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We forget that high tech fantastic aircraft do not add up to commercial success (PHOTOS BELOW: Concorde (Mach 2+ airliner), Canada’s Avro C-102 Jetliner (2nd jet airliner to fly after the British de Havilland’s Comet by just 13 days, only 1 built) , Saab 2000 (370 kts turboprop), Lockheed L-1011 Tristar, Convair CV-990 Coronado (Max. 540 kts), Dornier 728) all the time, one sees it today with the Bombardier CSeries, all brand new, fuel efficient, but it struggles against legacy air frames with new fuel efficient engines and more seats, which means better seat economics, and no airline has been willing to pay a “premium” for the new technology.
As Michael O’Leary of Ryanair likes to call people who fall in love with aircraft as “aerosexuals”, when really its just a revenue generating asset to carry passengers A to B as profitably as possible.
Marketing Myopia basically says, businesses will do better in the end if they concentrate on meeting customers’ needs rather than on selling products.
The Myopic culture, paves the way for a business to fail, due to the short-sighted mindset and illusion that a firm is in a so-called ‘growth industry’. This belief leads to complacency and a loss of sight of what customers want, and this love affair with their product and belief there is no competitive substitute for the industry’s major product, has destroyed many good companies.
To continue growing, companies must ascertain and act on their customers’ needs and desires, not bank on the presumptive longevity of their products. In every case the reason growth is threatened, slowed or stopped is not because the market is saturated. It is because there has been a failure of management.
No better case then the Bombardier CSeries, where Bombardier thought a new aircraft with 20% fuel savings and 15% lower cash operating costs (excludes capital costs) will a BIG hit when launched in July 2008, and here we are 9 years later and what 320 orders that’s all ? what happened to the “Game Changer” ? as it was suppose to be so much better than the competition, but now its fuel efficiency is plus/minus the same per seat as the new re-engined Embraer E2’s, Airbus A320neo’s and Boeing B737Max’s, which have new fuel efficient engines like the CSeries with low maintenance costs and yet without the major investment in a whole new airplane.
After last years big discounting drive (+65% off list price and big loses on each deal) to get desperately needed orders for 75 x CS100’s from Delta Air Lines and 45 x CS300’s from Air Canada, the company has only managed, to sell 2 x CS300’s to little known and highly corrupt in the past, Air Tanzania, in 12 months that has been it ? nothing at Farnborough, Zhuai, Dubai, nothing ? just talk of possible deals with Spirit Airlines, JetBlue Airlines, British Airways (Club World London City a 2 x A318 VVIP operation with 32 seats on LCY-JFK return).
Maybe the sales and marketing “dream team” needs some airline executives and not just air leasing executives from ILFC, etc. no ?
The CSeries has to compete on price with Airbus and Boeing, and losing money on every order (discounts by Airbus and Boeing are >60% off list these days as sales are slow) while taking a beating in sales 3,703 x B737Max orders, 5,056 x A320neo family orders versus 320 x CS100/300 orders, great aircraft, lousy seller 8,759 vs 320 or 27 to 1.
Absolutely NO sign of the Bombardier forecast of 7,000 deliveries in the 100 to 150 seat market over the next 20 years, or 350 per year, peaked at 330 in 1991 and only 130 the past 2 years by 4 OEM’s, where is this “fantasy” market.
One only has to look to the total orders as of today of other aircraft in that segment today since entering the market, 60 x Max7’s, 55 x A319neo, 68 x CRJ-1000, 166 x E195’s (or 11.2% of the 1,474 EJet orders) and 65 x E195-E2’s (or 23.6% of the 275 E2 orders), which adds up to just 414 ‘new’ commercial aircraft orders in the 100 to 150 seat segment (excluded E195).
In terms of time since each program launch its now (May, 2017) and 106 months since the Bombardier CSeries was launched, 77 months after A320neo is launched, 69 months after B737Max launch and 78 months after E2 launch and 123 months after CRJ-1000 launch, not good.
When I life of each program and divide it by current orders I get average orders per month for each program and it comes to 53.6 aircraft per month for B737Max, 65.6 aircraft per month for A320neo line, 3.0 aircraft per month for the CSeries and 3.5 aircraft per months for the Embraer E2’s and just 0.55 aircraft per month for the CRJ-1000.
One can see the huge success of Boeing and especially Airbus of their new single aisle Max and neo product lines, and then the struggles of both Bombardier and Embraer in achieving future orders for their respective CSeries and EJet E2 product lines.
When we look at the 100 to 150 seat market aircraft only, we can see what a DISASTER that segment really is in terms of current demand for ALL 4 OEM’s (Airbus, Boeing, Bombardier and Embraer) currently active in the market segment.
The B737Max7 (0.86 orders per month), A319neo (0.71 order per month), CSeries -CS300/CS100 (3.01 orders per month) and E195-E2 (0.83 orders per month). A very sad telling and indication of the future demand by commercial airlines for commercial jets in the 100 to 150 seat category.
With Bombardier 100% exposure in that segment with its new CS100 and CS 300, its a very ominous sign of BIG trouble for that program, as the A319neo is just 1.0% of A320neo orders and the B737Max7 is just 1.6% of all B737Max orders, its a “trivial” market segment for the duopoly.
While Embraer’s E195-E2 is 23.6% of the E2 order book, it has great potential for the E175-E2 and E190-E2 to become the big sellers to offset slower E195-E2 sales.
While Bombardier’s CRJ line is dying, having lived off its backlog for too long, and down to just 52 orders in backlog (Dec 31, 2016) with production in 2016 at 3.8 per month (13.5 months at 2016 production and no orders, shut down by March, 2018), with a a few orders here and there and a cut in production to say 2.75 per month (Q400 rate in 2016 which is down to 31 orders in backlog as of Dec 31, 2016), the CRJ “could” “survive” till late 2018 at best without many new orders.
Only 101 orders for the CRJ in the past 3 years (April 2014 to March, 2017), or 33.6 per year on average, as 2016 delivery was 46 ( 1 x CRJ700, 37 x CRJ900 and 8 x CRJ1000) and only 19 orders (all CRJ900’s) for a book to bill ratio of 0.41, which has been the story with the CRJ lately, as it lives off the backlog as deliveries exceed orders for several years.
In short, Bombardier’s BCA (Bombardier Commercial Aircraft) is heading for a uncertain future in a very questionable markets segment with, no other product to lean on, its 100% committed to the 100-150 seat segment, hell or high water, and that should keep Bombardier executives and investors up at night.
They had to see it coming with their miserable 104 seat CRJ-1000 program (itself a 4 time stretch of the 1970’s Canadair CL-600 Challenger business jet), which has 68 orders and 17 in backlog (ALL 17 for Air Nostrum which ordered 35 back in June, 2009 ?) after 10+ years, the writing was on the wall a long time ago about the 100 to 150 seat segment, Bombardier chose to ignore it and fell into the “marketing myopia” trap, too emotionally attached to its product to see reality and the light of day.
It fell for its “fantasy” forecast of 7,000 deliveries in 20 years in the 100-150 seat market, at best, yet latest Flight Ascend forecast says Bombardier will deliver just 1,343 aircraft in 20 years (67 per year) IF it survives that long, which it won’t if sales/deliveries are that low. The segment peaked in 1991 at 330 deliveries and its been declining for the past 10 years, with just 135+/- deliveries in the past 2 years as airlines move up in seat capacity (up-gauging) as shown by the second graph below.
Nice and short today no ? finally ! till next time thank you for reading my Blog.