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Bombardier CSeries jets, Boeing complaints, and the Airbus takeover

Triton

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"Boeing’s future plans threatened by Airbus-Bombardier pact"
Originally published October 17, 2017 at 7:14 pm Updated October 17, 2017 at 10:19 pm

by Dominic Gates

Source:
https://www.seattletimes.com/business/boeing-aerospace/boeings-future-plans-threatened-by-airbus-bombardier-pact/

Airbus’s surprise move to swallow Bombardier’s CSeries airplane program gives it a new small-jet family without spending the billions of dollars it would take to develop one itself.

Besides the likely impact of the deal on the Boeing-instigated U.S. trade case against Bombardier, that leg up for Airbus could trigger a serious strategy shift for Boeing.

The deal Airbus announced Monday, giving it control of Bombardier’s freshly introduced two-model family of small narrowbody jets — the 110-seat CS100 and the 130-seat CS300, — could ultimately force Boeing to redraw the road map of new airplane development that it had settled on.

Boeing has said it doesn’t expect to have to field a so-called “clean-sheet” new-technology design to replace the Renton-built 737 narrowbody until around 2030.
Yet Ernie Arvai, president of AirInsight Group, an aviation industry consulting firm, said that if Airbus chooses to produce a stretched CSeries jet — a potential 150-seat CS500 — it would hurt sales of the 162-seat 737 MAX 8, the heart of Boeing’s narrowbody jet lineup and the narrowbody plane from which it expects to derive most revenue.

With such a threat, Boeing might need to spend billions on a 737 replacement sooner than expected.

“It probably pushes it two to three years earlier than Boeing had originally planned,” said Arvai. Conversely, with the CSeries in hand, “Airbus may not need a new-technology narrowbody jet just as desperately.”

Indeed, Airbus’s move to secure the small narrowbody market should free it to focus its money and resources on countering Boeing’s pending plan for a new 797 airplane that’s sized between its 737 and 787 jet families.

For that project, Airbus may find useful the innovative composites manufacturing technology that Bombardier developed for the CSeries in its wing plant in Belfast, Northern Ireland.

There, in a very different composites layup technique from that used by Airbus and Boeing, employees make single-piece wing panels, with stiffening rods called stringers already attached, out of dry carbon fiber fabric, and then inject epoxy resin that will harden the material in a high-pressure oven or autoclave.
 

ADVANCEDBOY

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This is bad news to all aircraft fans. By purchasing Bombardier`s CSeries, Airbus is most likely interested in absorbing the company( stripping the assets) and dissolving it later by shredding the unprofitable remains. Airbus might use the CSeries to fill their own niche with a brand new plane while saving money on their own R&D for this segment. More manufacturers would mean more diversity, choice and competition and would push Tier 1 manufacturers to overhaul their product line more often.
Boeing walks the typical thin ice strategy by milking a 50 year old, obsolete airplane design . Why invest in a brand new airplane if we can impose 300 % taxes on our competitors? In the end Boeing doesn`t understand that by not building new airplanes more often they deprive themselves of expertise. The best manufacturers in any sector are characterized by solid long term expertise and in-house complex engineering. Companies that risk going south always adopt the sweat-less strategy - outsourcing complex engineering, rebadging, modernizing obsolete platforms , hit or miss product strategies based on unsubstantiated hype of patriotism or advertising over real engineering, etc.
While Boeing enjoys healthy orders for the ridiculously over-milked 737 , that is a dead end in long term. In single isle narrowbody category we have a lot of contenders on the horizon. You can`t impose ubertaxes on all of them. By the way Canada can shrink their F-35 orders in response to Boeing`s lobbied import tariff.
I am allergic to old obsolete products that get a nose job and are being sold as brand new ones. I would never buy 737 be it Max 10 or whatever fancy name you add to it. I can still see the ugly old nose and the uncovered retracted chassis from 50 years ago, which is enough to realize that pennies have been saved. I want to see engineering sweat, roll up those sleeves and make a brand new single isle aircraft, not a mixture of senile architecture with updated patches. This is characteristic all along US manufacturing sectors in general ,leading to rust belts all along precision engineering manufacturing sectors. My 2 cents.
 

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Although I do agree in the general terms of your comment here, I still think you are beating to hard on Boeing.
Let's see it with cold blood:
- Airbus made a coup, a nice one, gaining a commercial advantage helped by PR Trump attitude.
- Airbus gained a manufacturer with a good product on this segment that invested all its capital in its latest product. We don't have sadly much signs of a long forward thinking vision from Bombardier r&d.
- Boeing just bought at relatively low cost Aurora, a successfully innovative firm that is well funded on the R&D side.

Conclusion:
Airbus just bet its future on an immediate sales advantage. The inevitable restructuration, social conflict embedded with nationalistic pride are a potential burden that will affect profit and sales on the long term (image).
On the other hand, Boeing just
bought a new refreshing team able to influx fresh thinking in Boeing R&D, exhausted, trimmed and downsized after years of frontal competition with Airbus (have a look at the KC46 project).

In other words, Airbus bet on its long term future when Boeing just made it an asset...

My 2 cents.
 

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Airline companies buy whatever makes economic sense. And in some cases that will be a 50yo, multiply rehashed 737 Max, because it fits the specific route statistics better than anything else, because of established working relationships, because it fits within an existing fleet, because the costs of switching manufacturers are too high, or because Boeing offer a better price. They don't care about the strength, or not, of Boeing R&D, because that has zero impact on the things that are important to their shareholders.

When the question of whether to refresh or replace 737 and A320 came up earlier in the decade, both Boeing and Airbus did extensive customer surveys to find out whether airlines wanted the better in-flight economics, but higher upfront costs of a new aircraft, or a refreshed platform with lower upfront costs available sooner. Everyone plumped for the Max and the Neo. That's not just the bottom line, it's the only line. You build what the customer wants.
 

TomcatViP

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I disagree. There is much more at stake than immediate airline requirement. That would be an acute blindness to discard the incoming reshaping of this market. From regulation to profit margin, R&D would be a big asset.
Oh, today, Fr research agency got the credit long waited to overall its winds tunnel facility. Just to say.
 

DWG

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TomcatViP said:
Airbus just bet its future on an immediate sales advantage. The inevitable restructuration, social conflict embedded with nationalistic pride are a potential burden that will affect profit and sales on the long term
On the other hand, Boeing just
bought a new refreshing team able to influx fresh thinking in Boeing R&D, exhausted, trimmed and downsized after years of frontal competition with Airbus (have a look at the KC46
You're not placing things in their strategic context. Airbus hasn't bet anything, it was already in an intense fight with Boeing's political catspaws over subsidies, getting into a fight over the C Series is a minor issue - in fact the absurdity of Boeing's claim makes it a PR gift to Airbus that it can leverage to undermine the wider Boeing position. Meanwhile the decision to build in the States furthers Airbus' existing strategy of becoming a US-native prime, which destroys Boeing's strategy of resorting to the nationalist argument whenever it can't compete economically. And ultimately airlines don't make purchase decisions based on nationalist arguments, as we see with Airbus' existing penetration into the U.S. market.

WRT Bombardier, their R&D outlook was constrained by budget. They could only fund one new product. They bet big on C Series, which is what Airbus or Boeing would have built if they were trying to break into the market, as opposed to existing primes, constrained by fleet ownership. They knew it was a risk, that it would bring them into conflict with Boeing, but also that it was a good product. Boeing haven't attacked them because of the CS.100, competing in a market segment Boeing abandoned when it canned the 717, but because the CS.300 is potentially a very real threat to Max sales, and the CS.500 would be worse if Bombardier got the C Series momentum rolling. So they decided to strangle the C Series at birth. Bombardier lost their bet, but Airbus stepping in frees them from having to support C Series and releases their in-house resources to refresh their regional fleet.

I think you're fundamentally misreading the Boeing situation. There's nothing wrong with Boeing's innovative R&D capability, that's tucked away in Phantom Works, Aurora is simply a case of buying into/strengthening their position in a new market segment. The Aurora team's significance lies solely within that area, they'd be an insignificant drop within the ocean of an airliner development team. There's a fairly strong divide between Boeing's civilian and military sides and R&D mirrors that, Aurora will augment the military side, not the civilian. You criticise KC-46, but given all the funding, time and R&D talent in the world, KC-46 remains the only product Boeing could have offered. The requirements across the whole farcical process remained constant in one thing, it had to be a commercial derivative. That locked Airbus into KC-330, and Boeing into KC-767. KC-330 is simply the better product, a younger, better sized platform. KC-767 was based on a platform at the end of its commercial life, but it was the only platform they had, 777 is too large. Circumstances made KC-46 inevitable, R&D capabilities were irrelevant. And there's nothing wrong with Boeing's commercial side R&D, it just doesn't get much chance to shine because the airlines want low risk, incremental development, as we saw when Boeing pitched Sonic Cruiser and got a resounding 'No!' from across the industry.

TL/DR C Series strengthens Airbus' existing US-penetration/counter-Boeing strategy;Aurora Flight Sciences locally strengthens Boeing in the military/unmanned sector, is irrelevant to the civil side. Neither of them bets the respective companies' future.
 

TomcatViP

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Boeing temporarily rehiring retired mechanics as it struggles to fill jetliner orders:

https://www.cnbc.com/2017/10/25/boeing-temporarily-rehiring-retired-mechanics-in-washington-state.html
 

Triton

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"Boeing CEO: Discussions between Airbus, Bombardier 'don't change our plans"
by Jeff Daniels | @jeffdanielsca
Published 2:19 PM ET Wed, 25 Oct 2017 Updated 2:24 PM ET Wed, 25 Oct 2017

Source:
https://www.cnbc.com/2017/10/25/boeing-ceo-airbus-bombardier-discussions-dont-change-our-plans.html

Boeing's CEO on Wednesday expressed confidence in the planemaker's strategy and said the Airbus-Bombardier partnership won't change the company's game plan.

Last week, Europe's Airbus announced a partnership with Canada's Bombardier on the C Series, a narrow-body aircraft that competes with Boeing's 737.

"Recent changes in the marketplace, the discussions between Airbus and Bombardier, don't change our plans," Boeing CEO Dennis Muilenburg said during a conference call after the company announced third-quarter results.

According to the CEO, Boeing has "a strong strategy in place. We'll continue to look at our strategic alternatives."

Muilenburg said the narrow-body market is "an attractive market with a lot of global competitors. We like competition. It makes us better. We are confident we can win, but it's important that everybody plays by the same rules."

Boeing has accused the Canadian manufacturer of benefiting from "unfair" government subsidies. Last month, the U.S. Commerce Department imposed anti-subsidy duties on Bombardier's C Series planes.

"We're going to continue to invest to win in the narrow-body marketplace," Muilenburg said. "We have lots of growth opportunity both top and bottom line in our core narrow-body business. We have a number of customers who operate 737s today who still have not made their next-generation selection [to the MAX].

At the same time, the CEO said Boeing will "continue to look at ways to accelerate our core business, grow organically as our primary growth engine."

Muilenburg also said Boeing has "clear priorities on usage of cash. Our first use of cash is invested organically, secondly returning values our shareholders — roughly 100 percent free cash flow. And then thirdly, mergers, acquisitions, partnerships that complement our organic strategy. We are going to continue down that path."
 

Triton

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"Bombardier cuts 280 Belfast jobs amid Boeing trade row"
Thursday 26 October 2017

Source:
http://news.sky.com/story/bombardier-cuts-280-belfast-jobs-amid-boeing-trade-row-11099122

Bombardier is to cut 280 jobs at its Belfast operations as the company's trade row with US rival Boeing continues to simmer.

It comes a week after Airbus had eased jobs fears after agreeing to take a majority stake in Bombardier's C-Series aircraft programme - the focus of the row.

The passenger planes are facing a 220% tariff and further 80% levy as a result of a US state aid ruling - disputed by the company and the UK and Canadian governments.

Canada-based Bombardier makes the wings for the C-Series in Belfast, where it currently employs 4,000 staff.

But it said on Thursday: "Following the 7,500 global workforce reductions announced by Bombardier Inc last October, we continue to review our manpower requirements in Belfast and regret to confirm that we must reduce our workforce levels by around 280.

"Those impacted will be functional support personnel, including managers and professional staff.

"We acknowledge the impact this will have on our workforce and their families and we continue to explore opportunities to help mitigate the number of compulsory redundancies.

"However, we need to continue to cut costs and improve the efficiency of our operations to help ensure our long-term competitiveness."

Bombardier's competitiveness was bolstered by its partnership with Airbus which will see US-bound C-Series planes assembled at Airbus US plants to avoid the 300% import tariffs.

The company signalled that the latest job losses were not a direct result of the trade dispute but an element of its continuing five-year plan to grow profitability.

It had cut 1,000 jobs in Belfast a year ago and a further 95 just last month.

Davy Thompson, Unite regional coordinating officer, said: "At a time when the unions and the broader Bombardier workforce in Northern Ireland are leading efforts to put the pressure on political leaders to use their leverage on Boeing and the US administration to rescind the 300% tariffs threatened on the C Series, it is very saddening that our efforts are rewarded by this announcement.

"Unite is calling on Bombardier to reconsider these redundancies and lift the threat to its workers in Northern Ireland at this time."
 

Triton

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"Airbus' deal of the century may not be as great as it sounds"
Benjamin Zhang

Oct. 26, 2017, 9:29 AM

Source:
http://www.businessinsider.com/airbus-bombardier-c-series-deal-challenges-2017-10


...

The problems of being an orphan

A major part of the deal will see the C Series included in the Airbus sales operation. For both Airbus and Boeing, it is important to be able to market a family of aircraft. Unfortunately, the C Series will be a stand-alone or orphan in the Airbus lineup, a hurdle it and Bombardier will have to overcome.

"We have the 737MAX 7,-8,-9, and -10. We have a family," Dinesh Keskar, Boeing's senior vice president of sales for the Asia Pacific and India, told Business Insider. "You talk to others and they'll tell you that family has a lot of value."

For Boeing, this means the 737 MAX comes in four distinct variants capable of efficiently carrying anywhere from 138 to 204 passengers. As a result, a family of planes allows airlines to take advantage of the synergies created by filling a wide variety of needs using the same set of pilots, mechanics, and spare parts.

In addition, it allows Boeing to incorporate clauses into sales agreements that allow customers to switch to larger or smaller models should market conditions change.

"Typically, most deals are centered around a single model like the 737MAX 8," Keskar said. "But to have the comfort in the contract to say they can move up to the -9 or -10 or down to a -7 is a very big deal for the airline board and CEO."

"Does this sway the deal? Maybe not, but does it make a significant impact in their thinking? Absolutely," the Boeing executive added.

For Airbus, its A320 family of planes has been one of the most successful in aviation history. But with the C Series in the fold, the smaller end of the single-aisle Airbus lineup will consist of the 110-seat CS100 and the 130-seat CS300 while the larger end of the spectrum will be the 240-seat A321neo.

As great as the C Series and the A321neo may be as individual aircraft, they can't deliver the same type of synergies as aircraft from the same family. After all, the C Series and the A320 series will remain aircraft designed and built by two separate companies with completely disparate design and engineering philosophies.

"The CSeries is a great complement to the current Airbus lineup," an Airbus spokesman said in a statement sent to Business Insider. "Filling a market need for 100-150 passenger single-aisle jets that Bombardier estimates at 6,000 aircraft over the next 20 years."

This is something Boeing itself dealt with some more than a decade ago.

Following a 1997 merger with McDonnell-Douglas in 1997, Boeing was left with the task of selling the defunct brand's final product, the MD-95.

Boeing went to great lengths to incorporate it into the company's lineup including renaming it the 717-200. Unfortunately, Boeing was forced to pull the plug on the project in 2006 after just eight in production and 156 aircraft sold.

According to Keskar, one of contributing factors to the 717's demise was that it was an orphan in Boeing's lineup. Incidentally, the people who bought aircraft remain extremely happy with it and are looking to acquire more of them on the secondhand market....
 

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It depends if the CS500 becomes the foundation block of a new family to replace the A320 series.
At some point both Airbus and Boeing have to make a new family. Airbus is taking a gamble. US carriers might not take to the CS even with an Alabama production line, the major airlines haven't yet shown any increased interest. Maybe if a line becomes practical they might change their mind or smaller feederlines might make up the bulk of sales. Even if the US production plan doesn't come off, they've neutered a competitor and gained a share in its manufacturing and design IP for nothing.
As much as the workers of Belfast may moan, the deal to set up a US production line within a couple of years was never going to save their jobs. Airbus wasn't acting altruistically to benefit the interests of the Canadian or UK governments, they were looking after their profit margins and shareholders and finding ways to penetrate the US market. It wouldn't surprise me if in the end they open a Chinese production line.
 

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Triton said:
"Airbus' deal of the century may not be as great as it sounds"
Benjamin Zhang

Oct. 26, 2017, 9:29 AM

Source:
http://www.businessinsider.com/airbus-bombardier-c-series-deal-challenges-2017-10


...

The problems of being an orphan

A major part of the deal will see the C Series included in the Airbus sales operation. For both Airbus and Boeing, it is important to be able to market a family of aircraft. Unfortunately, the C Series will be a stand-alone or orphan in the Airbus lineup, a hurdle it and Bombardier will have to overcome.

"We have the 737MAX 7,-8,-9, and -10. We have a family," Dinesh Keskar, Boeing's senior vice president of sales for the Asia Pacific and India, told Business Insider. "You talk to others and they'll tell you that family has a lot of value."

For Boeing, this means the 737 MAX comes in four distinct variants capable of efficiently carrying anywhere from 138 to 204 passengers. As a result, a family of planes allows airlines to take advantage of the synergies created by filling a wide variety of needs using the same set of pilots, mechanics, and spare parts.

In addition, it allows Boeing to incorporate clauses into sales agreements that allow customers to switch to larger or smaller models should market conditions change.

"Typically, most deals are centered around a single model like the 737MAX 8," Keskar said. "But to have the comfort in the contract to say they can move up to the -9 or -10 or down to a -7 is a very big deal for the airline board and CEO."

"Does this sway the deal? Maybe not, but does it make a significant impact in their thinking? Absolutely," the Boeing executive added.

For Airbus, its A320 family of planes has been one of the most successful in aviation history. But with the C Series in the fold, the smaller end of the single-aisle Airbus lineup will consist of the 110-seat CS100 and the 130-seat CS300 while the larger end of the spectrum will be the 240-seat A321neo.

As great as the C Series and the A321neo may be as individual aircraft, they can't deliver the same type of synergies as aircraft from the same family. After all, the C Series and the A320 series will remain aircraft designed and built by two separate companies with completely disparate design and engineering philosophies.

"The CSeries is a great complement to the current Airbus lineup," an Airbus spokesman said in a statement sent to Business Insider. "Filling a market need for 100-150 passenger single-aisle jets that Bombardier estimates at 6,000 aircraft over the next 20 years."

This is something Boeing itself dealt with some more than a decade ago.

Following a 1997 merger with McDonnell-Douglas in 1997, Boeing was left with the task of selling the defunct brand's final product, the MD-95.

Boeing went to great lengths to incorporate it into the company's lineup including renaming it the 717-200. Unfortunately, Boeing was forced to pull the plug on the project in 2006 after just eight in production and 156 aircraft sold.

According to Keskar, one of contributing factors to the 717's demise was that it was an orphan in Boeing's lineup. Incidentally, the people who bought aircraft remain extremely happy with it and are looking to acquire more of them on the secondhand market....
Comparisons between C Series and the MD-95/ Boeing 717 are of limited validity.
The former was the last update of an old design (DC-9) that had been pushed to the lower-seat margins by the B737 & A320 families. The B717 was still a lot of aircraft for its capacity versus even its contemporary regional jet liners (even more so now), it was kept on temporarily because it was still more competitive than the smallest of the 737s in this regard and because of outstanding orders.
The C Series are clean sheet of paper designs that are more competitive at the lower passenger number range than shrunken members of the B737 & A320 families and for which “growth” versions can potentially threaten the lower end of main production B737s and A320s (especially on shorter routes or routes with lighter load factors).
Basically this development adds to the saturation of most of Boeing’s and Airbuses main markets with particular members of their various families of aircraft hitting sweet spots while other variants of the same aircraft being vulnerable to their competitors aircrafts sweet spots. The problem for Boeing is that apart from their middle and higher capability 787s alot if the more lucrative (at least in terms of orders) sweet spots are ending with Airbus as Boeing’s slate of offerings are starting to show signs of needing replacement not just updating.
 

DWG

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Hood said:
It wouldn't surprise me if in the end they open a Chinese production line.
They already have an A320 production line and an A330 completion centre in Tianjin
 

LowObservable

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For Boeing, this means the 737 MAX comes in four distinct variants capable of efficiently carrying anywhere from 138 to 204 passengers.

In the case of the MAX7 the market appears to have delivered its verdict on its claimed efficiency.
 

Archibald

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kaiserd said:
Triton said:
"Airbus' deal of the century may not be as great as it sounds"
Benjamin Zhang

Oct. 26, 2017, 9:29 AM

Source:
http://www.businessinsider.com/airbus-bombardier-c-series-deal-challenges-2017-10


...

The problems of being an orphan

A major part of the deal will see the C Series included in the Airbus sales operation. For both Airbus and Boeing, it is important to be able to market a family of aircraft. Unfortunately, the C Series will be a stand-alone or orphan in the Airbus lineup, a hurdle it and Bombardier will have to overcome.

"We have the 737MAX 7,-8,-9, and -10. We have a family," Dinesh Keskar, Boeing's senior vice president of sales for the Asia Pacific and India, told Business Insider. "You talk to others and they'll tell you that family has a lot of value."

For Boeing, this means the 737 MAX comes in four distinct variants capable of efficiently carrying anywhere from 138 to 204 passengers. As a result, a family of planes allows airlines to take advantage of the synergies created by filling a wide variety of needs using the same set of pilots, mechanics, and spare parts.

In addition, it allows Boeing to incorporate clauses into sales agreements that allow customers to switch to larger or smaller models should market conditions change.

"Typically, most deals are centered around a single model like the 737MAX 8," Keskar said. "But to have the comfort in the contract to say they can move up to the -9 or -10 or down to a -7 is a very big deal for the airline board and CEO."

"Does this sway the deal? Maybe not, but does it make a significant impact in their thinking? Absolutely," the Boeing executive added.

For Airbus, its A320 family of planes has been one of the most successful in aviation history. But with the C Series in the fold, the smaller end of the single-aisle Airbus lineup will consist of the 110-seat CS100 and the 130-seat CS300 while the larger end of the spectrum will be the 240-seat A321neo.

As great as the C Series and the A321neo may be as individual aircraft, they can't deliver the same type of synergies as aircraft from the same family. After all, the C Series and the A320 series will remain aircraft designed and built by two separate companies with completely disparate design and engineering philosophies.

"The CSeries is a great complement to the current Airbus lineup," an Airbus spokesman said in a statement sent to Business Insider. "Filling a market need for 100-150 passenger single-aisle jets that Bombardier estimates at 6,000 aircraft over the next 20 years."

This is something Boeing itself dealt with some more than a decade ago.

Following a 1997 merger with McDonnell-Douglas in 1997, Boeing was left with the task of selling the defunct brand's final product, the MD-95.

Boeing went to great lengths to incorporate it into the company's lineup including renaming it the 717-200. Unfortunately, Boeing was forced to pull the plug on the project in 2006 after just eight in production and 156 aircraft sold.

According to Keskar, one of contributing factors to the 717's demise was that it was an orphan in Boeing's lineup. Incidentally, the people who bought aircraft remain extremely happy with it and are looking to acquire more of them on the secondhand market....
Comparisons between C Series and the MD-95/ Boeing 717 are of limited validity.
The former was the last update of an old design (DC-9) that had been pushed to the lower-seat margins by the B737 & A320 families. The B717 was still a lot of aircraft for its capacity versus even its contemporary regional jet liners (even more so now), it was kept on temporarily because it was still more competitive than the smallest of the 737s in this regard and because of outstanding orders.
The C Series are clean sheet of paper designs that are more competitive at the lower passenger number range than shrunken members of the B737 & A320 families and for which “growth” versions can potentially threaten the lower end of main production B737s and A320s (especially on shorter routes or routes with lighter load factors).
Basically this development adds to the saturation of most of Boeing’s and Airbuses main markets with particular members of their various families of aircraft hitting sweet spots while other variants of the same aircraft being vulnerable to their competitors aircrafts sweet spots. The problem for Boeing is that apart from their middle and higher capability 787s alot if the more lucrative (at least in terms of orders) sweet spots are ending with Airbus as Boeing’s slate of offerings are starting to show signs of needing replacement not just updating.
I mostly agree. DC-9 was at the end of its useful life, C-series is brand new, efficient design.

This said, Boeing points about an "orphan" is valid. The C-series is no Airbus by any way, although it could be altered with "cosmetic" makeover to better fit into the Airbus catalogue. first thing that come to mind is giving C-series an Airbus cockpit.
 

Triton

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"Report: Boeing eyed stake in Bombardier’s CSeries before talks derailed"
Originally published October 28, 2017 at 8:10 am Updated October 28, 2017 at 12:13 am
By Seattle Times staff

Source:
https://www.seattletimes.com/business/report-boeing-eyed-stake-in-bombardiers-cseries-before-talks-derailed/

Talks between Boeing and Bombardier last summer included the possibility that the U.S. plane maker would take an ownership stake in the Canadian company’s CSeries jet program, the Globe and Mail reported this week.

The negotiations brokered by Canadian government officials were ended by Boeing a few weeks before the U.S. International Trade Commission, acting on a complaint brought by Boeing, imposed massive tariffs on any purchases of the plane by U.S. airlines.

Bombardier subsequently stunned the industry by selling majority control of the CSeries program to Boeing’s archrival, Airbus.

The Globe & Mail, citing unidentified sources, reported that “after weeks of high-level talks that the Canadians felt were going well, Boeing International President Marc Allen phoned Canada’s ambassador to the United States, David MacNaughton, one Saturday morning in August to say Boeing was breaking off discussions.”

The Canadian newspaper reports that in talks beginning in June, two options were on the table.

“The first was a joint partnership in which Boeing would take an ownership stake in the CSeries. The second would see the two companies agree on a set of trade rules — including acceptable government backing — and cooperate to try to keep other rivals out of the North American market, particularly emerging competitors from Russia and China.”

According to the Globe & Mail, officials at the Embassy of Canada in Washington, D.C., as well as from Canada’s foreign and international trade ministries were involved.

Boeing Chairman and Chief Executive Dennis Muilenburg also took part. U.S. Commerce Secretary Wilbur Ross knew of the talks and didn’t object, but the U.S. government wasn’t part of the discussions.

“Boeing told the Canadians they were interested in a deal and Canada’s proposals were constructive,” according to the newspaper.

The report offered no new details on why those talks broke down, and Boeing and Bombardier did not comment on the Globe and Mail’s account.

Bombardier then quickly resumed its previous negotiations with Airbus, crafting a deal that analysts have said likely circumvents the onerous U.S. tariffs: Airbus will do final assembly of CSeries jets for the U.S. market in Alabama.

Boeing’s trade case objects to government support for the CSeries by Canada and the U.K., where the jet’s wings are built. The controversy has frayed Boeing’s relations with both nations, and with U.S. airlines interested in the CSeries.

Through June, Bombardier has won 360 firm orders for the CSeries, according to Bloomberg News. Delta Air Lines is the biggest buyer, with a firm order for 75 aircraft and options for 50 more.
 

Triton

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"Exclusive: Canada pushed for Airbus deal as Bombardier courted China"
Allison Lampert, Tim Hepher

October 24, 2017

Source:
http://www.reuters.com/article/us-bombardier-airbus-china-exclusive/exclusive-canada-pushed-for-airbus-deal-as-bombardier-courted-china-idUSKBN1CU0DG

MONTREAL/PARIS (Reuters) - The Canadian government encouraged Bombardier to make a deal with Airbus SE for its CSeries planes to thwart a potential venture with Chinese investors, according to five sources familiar with the matter.

It signaled its preference for Airbus after Bombardier failed to reach an agreement with Boeing Co earlier this year that would have given the U.S. company a stake in the CSeries jetliners, according to the sources. The Canadian government’s role has not been previously reported.

Prime Minister Justin Trudeau’s administration took a calculated risk in steering Bombardier toward Airbus, according to the sources. It helped save a key product for Bombardier and likely resolved a brewing trade dispute with the United States, but potentially set back efforts to improve trade and economic ties with China.

The deal with Airbus came at a critical time for Bombardier. Its $6 billion CSeries program, already losing money, had become the subject of a trade dispute in which Boeing charged in a complaint to U.S. authorities that the jetliners benefited from Canadian government subsidies and unfair pricing.

Bombardier had considered a Chinese partnership as early as 2015, after talks about a possible merger with Airbus became public and fell apart. This year, as negotiations with Boeing over a CSeries partnership faltered and concerns about the future of the program mounted, Bombardier’s interest in a deal with China intensified, two sources said.

The prospect of such a deal raised concern within the Canadian government, two of the sources said, where officials believed jobs or technology could be “siphoned away” to China. They also expressed uneasiness about what some saw as inadequate Chinese safeguards against intellectual property theft.

In a series of calls with Bombardier in August and September, Innovation Minister Navdeep Bains and Trade Minister Francois-Philippe Champagne, as well as senior officials in Trudeau’s office, urged Bombardier to contact the European company, the two sources said.

“From the federal government’s point of view, anything was better than a link-up with China,” according to an Ottawa source. The source said the government suggested to Bombardier that Chief Executive Alain Bellmare reach out to his counterpart at Airbus, Tom Enders.

The government’s efforts eventually helped pave the way for an Oct. 16 agreement in which Airbus took a majority stake in the narrow-body, medium-range CSeries jets for one dollar.

But they also came at a time when Ottawa is pushing for closer economic ties with Beijing. Canada, concerned about Washington’s threats to scrap the NAFTA trade deal, wants to bolster relations with China in order to cut its heavy dependence on exports to the United States. Talks between Ottawa and Beijing are ongoing.

Bombardier declined to discuss its CSeries negotiations. Representatives of Bains, Champagne and Trudeau declined to comment. Beijing officials declined to comment. Boeing also declined to comment.

Asked whether Airbus had stepped in because of concerns about China obtaining a stake in the CSeries, Airbus CEO Enders said: “We were obviously not privy to these discussions.”
AN IMPERFECT PARTNER

Bombardier’s most recent discussions about a Chinese tie-up centered on Comac, a Chinese state-owned firm developing passenger jets, according to a source familiar with the Canadian company’s thinking. Financial terms of any potential deal were not known. Comac did not immediately respond to requests for comment.

Sources said Comac was also among the companies Bombardier held talks with in 2015, along with national aerospace conglomerate AVIC and possibly a state-owned investment fund.

For Bombardier, a tie-up with the Chinese would have offered access to the world’s fastest-growing aviation market, providing a boost to its struggling CSeries program. Bombardier has not a secured CSeries sale in 18 months.

Inside Bombardier, however, executives worried that talks with potential Chinese partners were not moving quickly enough, according to sources.

With discussions stalled, Bombardier approached Boeing last spring, three of the sources said. Bombardier offered Boeing a stake in the CSeries under similar terms to those later offered to Airbus, two of the sources said.

The U.S. company agreed to study the proposal, but eventually decided against it based on its experience with a troubled purchase of Canadian aerospace assets in the late 1980s.

That once again Bombardier’s focus back on a deal with the Chinese - until Ottawa pressed the case for discussions with Airbus over the summer.

Asked why senior Canadian federal officials suggested to Bombardier that it talk to Airbus, the Ottawa source said: “People felt that Bombardier might not have thought of this option, given the collapse of the earlier talks.”

Officials from Airbus and Bombardier soon began what would be a series of meetings at restaurants in Paris, London and Munich. The meetings involved only four people - the two CEOs along with another executive from each company. A representative of the Canadian government did not attend.
 

Archibald

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So Boeing, China and Airbus all fought to get the C-series. Interesting.
 

Grey Havoc

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http://www.bbc.com/news/uk-northern-ireland-41888267

Talk about a load of codswallop...
 

DWG

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Ross also attacked European opposition to US chlorine washed chicken as unscientific during his round of interviews, while representing a government that rejects climate-change. He'll say whatever suits his aim of the moment.

Meanwhile Bombardier says a 61 aircraft order (30 firm, 31 options) will be signed before the end of the year.
 

Grey Havoc

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https://www.flightglobal.com/news/articles/boeing-bombardier-and-delta-spar-ahead-of-cseries-t-443534/
 

Flyaway

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I don’t think anyone expected this result.

Bombardier wins trade dispute in US

http://www.bbc.co.uk/news/uk-northern-ireland-42825916
 

yasotay

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With a decision rendered in less than a minute.

*BOOM*

mike drop
 

Arjen

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From Politico:
The Commerce Department under Secretary Wilbur Ross had conducted its own investigation and found reason to impose combined anti-dumping and anti-subsidy duties totaling 292 percent. But today’s ITC vote scraps that ruling, and no duty orders will go into effect.

The vote is a turnaround from the ITC’s preliminary ruling in the case, when the panel voted 5-0 that there was a reasonable indication that Boeing's business was threatened with material injury by the allegedly unfairly priced and subsidized imports. But the bar for that vote was far lower than for Friday’s final vote, where Boeing had to convince at least three commissioners that it faced injury or threat of injury from Bombardier's imports. A tie vote would have gone in Boeing’s favor.
Didn't see that coming.
 

Archibald

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Me too ! Plus the Irish connection, and Theresa May.

Ok, so in some way this is a major defeat for Trump "protectionism " ? Also a defeat for Airbus, at least a partial one.

I'm trying to get the record clear: Airbus still has that deal to market C-series together with their A320, what's dead is the Mobile, Alabama plant ? (since there is no longer a need to build C-series INSIDE the United States borders to avoid the 292% tax)

Strange days... :eek:
 

Hood

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I didn't expect that but I don't think we've heard the last from Boeing about it.

I would say this makes a Boeing-Embraer tie-up almost inevitable. Boeing is going to eliminate one competitor one way or the other.
I don't think the Mobile plant is doomed just yet, if CS demand does grow and it does take over the market (which is doubtful) then they'll need extra production capacity. In any case the lure of extra jobs in the US is the win and so its doubtless Airbus is going to back out now and risk their favourable decision.
 

Boxman

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Well, at least this is not as confusing/messy as the multiple and successive re-naming/re-designations of the same types through various and changing companies/consortia (ex. Aérospatiale (Aerospatiale)/ Eurocopter / Airbus Helicopter). At least, not yet....

https://www.flightglobal.com/news/articles/picture-cseries-renamed-as-airbus-a220-450072/
Flight International - Picture CSeries renamed as Airbus A220 - 10 July 2018
Airbus has formally redesignated the Bombardier CSeries as the A220, complementing its larger A320 single-aisle range.

A former CS300 – now known as the A220-300 – has touched down in Toulouse, painted in its new Airbus colour scheme.

Its smaller sister aircraft, previously known as the CS100, will be called the A220-100.

Airbus took over the CSeries programme from Bombardier on 1 July.
 

robunos

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Beat me to it . . . ;D
Here's the link I came across . . .

http://www.deeside.com/airbus-set-to-unveil-rebranded-bombardier-cseries-as-the-a220/

cheers,
Robin.
 

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Archibald

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Airbus designation system is now a complete mess. For the record, the reason why they started at A300, was because the aircraft was to carry 300 passengers in a twin-jet layout - a pair of RB-207. Then RR screwed Airbus, went to Lockheed with the RB-211, and with a pair of less powerful CF-6, the A300 was downsized to 260 passengers.
Then they developed the family from A300. A380 was a first breach (because 8 = lucky number in Asia) and now A220, just to say "this is A320 little brother" yeah sure.
 

TomS

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Makes absolute sense from a marketing perspective, even if there is little sense from an engineering view.
 

Grey Havoc

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https://www.flightglobal.com/news/articles/leonardo-renegotiates-a220-supply-terms-with-airbus-450844/

Leonardo is negotiating with Airbus to improve the Italian aerospace group’s terms for the supply of A220 components.

The Rome-based group’s chief executive, Alessandro Profumo, said during a results briefing on 30 July that Leonardo had initiated legal proceedings against Bombardier before Airbus took over control of the A220 programme – previously known as the CSeries – in July, and that the case has now been redirected at the European airframer.

Having previously admitted that Leonardo was “losing money” on the programme, Profumo says the “price” the manufacturer receives for A220 components is below a “cost structure discussed with Bombardier”.

Leonardo supplies the vertical and horizontal stabilisers for the A220.

Profumo suggests that the dispute can be resolved. “We have a very open talk on that with our Airbus friends,” he says.

Airbus said in July that it was seeking double-digit cost efficiencies for the A220 programme through renegotiation of supplier terms and increases in the aircraft’s production volume.

Leonardo and Airbus jointly own turboprop manufacturer ATR.
 
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