The 2014 Farnborough Air Show is over and once again Airbus and Boeing dominated the show with big deals worth $US 115.5 billion in orders for 697 out of roughly 900 aircraft orders ! for comparison, last year’s Le Bourget Air Show had 1,450 orders worth $295 billion. This year the show was all about the new A330neo, a new lease on life with the Rolls Royce Trent 7000 engines, which will challenge the B787-8 and keep current A330ceo (current engine option) operators happy.
The Airbus A350-900 of Qatar Airways was at Farnborough, it sold only 4 x A350-900’s to Air Mauritius at the show while the new A330neo had 171 firm orders and options and was the star of the show.
So, no major slow down in aircraft sales-yet, its a golden time for commercial aircraft manufacturers, with low interest rates, high liquidity, airline profitability is up and high fuel costs are driving sales of new fuel efficient aircraft, it does not get better than this ! and Bombardier is still struggling to get its CSeries sales going, while Embraer, Mitsubishi, Sukhoi and believe it or not COMAC regional jets firm up more sales each than Bombardier at the Air Show, what the heck is going on in Montreal ? more on that further down. What happens when it reverses, higher interest rates, low liquidity, airline’s are back to loosing money and low fuel prices ? any one of those changes the landscape.
This again raises the question of a speculative “bubble” down the road (5 to 6 years from now), as backlogs grow they cause speculative and irrational orders, where orders are made in the hope of needing them many years out into the future. No airline executive wants to be without future capacity, which means future orders that defy logic (ie. Lion Air ordering 500+ aircraft when it has less than 100 today), yes it ‘hopes’ it will need them, and OEM’s hope the same, once again “HOPE” is not a strategy !
Boeing had 649 orders this year going into the Air Show, the show produced 201 more orders so Boeing should now have 850 orders but now claims only 783 while Airbus booked 496 orders at the Air Show and now shows only 650 orders ? anyway the ‘order book’s’ are getting confusing, Bombardier now ‘conditional purchase agreements’ and previously customers now showing up as previously ‘undisclosed’ customers, so there is a lot of smoke and mirrors going on with order books.
With around 3,800 aircraft to be replaced over the next 5-6 years, we are looking at around 650 aircraft per year for the next 6 years, most of these will be old MD-80’s, B737’s, A320’s, A340’s, B757’s and B767’s. Times are good for manufacturers, if you are not selling now in this boom environment, you are in BIG trouble. What goes up will come down, and OEM’s know this especially Boeing. Airlines are very good now at filling the aircraft today, not long ago an average load factor of 70% was considered good, now that is too low and anything below 80% is not good.
This is changing the dynamics of the industry, where once you had a 130 seat aircraft with 70% full, 91 seats now that 130 seater has 104 seats filled (80% load factor) on average, to grow you need a bigger aircraft as you will not be able to get much above 88% load factor 114 passengers on board, so it is why many airlines go for larger capacity aircraft today, and to get better seat mile costs.
Add in airport capacity problems in Asia and Europe especially, and you can see why airlines are choosing larger capacity variants of each aircraft family (B737Max8 out sells Max7, A320neo out sells A319neo, A350-900/1000 outsells A350-800, B777-300 outsells B777-200, etc.).
In 2013 Boeing and Airbus delivered an impressive 1,274 aircraft and 650+ aircraft were parked, parted and done, leaving a net gain of 674+/- aircraft last year globally. Now the industry has over 10,650+ aircraft (5,457 Airbus and 5,199 Boeing) on backlog, which by 2013 production numbers is 8.2 years’ worth of production, the envy of any industry.
It is no secret in the industry that some airlines have ordered way too many aircraft (ie. Lion Air, Norwegian) and most likely many orders will be cancelled or pushed back in a few years time. Such optimistic fleet planning by many airlines is both Airbus and Boeing take that into account, and like airlines, manufacturers do ‘overbook’ and sell aircraft to more than one customer so that always have a back-up plan for each aircraft going out the door. No manufacturer wants ‘white tails’ parked outside their facility waiting for a customer, like in the early 1990’s when over optimistic and speculative ordering by Irish lessor GPA lead to many white tails.
Today, Airbus is producing 42 A320’s a month, going to 46 and maybe 50, while Boeing is going from 37 B737’s per month to 47 and maybe even 52 per month !
Really ? do they honestly believe that there will be a market for 102 B737’s/A320’s per month (1,224 per year or 3.3 per day) ? even if there was such a demand, how long before that collapses ? it takes a another major financial crisis by greedy bankers or another terrorist attack by sick terrorists, or an over throw of the Middle East monarchies or China or Russia pushing one of its neighbors around and everything collapses like a house of cards, the world economy today is very volatile to global political/economic crisis.
We are in good times, but that can change, the political situation globally in the Middle East, Russia and China can change real fast. While little data exists on how many orders the OEM’s deal with on a given year, but in Aviation Week & Space Technology (March 31, 2014) “The Best Kept Secret” mentions that cancellations last year covered 346 aircraft, and peaked in 2011 at 467 aircraft, which is huge, somewhere between 27% to 37% of aircraft deliveries.
There is a rush to retire older, less fuel efficient aircraft from global fleets and probably 6,000 to 8,100 aircraft between 2010-2019 will never fly again. This trend will reduce airline fuel costs and with many aircraft being parted out, maintenance costs will come down through lower parts costs, there is a big business in used parts, around $3 billion a year. In fact, the business for parting out aircraft is a very profitable business for investors of all kinds in that business.
This business is also driving the trend to part aircraft out before their useful life would dictate, but many aircraft less than 15 years old are now worth more in parts than as a whole aircraft, that has to be a worrying trend for any aircraft investor or financier as their business models are based on certain residual values over a specific period of time.
Airbus won the Farnborough Air Show bragging rights this year with orders for 496 aircraft worth $US75.3 billion, mainly driven by the surprise launch of the Airbus A330neo, now known as the A330-800neo (ex-A330-200) and the A330-900neo (ex A330-200) which secured 121 orders worth $33.2 billion at list price. The aircraft will have about 400nm more range and will be able to cover about 80% of all long haul flights that are around 8 hours.
This was a major dilemma for Airbus, let the A330 die of a slow death over the next few years and let the A350 have more market space? The A350 was developed with lower operating costs in mind, better use of composites for lighter weight and new more fuel efficient engines to eventually replace the A330 in the 246-300 seat market, with 3 variants:
A350-800 with 270 seats in 3 class seating, $261m each and a max. Range of 8,260nm
A350-900 with 314 seats in 3 class seating, $293m each and a max. Range of 7,750nm
A350-1000 with 350 seats in 3 class seating, $341m each and a max. Range of 7,990nm
The new A330-800neo will have 252 seats in 2 class seating and a range of 7,450nm and the A350-900neo will seat 310 in 2 class seating and a range of 6,200nm
Recently Emirates cancelled its $16 billion order for 70 A350’s (50 x 900’s and 20 x 1000’s) as it is going with A380’s and B777X’s fleet, and if anything shows that orders can be cancelled, and even financially strong airlines like Emirates can change its fleet strategy, that has to be worrying for all OEM’s.
The decision by Airbus to go with the A330-800/900 basically means the A350-800 is done, the smallest version of the ‘short’ A350 has only 34 order son the book, and the launch of the A330-800/900 means those orders will most likely jump ship to the new A330 or go like many to the larger 350’s.
The Airbus A330 got a new lease on life at Farnborough, with the launch of the A330-800neo (A330-200) and A330-900ex (A330-300) with new Rolls Royce Trent 7000 engines, which with some aerodynamic improvements will result in a -14% reduction in fuel burn per seat over the A330.
Airbus really had no choice, it had to launch the new A350 or risk losing the 220-300 seat segment to the B787, so there will be no A350-800, no big deal, while not announced its obvious it has no future now and will be cancelled like the B737-600/A318 the smallest members of their narrowbody family of aircraft.
The A330 presently has a healthy backlog and production is at 10 per month and even before the launch of the new A330, it had 1,342 orders, with 1,082 delivered to a very impressive 106 operators, and 260 aircraft on backlog, a healthy 26 months’ worth, which will now sky rocket following the launch of the new A330.
The A330-800/900 will have a sole engine option; the Rolls Royce Trent 7000 will be a very good competitor to the B787-8 as it will offer up to 14% improvement in fuel efficiency (11% from the new engines and 3% from aerodynamic improvements), and another 2% will be gained by being able to add up to 10 more seats through a new cabin layout.
Interesting note is that since 2008 to 2013 the A330 outsold the B787 by 5:1 ratio with 800+ orders. Today the A330’s are very versatile from the shortest route Doha-Bahrain (74nm) by Qatar Airways to the longest route Honolulu-Seoul (5,426nm) flown by Korean Air.
The next BIG test for Airbus is the immense pressure from Emirates which wants to re-engine the A380 with newer engines especially due to the fact the A380 has a very high weight per seat. With 140 of the currently 261 A380’s delivered and ordered (54%) how can Airbus say NO to Emirates, without it the Airbus A380 program would be a total failure, and Emirates knows it and Airbus knows it.
The top 6 deals for Airbus at the show are:
- SMBC Aviation Capital, with 110 firm orders for the A320neo.
- Air Lease Corporation with 60 firm orders for A321neo.
- Air Asia X with 50 firm orders for the A330-900neo and 50 more on MOU’s. The long haul business model of Air Asia X is yet to show success, many new entrants, worth watching out for.
- AerCap with 50 frim orders for A320neo family.
- Transaero (Russia) with last minute LOI’s for 8 x A330-300’s and 12 x A330-900neo’s, a good strategic order.
- Got commitments for 46 A320ceo (current engine options) which has to be hard these days, while 317 A320neo’s were committed to.
One thing that is becoming very evident in the large commercial aircraft business is the growing power and influence that lessors and large airlines are having on aircraft design. The 330neo launch was very much driven by the likes of aircraft lessors CIT (Jeff Knittel) and Air Lease Corp. (Steven Udvar-Hazy) backed up by Delta Air Lines (Richard Anderson), Air Asia Group (Tony Fernandes) with 3 of those 4 place dorders or MOU’s for 140 A330neo’s (out of 171 in total at the Air Show), only Delta has made no moves, but I am sure it will, CEO Richard Anderson likes to take his time before making a commitment to anything.
Interesting note, only 4 A350-900’s were sold at the show (Air Mauritius) versus 171 commitments for the A330neo ? will the aircraft cannibalize some A350 orders beyond the A350-800 ? Boeing only got 18 orders for the B787-9 and all from 3 leasing companies (Avolon x 6, CIT x 10 and MG Aviation (Jordashe Enterprises-Nakash Family owners of Arkia Israeli Airlines) x 2).
For Boeing, Farnborough was a good show, only 201 aircraft ordered worth $US 40.2 billion is much less than Airbus, but take out the 171 A330neo’s and it would be 321 aircraft for Airbus versus 201 for Boeing, but in value Airbus’s $75.3 billion order value would be around $US 30 billion without the new A330neo orders.
The big news from the show for Boeing was its 50 orders and 50 options for the super hot B777-9X being firmed up by from Qatar Airways and the airline firmed up on 4 more B777F (freighters) with 4 options.
With a B777X and B787-10 Boeing will dominate the twin aisle twin engine market for many years to come, while in the narrow body segment it is going to be a pretty even 50/50 split for years to come between the B737Max and the A320neo lines.
Boeing has a great line up from the B737Max, B787, B777X and the B747-8 and will do well against Airbus, BUT it has a ‘weak spot’ the gap left when it closed down its B757 line back in 2005.
Boeing is very well placed for the future with its B737Max, B787, B777 and B747-8 line, but it has one hole, the B757 segment, an aircraft of 200-260 seats, single aisle, with up to 4,800 nm range, just between the B737-Max9 and the B787-8. There were 1,049 B757’s built and today 855 are in service with another 1,102 A300’s, A310’s and B767’s in service as well, a sizable replacement market exists, will Boeing go for it ?
A narrowboday aircraft with 200 to 260 that can do up to 4,800 nm. The B787, A350 and now A330neo are optimized for long range and the B737Max9 and A321neo do not have the range and capacity. This market could be big, 1,049 B757’s (200’s and 300’s) were built and airlines today like Icelandair, are using them very effectively to Europe and North America.
It will also be able to replace some of the 1,957 existing airliner types in that category:
Airbus A300’s (234 in service)
Airbus A310’s (84 in service)
Boeing 767-200’s (102 in service)
Boeing 767-300 (682+ in service)
Boeing 757’s (855 in service)
With A350-800 most likely to be cancelled only the A330-800neo (252 seats in 2 class seating), but too much range than is needed (7,450nm) and costing $261 million, much too high.
The battle between Airbus and Boeing is a good one, and I cannot see anyone challenging that duopoly for 20+ years.
The Embraer E2 line has racke dup 280 firm orders since launch over a year ago, already surpassed the 5 year sales figures of the Bombardier Cseries by 77 orders, above is the E195 of Azul (Brazil) which ordered 30 E195-E2’s and optioned an additional 20 at Farnborough, in total Embraer led all regional jet sales at the show with 85 firm sales out of 104 total firm sales (82% of RJ sales at the show).
Now, on to the regional market, where Farnborough produced some big surprises and disappointments, with firm orders for 43 turboprops (38 x ATR’s and 5 x Q400’s) and 104 firm regional jet orders and now let’s look at the Air Show’s final count for regional jets and turboprops:
#1 Embraer (85 orders + 73 LOI’s = 158 commitments from 4 new airlines)
With 85 firm orders and 73 options/MOU’s for a grand total of 158 commitments from 4 existing airlines on 3 continents, nice geographical spread. So it has added 53 x E175-E2’s plus 53 options to its E2 commitments plus 30 x E195-E2’s and 20 options, so in total the air show brought in 83 E2 sales and 73 options, wow. Embraer now has 278 firm orders for its E175/190/195 E2’s, surpassing Bombardier’s CSeries 203 orders by 75 orders in little over 1 year after launch, Bombardier has been out there selling since 2009.
> Trans States (USA) firmed up 50 x E175-E’2 plus 50 options, the airline also has 50 orders and 50 options for the Mitsubishi MRJ90, most likely hedging its order. Valued at $2.4 billion.
> Azul (Brazil) firmed up 30 x E195-E2’s plus 20 options.
> Fuji Dream Airlines (Japan) firmed up 3 x E175-E2’s and 3 options.
> Azerbaijan Airlines (Azerbaijan) firmed up 2 x E190’s, the manufacturer needs to sell about 200 E-Jets before transitioning to the E2’s, E175 and E175-E2 selling very well in the US due to scope clause changes and retiring of 50 seaters
The ATR line is having a great year, backlog 325 aircraft and racked up 38 orders and 56 options at Farnborough, must make Bomabradier thinking about why it left the 50 seat market and why the Q400 cannot compete with the ATR-72-600.
#2 ATR (38 orders + 56 options = 94 commitments from 1 new airline and 2 leasing companies)
With 38 firm orders and 56 options/MOU’s for a grand total of 94 commitments from 2 leasing companies and one airline (Myanmar’s Myanma Airways for 6 x ATR-72-600s plus 6 options). Announced that the 90 seat ATR is dead for now, may lift seating capacity of ATR-72-600 from 74 seats to 80 in high density.
Current backlog is 325 aircraft (88 to Nordic Capital) up 45% this year alone, valued at $US 8 billion, it has had a great 2014 so far and we have 5 months to go. It now dominated over Bombardier in the turboprop market, once airlines take a look at the numbers, the ATR-72-600 beats the Q400 almost everytime (only 5 firm orders for Q400 at the Air Show and no options).
#3 Mitsubishi (6 orders + 44 options = 50 commitments from 2 new airlines)
The Japanese manufacturer pulled off a good Air Show, it badly needed new customers, going into the show it had 165 firm orders for the MRJ90 and 160 options for 325 commitments from only 3 airlines (US based Skywest and Trans States and Japan’s All Nippon Airways (ANA)) , and fears in the industry that further delays may be coming, but so far so good.
It has brought to the table 2 new airlines for 6 confirmed orders and 44 options at the show, for a grand total of 50 more commitments which brings its total now to 375 of which 191 are orders and 184 are MOU’s. Skywest has 100 ordered and 100 on option, Mitsubishi has to get it right with Skywest or it can really hurt its future ambitions especially in the highly competitive US 76 seat market. Note, no leasing company order, sign of market reluctance still.
> Air Mandalay (Myanmar) currently operates 2 x ATR-212’s and 1 x ATR-42-320 and has ordered 6 x MRJ95’s and optioned 4 more.
> Eastern Air Lines (EAL) of Miami Florida, is a new start-up using the old Eastern brand (bankrupt in 1991-sadly) that will start with a few B737-800’s on charters and then go to scheduled services, it has ordered 10 x B737-800s as well. It is headed by airline veteran CEO Edward Wegal (ex-BWIA, Air Jamaica, Chautaugua Airlines and Atlantic Coastal Airlines), plans to use the MRJ90’s for services to Latin America and the Caribbean. Signed MOU for 40 x MR90’s for 2019 delivery. With Spirit Airlines maybe moving some operations to Miami, it will be a tough go of it for EAL, but best wishes for sure !
The Sukhoi SSJ-100LR of Mexico’s Interjet is proving to be a good airplane with the first ‘western’ customer, while sales have been mostly in Russia the aircraft has potential, only got an order for 7 aircraft at the show from Kazakstan’s Bek Air. It is worth a look at the aircraft.
#4 Sukhoi (7 orders from 1 new customer)
Sukhoi badly needed a customer, especially one outside of Russia. It found Bek Air, a Almaty, Kazakstan based airline operating 6 x Fokker F100’s on domestic services to 14 destinations, and is an ex-VIP business jet operator. Bek Air has ordered 7 x Sukhoi SSJ-100LR’s with 1st delivery in 2015 and worth $255 million.
Sukhoi is looking to build 40 aircraft this year, up from 25 last year, and hopes to get to 50 per year in 2015. Current order book is 189 (with Bek Air inc.) and about 50 delivered, 8 of the 10 current customers are in Russia, except Lao Central Airlines (Laos) with and Interjet (Mexico).
Interjet in Mexico is their show case with 20 SSJ-100’s on order, this is the only ‘western’ client and so far so good, dispatch reliability is better than Interjet’s A320’s says Interjet. Maybe one day the aircraft will fly to the USA to show the market their what it is all about, it will be a tough sell, Russian airliner to the US ?
BUT it is worth looking at, I have heard very good things about the aircraft personally from Interjet pilots/mechanics. There are plans to stretch the aircraft to 130 passengers from its current maximum of 103, but that is a political issue with the Irkut MS-21 program that starts at 136 seats in 2 class configuration, don’t hold your breath on that program !
The 78 seat COMAC ARJ-21’s first flight was in November 2008, the Chinese are slowly learning how to certify a commercial aircraft to western standards, the aircraft will not be certified till mid 2015 and its delays have also slowed down the C919 a narrowbody twin that will compete with the A320neo and B737Max, probably not well, but Chinese airlines will buy because they will be told to buy it. Product support will be a big issue with COMAC, ultimately I think they will buy a western OEM and gain the know how and support through acquisition, Bombardier commercial aircraft could be a target, there is some cooperation agreements and if CSeries does not materialize as expected, the division will struggle, while the business jet side is doing very well.
#5 COMAC (6 orders for 3 new VIP version customers)
Announced 6 orders for its ARJ-21 a long-long running programme that never seems to meet any deadlines, well might as well give them away for free to Africa.
Yes, the ministry of Transport of the Republic of Congo ordered 3, the first African country to do so, surely it was a ‘gift’ a loan that never has to be paid as long as the Chinese get to mine in the Congo. The Ministry of Transport does not need an FAA type certificate, they can have them now instead of waiting for another year or two for certification.
Then we had Yanshang Corp. order one ARJ-21 for VIP flying as did Nanshan Group for 2 ARJ-21’s, which brings the total “commitment” to 258 basically ALL for Chinese airlines who had no choice, 100 to 1 that they never build more than 100.
The 108 seat CSeries CS-100 is a beautiful aircraft, but faces tough competition in a market segment with several competitors. Bombardier gambled on a new airframe and engine (PW1500G) to bring operating costs down and is investing $4.5+ billion into the program, while Embraer has taken a lower risk route and is going to use the same engine to power its E175/190/195 E2 models and match the economics with an investment expected under $1 billion. The delays in certification are hurting the company as its CRJ 700/900/1000 and Q400 sales continue to under perform as their future is in the declining phase of the product life cycle and therefore not producing the cashflow Bombardier would like while the CSeries is sucking up cash being readied for certification and full production sometime in 2016.
#6 and Last Bombardier (0 new orders and 44 options/LOI’s)
I really though Bombardier would pull a rabbit out of their hat for Farnborough, its been a long time since they came up with a firm order from a ‘solid’ airline. It looks as if early promises of 15% less cash operating expenses (no capital costs ?) and and 20% less fuel burn versus competitors is not as once thought as Embraer and the Airbus A320neo have gone with the PW line of geared engines, so the once impressive improvements against competing aircraft has significantly eroded and now the future of the program is being questioned, as it has lost its competitive advantage.
There were only 5 firm orders for the CSeries at Farnborough both from previously undisclosed customers revealed themselves as Falcon Aviation Services for 2 x CS300’s and air Baltic for 3 x CS300’s, rather confusing as they we “undisclosed” yet already had public orders 11 x CS300’s and 11 options/purchase rights ? with air Baltic going back to July 2012 ? so no new order at all, just a paper shuffle of some sort.
So a little confused I assume that Air Baltics 10+10 is now 13+7 after this order for 3 aircraft and Falcon’s order for 1+1 is now a firm deal, so NO increase in firm orders and we are at 203 still, but new options have increased to a total of 310 by my count, so 513 commitments for the CSeries todate (203 orders + 310). Sadly only Sukhoi and COMAC did worst at the show, but there is some light at the end of the tunnel in the LOI’s, now need to convert those to orders.
On the Q400, Bombardier booked 5 orders 2 for Abu Dhabi Aviation, 1 for Horizon Air and for Nok Air (Thailand) for 2 there are no options, compared to 38 ATR’s sold at the air show, Bombardier is falling well behind ATR in the race for turboprop supremacy.
Remember Air Baltic has since lost Euro 200 million between 2010 to 2012, and made a profit of Euro 1 million in 2013, its not in the best financial shape but does need to replace its 8 x B737300’s and 5 x B737-500’s, which is equals the 13 x CS300’s on order, and then 10 options for growth along with the 12 x Q400’s for an all Bombardier fleet. Not sure what veteran CEO Martin Gauss (ex-DBA, Malev) sees in the Q400, Malev got them before it went bust, I am not a fan of the aircraft, sweet spot is 300-400nm, that is it. Less than that get an ATR-72, more than that get a E175.
With 13 CS 300’s on order, that is $923 million at list price ($71m/each), so with discount where will airBaltic finance $$750 million worth of aircraft with a Euro 1 m net profit ? can’t go to the Latvian government, the EU has already investigated that support and cleared it, but not next time. Remember it was the EU investigation into Hungary’s aid to Malev that ultimately brought the airline down, when the EU ordered the airline to repay the Hungarian aid, anyway, wish them well.
What we got was a promising LOI (letter of intent) from lessor Falko for up to 24 CS100’s, probably careful like the other lessors for the CSeries (Ilyushin Finance and CDB Leasing) who have “conditional orders”, everyone waiting to see it certified I am sure, which is planned for 2nd half of 2015, I predict 1st half 2016.
Bombardier did get a LOI for 20 x CS100’s from China’s Zhejiang Loong Airlines (presently operating 6 x A320ceo’s with 5 more coming, plus 9 x A320neo’s serving 7 destinations, and operating 3 x B737-300F Freighters as it started as cargo airline).
Well this could be a good customer, though with 15 new low cost airlines entering the Chinese market there is going be a real battle and the BIG 3 (247 million passengers in 2013) are entering as well (Air China, China Southern and China Eastern) with their own LCC’s. A good market to be in for sure.
Next we have LOI from Jordan’s tiny Petra Air for 2 x CS100’s plus 2 options on CS300’s (airline flies 2 x A320ceo’s flying to 11 destinations, owned by RUM Group, also owned bankrupt RUM Air), it’s a small operation and right in the heart of Royal Jordanian with 30 aircraft, including 3+1 E175’s and 5+1 E195’s, I would not bet on it.
There has to be some serious worries at Bombardier about its Commercial Aircraft Division, the Q400 is not doing well while ATR is, the CRJ-700/900 is holding its own in the US market as 50 seaters are replaced by 76 seaters, and so far Embraer and Bombardier have been pretty even there, more to do with quick deliveries than with which manufacturer has the better aircraft.
Bombardier will improve its CRJ-700/900’s with small changes changes to the existing engine and airframe to get better fuel and maintenance costs, but ultimately once the E2’s from Embraer enter the market the CRJ line will not be able to compete, and will be done, so 3-4 years at best, and then the Divison will depend on the CSeries for its future.
Bombardier also has 2 undisclosed airlines (off course), an African airline with LOI for 5 x CS 300’s and another airline with LOI for 7 CS 300’s plus 7 options, so lots of LOI’s and Bombardier has to get good at closing deals and turning LOI’s into firm orders. The manufacturer really needs more some top notch airline customers beyond Lufthansa Group-Swiss European Air Lines and Korean Air, presently it has several up-starts, weak and struggling airlines and most importantly a North American airline. The quality of airlines is sadly not strong at all, in my opinion 113 orders I would classify as “risky” (less than 50% probability of happening)-below:
- Republic Airways Holdings, ordered 40 x CS 300’s in 2010 when they owned Frontier Airlines, since sold, and now only a regional CPA (capacity purchase agreement) provider, that cannot fly jets over 76 seats, no need for CS300’s anymore, but cancelling would bring down Bombardier stock, but reality is it won’t go through.
- Iraqi Airways, so many different types in the fleet and close to being a failed state to be divided into 3, the 5 x CS 300’s + 11 are highly doubtful.
- Odyssey Airlines, premium product start-up for London City service to Toronto, new York, etc. come on, been done as is being done by BA with A318’s, we shall who is right.
- Ilyushin Finance, 32 x CS 300’s not sure how much that deal is dependent on the Q400 being built in Ulyanovsk, Russia, just recently Russians said that Bombardier is stalling and that if there is no deal this year, the Russians will put back into production their mothballed 54 passenger Ilyushin IL-114, a crappy BAe ATP look a like that last rolled of the assembly line in far away Tashkent in 2012, and only 7 exist “flying” for Uzbekistan Airways, the only Russian aircraft among a fleet of A320’s, B767’s, B767’s and new B787’s to come. Russians are irrational and upset them and they bite back, I know 17 years in Eastern Europe
- Gulf Air with order for 10 x CS100’s just cannot seem to get itself rejuvenated, the government of Bahrain is keeping it alive to keep face with its bigger neighbours (ie. Qatar, Abu Dhabi and Dubai)
- Al Qahtani Aviation Company/SaudiGulf Airlines, a new start up in Saudi Arabia with 16 x CS300’s on order, where the domestic market is being opened up, several airlines planned, inc. a subsidiary of Qatar Airways, it will be tough for any start-up to compete with Saudia and all the others in a market that will still be restricted to some degree.
In closing, Farnborough Air Show 2014 was a success for most OEM’s, and let’s hope by Le Bourget next year, Bombardier does have its 300 firm orders for the CSeries and the others make progress as well.
Final comment, the Fokker 120NG has reared its ugly head again at the Air Show, the 125-130 seat stretch of the Fokker F100 with new PW geared engines and a ‘tweaks’ to the wing profile and winglets, it needs many things like a new wing and not just simple ‘tweeks’ and I just want to say it was a wonderful aircraft but it will NOT compete with the new generation of aircraft coming out from Embraer, Mitsubishi, Bombardier and Sukhoi, let it rest and die in peace.
Thank you for reading my blog.