They are going to keep the CSeries going as they have stated that the CS300 will effectively replace the A319neo
WHOA! I have to admit I did miss a bit of this, but WHERE did they state that?
In an interview with Bloomberg:https://www.bloomberg.com/news/articles ... sales-push
Airbus will “definitely” push the Canadian model’s largest variant, the CS300, at the expense of the similarly sized A319neo, Enders said in an interview Wednesday. The European planemaker hasn’t announced a new airline customer for the jet in five years, since Bombardier’s aircraft emerged as a serious rival.
“That was the last time we sold the plane,” he said. “That tells you something about the competition between the A319 and the C Series.”
What’s so facetious? Economically, that is exactly what is happening—another country’s product is being subsidized so I, and DL’s passengers, fly marginally less expensively.
Whereas the American tax payer (by way of taxes the ordinary worker gets to pay while Boeing does not thanks to its tax breaks) gets to pay for expensive lawyers, executive bonuses and share buybacks.
By comparison, I much prefer the BBD approach of using government help to actually develop better planes rather than bully tactics and similar sheenanigans.
Because, you know, BBD were at least bloody trying (yeah, they made mistakes as well, I know).
My understanding is Airbus is not putting any money into the project and getting 50% share which eventually may go as high as 70%, And that up to $500M in debt will be borne by partner. Sounds like a fire sale to me.
Airbus' share may (and probably will) actually go up to 100% eventually.
Were BBD under pressure and not in the best of negotiating positions? Absolutely.
But Airbus is not getting this for free. The value their marketing and sales organisation, plus their supply chain expertise and clout bring to the table is enormous.
Also, Airbus will be paying for the assembly line in Alabama, a multi-bn$ investment.
Lastly, don't forget that Airbus and BBD have the option (and every intention) of making the CSeries a 100% Airbus programme by the mid-2020s. At that point, fair market value is to be paid for the remaining 49,99%.
So for now, Airbus is BBD's and Québec's way of getting the plane out of some dire straits. That's worth more to them than getting any cash upfront. If the whole scheme succeeds, they'll still get their cash some 8 years down the line. Oh, and 49,99% of profits in the meantime, of course.
Airbus, meanwhile, get a cheap way of selling planes to airlines for whom the 737-7/A319NEO simply don't cut it any more. And it's not a paper plane. Ramp-up needs some work still, but the plane is fully developed, in production, and performance and reliability data is known (and looks quite good).
With all this, they also get a brand-new platform that they can base the lower end of the A320 successor family on, while doing their own MOM new development that would cover the A321-to-A330 niche.
Airbus would be absolutely stupid to not use this new platform in their portfolio to its fullest.
I guess it means so much convinced of their own truth, reality takes time to get accepted. Happened to them in 2010 too. Boeing only believed the NEO was happening when AA was waiving a huge A320NEO LOI in front of them and was going in all direction after that. At the day of signing the AA deal, a name for the MAX was not decided and no models were available. http://cdapress.com/apps/pbcsi.dll/stor ... g?MaxW=640
A lot of people - especially those pointing to how well-run Boeing allegedly is - seem to have forgotten this already.
Their best-selling programme only came to fruition after Airbus/AA effectively forced their hand. Before that, they had themselves and their cheerleaders convinced that the NEO only just about matched the NG's performance and a re-engined 737 was therefore a frivolous and quite unnecessary undertaking. Now they convinced themselves that some bully moves would enable them to kill a plane that everybody knows is way better than their own offering (and their bully moves demonstrated to the world how worried they actually were about the CSeries). Because screw competition if you're not the winner. And now they didn't expect this and according to Ostrower, who's usually a reliable source, they've still got themselves convinced that this deal isn't going to actually happen. Despite the fact that a BBD/Airbus deal was already under discussion in 2015 and talks only collapsed because news of them becaume public.
This was announced quite out of the blue for most, but with the talks in 2015 having already taken place, you can fully expect that due diligence was done on this on both parts. Trade, tariff etc. implications included.
So does the Mobile Final Assembly Line mean the tariffs are history?
No. Experts say jets assembled by Airbus and Bombardier in Alabama, as the companies have proposed, could still be subject to the tariffs if a significant portion of their parts come from overseas. So they are going to have to significantly rework the supply chain with a lot of lawyers pouring over the details. This is most definitely not the end. The fact that Airbus took over without paying anything tells you what they think of the transaction.
As scrimbl already asked: Care to quote your experts?
Airbus US is already building A32X in Mobile, and no tariffs are due. Boeing themselves are building various types of planes with "significant portion of their parts come from overseas".
It's hardly three days since the deal was announced and the first few myths are already forming, such as Airbus not paying anything. They are not paying cash today, but they will pay for the second FAL, they will put in marketing, sales, support, supply chain management - and they will pay cash in 2023.
I think we are loosing sight of the big picture. [...]
I don't get why people have a hard time understanding the sales situation that Bombardier was in. No airline wants to get stuck with orphan aircraft. And Bombardier was struggling to sell because Airbus and Boeing would undercut them at every turn. See Boeing's Black Friday Special on 73Gs for United. So they had to resort to deep discounts to gain traction. That, of course, put them in a worse bind. Because now they make worse margins and airlines still won't be sure about the long term stability of the program. Add to that the longer they went without sales the worse it looked. That was quite the negative feedback loop.
Fully agree with your assessment, ytz.
I'd also add that, if the CSeries was as dead a bird as many, including clearskies1, still appear to believe, Boeing wouldn't have activated friendly politicians and their own lawyers in order to stop it at any cost. The CSeries as such, by all accounts, appears to be a very viable airplane in its own right - just made by the "wrong" company. And by "wrong" I simply mean that BBD has financial troubles and simply not the clout to compete against A or B on its own.
Boeing's role during the dumping proceedings and now reminds me of a Leeham article from September 11, 2017. It was called Boeing's sense of invincibility
and basically listed a few points where Boeing at the time thought they were sitting really pretty, feeling really good about themselves. The CSeries tariffs were part of that.
At the time, I wrote in the comments section:
It tends to be the case that once an entity (superhero, corporation, rabbit or normal person) feels invincible… it sets them up for their downfall.
Quite a few of their current victories may end up being pyrrhic in nature after all.
Their case against Bombardier is a prime example. [...] Sure, the BBD case plays to Boeing’s home crowd – but the US isn’t Boeing’s only market, and playing to the home crowd exclusively has its risks when you’re in a global business. [...]
I think the amount of goodwill that Boeing are losing in all this should not be underestimated.
Even Aboulafia concedes this is a victory for both the CSeries and Airbus - and his firm, Teal, immediately see the value of the CSeries doubled after this, with potential to go even higher.
Also, looking at comments here and elsewhere (such as Leeham or Ostrower's twitter feed) , there's only a select number of people who don't think that Boeing shot themselves in the foot here - and deserve it.
Expect the same sentiment to be present with airline customers, potential defense customers (such as Canada and the UK) and others.