The following table summarizes firm orders announced at the Paris Air Show for the major aircraft manufacturers.
ATR’s generated 46 firm orders, in sharp contrast to its competition, the Q400 from Bombardier, which gained only 6. Despite the C Series on display, Bombardier generated no new orders or customers for the airplane at Paris, and no further orders for the CRJ. Viking logged an order for 50 Twin Otters from China, and Sukhoi orders for 3 SSJs. Embraer generated orders for 25 E2 Jets and 25 E-Jets, with options doubling those numbers. Mitsubishi got no orders.
Despite low expectations, the last minute WizzAir order for 110 A321s on the final day brought the order total above last year’s Farnborough show.
It seems like Airbus, five-something months into the year 2015, has already secured a book-to-bill ratio of greater than one for the calendar year. Boeing will probably follow suit very shortly. I wouldn’t be the least surprised if they’ll both again be at or above book-to-bill ratio of two at year end. The backlogs are really shooting through the roof, ultimately becoming an issue.
Although it wasn’t a new order as such, Boeing did confirm on Friday June 19 that Polish charter carrier Enter Air was the previously unannounced customer for four 737s (two 737-800s and two 737 MAX 8s) which the manufacturer had previously attributed to an unidentified customer. Boeing datelined the news release from Warsaw rather than Paris, but the news release was issued while the Paris Show was still occurring. Enter Air already operates a bunch of leased 737-400s and 737-800s, but the order is significant in that this is the carrier’s first direct contract for aircraft with Boeing.
I believe Bombardier are not selling many CSeries due to:
1. Refusing to discount to anything like the levels Airbus and Boeing are at. List price for A320/B737 are around $100m USD. Real prices are around a third that. I believe the CSeries list prices are ~60 & ~70 million for CS100 and CS300.
2. Airlines being wary of dispatch reliability. Just one of those things that won’t be proven until the aircraft is in service.
3. Airlines being wary of schedule slippage. Again, only really goes away when its in service.
2 and 3 are transient issues and will go away in time (assuming reliability isn’t a problem).
1 is not, especially coupled with low fuel prices. Its a thorny issue; they have much bigger program costs to recoup than MAX and NEO programs.
Even if the CS300 is more efficient per seat mile and per travelled mile, if the purchase cost of an A320/737-8 is that much lower, it’ll be a long time saving the difference. A CS500 might increase the CASM efficiency to a point where it pays up quick enough to make the sale.
At that point, a potential advantage is slot availability. Would having a CS500 available in say 2019 entice airlines on-board as they could likely get a family of CSeries before getting a family of 737s or A320s?
Questions, questions questions…
Of all the offerings the most unfortunate is the Cseries.
I thought that with both models on display they would sell at least 20 firm. Now it looks more dire than before the show. Nice plane, high tech clean sheet, good numbers. I can’t understand why this is not selling. Did someone put a curse on the plane or something?
I’m also curious as to what will happen with Republic and Ilyushin.
Republic won’t discuss the matter beyond what they’ve said. But industry chatter is that Republic is sitting on a killer deal. They won’t walk away from it – rather they are waiting for somebody to come along and buy those deliveries at a premium to what they paid.
Ilyushin is suffering from the Russian malaise. Putin and Co are furious that Ilyushin bought “non-Russian” and are making it tough for them. Then there is the ruble cost of the deal, which has skyrocketed. We believe BBD is working with them to assist. Ilyushin still wants the aircraft and if they cancel, are subject to penalties.
Its a complex situation. The negatives are massive discounts from Airbus and Boeing spoil deals. But as these have been possibly too successful, A & B are sitting on massive backlogs and can’t deliver fast enough. Ramp up will take time. So the positive is that, potentially, BBD can deliver before A & B. However, customers want to be assured – so they hang out and wait. There is no incentive to rush into this.
BBD cannot win a price war with A & B. Meanwhile EMB is de-risking their E2 to ensure 2018 EIS, because they take the CS threat seriously. BBD’s new sales team have between now and late 2017 to get the sales humming. At the same time the production team dare not slip one iota, or they lose more time and give EMB an advantage.
So in answer to your questions: The sales team have to execute right away and not sleep at night or get weekends off. The production team needs to hustle and get production optimized ASAP without any quality compromises. Fortunately the initial aircraft are very close to brochure weight and beat brochure performance handily. Note the new sales team are old hands at getting airplanes into airlines. We expect to see the CS at all sorts of airports around the world doing “show and tell” flights. Just like Airbus did with the A350 and Boeing did with the 787. At least BBD has a product to demonstrate and the pricing will go the way the market requires.
We think the BBD teams will pull this off, but time is very tight. Anyone who saw the Swiss airplane in Paris walked away impressed. The aircraft has 777 size bins, with enough space for EVERY passenger to bring a carry-on roller. Also its smallest seat is 18 inches wide, the middle seat is 19 inches wide! Passengers will be amazed and love this cabin.
I think an important issue is cost. The production rate of the A320 and 737 is much higher than those of the CSeries and Bombardier is at the beginning of the learning curve. On the other hand, Bombardier spent much more on the CSeries ($5.4B) than Airbus or Boeing on the A320NEO (~$1.5B) or the 737MAX (~$2.5B). So basically, in order to recover its investments, Bombardier need to sell its aircraft at an higher profit margin.