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A320 NEO

The Globe and Mail of Toronto has this recap of one element of our new Bombardier CSeries Study, and this is the greatest threat we see to BBD is the prospect of a price was initiated by Airbus and Boeing that it cannot hope to win.

As discussed in our new Study, Airbus and Boeing have the ability to make the A319/319neo and 737-700 loss-leaders, should they choose, to out-price the CSeries. With a full family of airplanes, up to and including Very Large Aircraft, Airbus and Boeing can subsidize the A319/319neo and 737-700 either within the A320 and 737 families or as part of deals with the larger brothers.

If one assumes a 25% discount off list prices for CSeries sales (and certainly this could be deeper for all we know), Airbus will have to discount the A319neo a whopping 41% off its list price (including the $6m premium over the legacy A319) just to match the CSeries discount. This discount would not be unprecedented for Airbus, but it’s not something the company wishes to do on a regular basis.

As for Boeing, which so far is resisting the idea of re-engining the 737, it, too, has pricing power afforded it through a family of airplanes. Boeing, and Airbus, also plan to boost production to as much as 40-42 737s and A320s per month. The additional production efficiencies also lend weight to pricing power, as well as being able to flood the market with airplanes at production rates Bombardier can’t match.

Other press coverage:

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AirInsight today issued a study, “The Business Case for the Bombardier CSeries,” that provides an in-depth analysis of the Canadian company’s leap into mainline jet manufacturing.

Bombardier is the world’s third largest aircraft manufacturer, after Airbus and Boeing, and is the leader in regional jet and turboprop aircraft seating 50-100 passengers. The CSeries, with seating from 100-149 passengers, puts Bombardier in competition for the first time with Airbus and Boeing and their A318/A319 and 737-600/700 aircraft.

AirInsight’s new study is a follow-on to a report it did in December 2009, “The Coming Narrow-Body Re-Engining Programs for the A320 and 737NG Families.” The 2009 report was a 16-page look at the prospective re-engining programs. The new study began as an update to this report but evolved into an in-depth study of the entire business case for the CSeries, which has been questioned by some—including Airbus, which claims that with the launch of the A320neo (New Engine Option), there is no business case for the CSeries.

AirInsight’s new study concludes quite the contrary. Among its findings:

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What is Qatar’s CEO, Akbar Al-Baker, up to?

The unpredictable Al-Baker, who has achieved the nickname U-Turn Al for his ability to pivot 180 degrees at a moment’s notice, seems to like the limelight in the press with his bombastic behavior.

In his latest interview, he takes on Boeing and Bombardier.

His frustration with Boeing is understandable. With a major order for the 787, Qatar is adversely affected by the repeated delays in the program and the continuing uncertainty over the delivery schedule.

His public criticism of Bombardier and Pratt & Whitney is mysterious–and may fall into the category of public posturing.

But first, how did Al-Baker earn the nickname U-Turn Al?

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Here’s a fascinating unfolding story – Boeing says there is no customer “pushing us to re-engine”.   The story, by Seattle P-I’s Aubrey Cohen, also links to a story by Bloomberg that speaks pretty clearly about how Boeing’s two major 737 customers feel.  Based on what we heard at Southwest’s Media Day last week, it appears to us there is a disconnect between Boeing and a key customer. Continue reading

Rolls-Royce is facing major challenges in the future, including being shut out of the single-aisle engine market.

In a syndicated article picked up today by the India Times (the original ran about two weeks ago out of London), the dilemma facing Rolls is well laid out.

The last purely Rolls single-aisle engine to be produced was for the Boeing 757. The V2500 engine for the A320 family is a joint venture with Rolls, Pratt & Whitney, MTU and a Japanese company through International Aero Engines (IAE). Rolls also produced the engine for the Boeing 717, nee MD-95 of McDonnell Douglas, in a JV with BMW, an unsuccessful venture that ended when Boeing discontinued the 717 following the merger with MDC. Rolls also built the Tay engine used on the Fokker 100 and the re-engine of the 727-100 for express carrier UPS.

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As the aviation world waits for Airbus to decide whether it will re-engine the Airbus A320 family with (as expected) the Pratt & Whitney Geared Turbo Fan and the CFM International Leap-X, little thought has been given to the advantage PW will have with its GTF.

There has been plenty of debate whether the GTF technology or the more traditional Leap-X approach is the better answer. Engineers and pundits will be arguing about this until there are years of service and experience from which to draw definitive conclusions. And this is where PW will have an advantage.

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