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I'll post what I did earlier: This is a huge blow for the Canadian aerospace industry, but the best that BBD could do in a bad situation. The plane itself is

I'll post what I did earlier: This is a huge blow for the Canadian aerospace industry, but the best that BBD could do in a bad situation. The plane itself is great, but management incompetence and customer worries about the company's long-term prospects made it a hard sell. Then, when BBD did make a sale to Delta, Boeing's naked politicking and the current administration's unreasonable duty made the situation untenable. BBD is essentially handing over the keys to the kingdom here: Airbus gets control of the program for nothing (they only have to allow the C series to be manufactured at an existing plant in Mobile) and if the program is successful they have the right to buy out the entire partnership; if it's unsuccessful they can walk away. Plus, it's unclear to me whether it's a way to actually push the C-series or a way to start conversations around it and then upsell customers to one of Airbus' existing narrowbodies. Again, not a good situation for BBD. Airplane manufacturing is a heavily political, heavily subsidized business, and since Canada is much smaller than the other players on the stage (US, EU, China, Russia) with a non-existent defence program it doesn't have the money or the weight to effectively compete.

verelo 9y ago
While I agree with everything you said, I would add that I think the US government is being anti-competitive here and a bit underhanded. Boeing has historically got a pretty sweet deal from the US government [1] in tax breaks, $8.7B worth! Not in the form of R&D grants like BBD get from Canada, a similar approach they take to other industries such as software development [2]. The outcome here is virtually the same, it’s just an alternative approach. This to me is pretty absurd show of irony and somewhat provocative move by the government. On the plus side, my BBD stock jumped 20% today, so I unloaded it. Not all bad news I suppose... [1] https://www.reuters.com/article/us-wto-boeing-idUSKBN19029Q https://www.reuters.com/article/us-wto-boeing-idUSKBN19029Q [2] https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program.html https://www.canada.ca/en/revenue-agency/services/scientific-...
- allengeorge 9y ago
  Oh, definitely - I t’s a case of the pot calling the kettle black. Not only does the US give Boeing huge tax breaks, but the defense expenditures are calculated to subsidize the commercial aircraft program. Unfortunately for us Canadians neither BBD or the government has the means to take on Boeing and the US respectively. My only hope - and a slim one - is that Boeing is permanently frozen out of defence procurement here.
wahern 9y ago
According to https://www.ft.com/content/201bf186-b350-11e7-a398-73d59db9e399 https://www.ft.com/content/201bf186-b350-11e7-a398-73d59db9e... > Airbus's own slightly bigger A319neo has not clinched a > deal for at least four years. It seems likely that the A319 is dead and Airbus will rely on the C300 for that segment. Also, don't forget the China angle. The Chinese state-owned Shenyang Aircraft Corp is a major partner in the C-Series project. And there's a C-Series technology sharing arrangement with another Chinese state-owned aerospace firm. I don't know what kinds of relationships Airbus has already built in China, but they're about to get much stronger. IIRC, Boeing built global strategic relationships for it's 787 program as part of it's out-sourcing strategy. That turned out to be horribly inefficient and a bust. But from a _political_ standpoint I imagine it's been quite successful. Of course, Airbus pioneered the strategy of using multinational sourcing for primarily political reasons, but it looks like they're poised to take it to the next level--Airbus might be on the road to effectively being a domestic manufacturer in Europe, North America, _and_ China.
- skgoa 9y ago
  > It seems likely that the A319 is dead and Airbus will rely on the C300 for that segment. That's because the A320 was bigger than the 737 from the start. This means the 319 (and the 318 to a much higher degree) was heavier for its number of passengers than it needed to be, while the 737 was right at its sweet-spot. More weight always means higher cost to operate. Higher cost to operate per passenger always means lower margins for the airlines. This trade-off exists with every airliner. Still, airlines bought both 318 and 319 because those planes are able to take off with the same amount of fuel as the 320, giving them the longer range that was necessary to fly certain routes. (London - New York being the obvious example for the 318.) The new engines and wing tips of the 320neo family have yielded range increases that were sufficiently high to make the 320neo and 321neo able to fly those routes that the 319 had been used for before and the planned 321neo LR ("long range") is going to do the same for the 318's routes. At the same time, Boeing is now offering the similarly re-engined 737 at a much lower price that Airbus will want to sell the 319 at. Thus the 318 did not even get a neo version and the 319neo has not sold well. A similar growth has happened with the 737 family. Which is exactly why Bombardier decided to target the absolute lowest end of the 737's market and the passanger/range area below that. It's just not worth it for Airbus and Boeing to design an entirely new plane in this segment, but their existing products are too heavy to compete against the C-series. Boeing decided to compete by selling their planes at very high discounts, which Airbus is unwilling to do because of the high demand for the 320neo family. Buying into the C-series solves this issue marvelously for them. Now they have a better product than Boeing across the entire single aisle airliner market. (Mostly because those products are significantly younger than the 737, the only single aisle Boeing still in production.) They have defeated the threat posed by a new single aisle airliner that Airbus just could not compete with in its specific segment. They could even use the C-series to relieve pressure on their 320 family production lines, which are projected to be unable to keep up with demand for many years. Offer those airlines that would be a good fit for the 319neo, but will go for the much cheaper to buy 737, a C300 instead.
sho 9y ago
> a way to start conversations around it and then upsell customers to one of Airbus' existing narrowbodies The USA, more than most other countries, has plenty of "thin" routes between minor cities that can only be profitable with a small, efficient plane like the C300. If they could fill an a320 then Delta would have been looking at that from the beginning. I don't think this is a likely concern.

verelo 9y ago

While I agree with everything you said, I would add that I think the US government is being anti-competitive here and a bit underhanded. Boeing has historically got a pretty sweet deal from the US government [1] in tax breaks, $8.7B worth! Not in the form of R&D grants like BBD get from Canada, a similar approach they take to other industries such as software development [2]. The outcome here is virtually the same, it’s just an alternative approach. This to me is pretty absurd show of irony and somewhat provocative move by the government. On the plus side, my BBD stock jumped 20% today, so I unloaded it. Not all bad news I suppose... [1] https://www.reuters.com/article/us-wto-boeing-idUSKBN19029Q https://www.reuters.com/article/us-wto-boeing-idUSKBN19029Q [2] https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program.html https://www.canada.ca/en/revenue-agency/services/scientific-...

allengeorge 9y ago
Oh, definitely - I t’s a case of the pot calling the kettle black. Not only does the US give Boeing huge tax breaks, but the defense expenditures are calculated to subsidize the commercial aircraft program. Unfortunately for us Canadians neither BBD or the government has the means to take on Boeing and the US respectively. My only hope - and a slim one - is that Boeing is permanently frozen out of defence procurement here.

wahern 9y ago

According to https://www.ft.com/content/201bf186-b350-11e7-a398-73d59db9e399 https://www.ft.com/content/201bf186-b350-11e7-a398-73d59db9e... > Airbus's own slightly bigger A319neo has not clinched a > deal for at least four years. It seems likely that the A319 is dead and Airbus will rely on the C300 for that segment. Also, don't forget the China angle. The Chinese state-owned Shenyang Aircraft Corp is a major partner in the C-Series project. And there's a C-Series technology sharing arrangement with another Chinese state-owned aerospace firm. I don't know what kinds of relationships Airbus has already built in China, but they're about to get much stronger. IIRC, Boeing built global strategic relationships for it's 787 program as part of it's out-sourcing strategy. That turned out to be horribly inefficient and a bust. But from a _political_ standpoint I imagine it's been quite successful. Of course, Airbus pioneered the strategy of using multinational sourcing for primarily political reasons, but it looks like they're poised to take it to the next level--Airbus might be on the road to effectively being a domestic manufacturer in Europe, North America, _and_ China.

skgoa 9y ago
> It seems likely that the A319 is dead and Airbus will rely on the C300 for that segment. That's because the A320 was bigger than the 737 from the start. This means the 319 (and the 318 to a much higher degree) was heavier for its number of passengers than it needed to be, while the 737 was right at its sweet-spot. More weight always means higher cost to operate. Higher cost to operate per passenger always means lower margins for the airlines. This trade-off exists with every airliner. Still, airlines bought both 318 and 319 because those planes are able to take off with the same amount of fuel as the 320, giving them the longer range that was necessary to fly certain routes. (London - New York being the obvious example for the 318.) The new engines and wing tips of the 320neo family have yielded range increases that were sufficiently high to make the 320neo and 321neo able to fly those routes that the 319 had been used for before and the planned 321neo LR ("long range") is going to do the same for the 318's routes. At the same time, Boeing is now offering the similarly re-engined 737 at a much lower price that Airbus will want to sell the 319 at. Thus the 318 did not even get a neo version and the 319neo has not sold well. A similar growth has happened with the 737 family. Which is exactly why Bombardier decided to target the absolute lowest end of the 737's market and the passanger/range area below that. It's just not worth it for Airbus and Boeing to design an entirely new plane in this segment, but their existing products are too heavy to compete against the C-series. Boeing decided to compete by selling their planes at very high discounts, which Airbus is unwilling to do because of the high demand for the 320neo family. Buying into the C-series solves this issue marvelously for them. Now they have a better product than Boeing across the entire single aisle airliner market. (Mostly because those products are significantly younger than the 737, the only single aisle Boeing still in production.) They have defeated the threat posed by a new single aisle airliner that Airbus just could not compete with in its specific segment. They could even use the C-series to relieve pressure on their 320 family production lines, which are projected to be unable to keep up with demand for many years. Offer those airlines that would be a good fit for the 319neo, but will go for the much cheaper to buy 737, a C300 instead.

sho 9y ago

> a way to start conversations around it and then upsell customers to one of Airbus' existing narrowbodies The USA, more than most other countries, has plenty of "thin" routes between minor cities that can only be profitable with a small, efficient plane like the C300. If they could fill an a320 then Delta would have been looking at that from the beginning. I don't think this is a likely concern.