could greatly increase the challenge for Bombardier in marketing a CS500.
The CS100 won’t be a direct replacement for the large MD80 fleet but a 737-7.5MAX would. The CS100 seems to next in line to replace the 717’s which still have some life left in them but since only 156 were produced, Delta’s chances of acquiring more are slim to none.
Since the 737-7MAX is selling poorly, Boeing has little to lose by offering the 737-7.5MAX, but it needs an expedited EIS which should not be a problem for Boeing since they have had over 50 years experience building thousands of them.
Steve,
The 737 needs to be put out to pasture as soon and the 737-7.5 is just a bad idea and complete bandaid. It has done well for it’s time but I thank Delta for having the courage to move on and start with something new.
I am surprised by the CS100 order as I think we all thought CS300. Does this mean that Ed will make another order for CS300s or just convert all the options? I have a feel that Delta will also order the CS500 when it is launched. This would fill out the bottom end of their fleet. This would leave AB or B to fill out the 180 seat and MOM segment. The new order for 321s seem to fit this.
I have heard for years that the 737 is obsolete, its days are over, etc. The MAX has garnered about 3000 orders as its the engine that provide most of the fuel savings. No courage on Delta’s part, Bombardier made them an offer they could not refuse. I would also imagine that Delta has escape clauses in the contract to walk away if certain numbers are not met, fuel savings being only one of them, also the dispatch rate and it seems P&W is having problems with the geared turbo fan engines.
I lot has to go right for this deal to be successful.