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keesje
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A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 10:54 am

I think we shouldn't underestimate the BBD A220 project strategic impact on Airbus.

:arrow: A220 adds a viable offering for the smaller NB segment, "solving" the CSeries / A319 issue.
:arrow: Setting up A220 FAL in Mobile is a major undertaking, billions, years..
:arrow: Keeping the current A220 engineering and production workforce busy & motivated is crucial
:arrow: Keeping the A220 supply chain (e.g. Spirit) happy moving assembly (partly) to Mobile

Image

Airbus recently developed the full CRFP A350 wing and A400/A380 wings before that, so there exists a lot of knowledge / capability, but mainly in the UK. Making sure that this cooperation it is exempted from Brexit like nonsense, while adding the Bombardier wing design capabilities and knowledge, might prove extremely important in the coming years.

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https://www.mrobusinesstoday.com/the-national-research-council-of-canada-and-airbus-renew-research-and-technology-cooperation-agreement

I think investing, e.g. launching the A220-500 for EIS around 2023 to demonstrate commitment to the Canadian C-Series community (R&D), government & supply chains, might not be a bad move longer term. Airbus Defence is discussing the draft tender on purchase of new fighter jets in parallel and there are upcoming MPA requirements..

Ontaria & Quebec have invested enormously in aerospace infrastructure & probably are rethinking long term priorities. Just moving over A220 production to the US could seriously dilute a valuable existing, culturally close development-integrator environment, while BBD divests.

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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 11:46 am

keesje wrote:
Airbus recently developed the full CRFP A350 wing and A400/A380 wings before that, so there exists a lot of knowledge / capability, but mainly in the UK. Making sure that this cooperation it is exempted from Brexit like nonsense, while adding the Bombardier wing design capabilities and knowledge, might prove extremely important in the coming years.


If the f__kw_ts within the DUP were not back in the 17th century, then you'd have a point here....

But unfortunately, Shorts (as mis-represented by east Belfast DUP idiot Gavin Robinson), are going to be within the UK as far as Brexit is concerned.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 12:13 pm

Amiga500 wrote:
keesje wrote:
Airbus recently developed the full CRFP A350 wing and A400/A380 wings before that, so there exists a lot of knowledge / capability, but mainly in the UK. Making sure that this cooperation it is exempted from Brexit like nonsense, while adding the Bombardier wing design capabilities and knowledge, might prove extremely important in the coming years.


If the f__kw_ts within the DUP were not back in the 17th century, then you'd have a point here....

But unfortunately, Shorts (as mis-represented by east Belfast DUP idiot Gavin Robinson), are going to be within the UK as far as Brexit is concerned.


We would obviously be discussing the rainy Airbus Filton wings center of excellence here :wink2:

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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 3:10 pm

I posted something similar some time ago:
viewtopic.php?f=3&t=1400805

Introducing a simple stretch (with a engine PIP) would be one of the few things that would makes for Airbus short term. Get the unit cost down, free up some A320 production slots in the proces (for people that need the range of an A320.

You actually improving two programs before the stuff comes that really takes it toll on resources; getting ultrafan generation engine integrated on the different programs, A330 replacement etc.
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 3:59 pm

I don't see anything happening with a stretch until Airbus has complete ownership of the program.
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 4:11 pm

Absolutely nothing will happen in the next five years— AB has to smooth out deliveries, reduce costs in the supply train, get Mobile and Mirabel working well AND start selling larger volumes of the existing design before any stretches.

It requires the DL and AC buys to be successful and those two operators pushing for a stretch
.

GF
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 4:21 pm

The cs series delivered around 32 planes in 18, it needs to be like 10 per month to make a difference to Airbus.

I would guess that rate is a few years off.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 4:25 pm

the A220 is the only plane currently in production optimally designed for the 100-150 seat market. It is the logical replacement for MD jets, 737-7's and A319's. The 737's and the 319's are just not as efficient in the 100-150 seat market. There could be large orders from AA, UA, perhaps even follow-up orders from Lufthansa and Delta. However, the only problem is production. Not until production can be increased from the current 30-40 jets a year to a much higher number can airlines place large orders. Imagine if AA put in an order for 150 jets. It would take 4 or 5 years just to fulfill this order (without even considering other orders) at current production levels. I think Airbus's first priority is to increase manufacturing levels, perhaps closer to 100 jets a year before it can even entertain making stretched versions of the plane.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 4:29 pm

The former C series is a great plane that fills a key slot in the commercial aviation industry. I hope Airbus maximizes its full potential.
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 4:36 pm

Currently there are about 350 outstanding orders for the A220. On top of that, there is an order for 60 from JetBlue that may soon be firmed up. Just to clear up existing orders at current production rates will take 10 years. Those wanting to order large quantities of the jet may have to wait for up to 10 years to have their orders fulfilled based on current production rates. Even if they can ramp production up to 100 planes per year would take them 4 years just to clear off the backlog assuming that JetBlue firms up.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 4:47 pm

GalaxyFlyer wrote:
AB has to smooth out deliveries, reduce costs in the supply train, get ... and Mirabel working well...

Totally agree with your above comments.

AB must first reduce unit costs and streamline/debug the FAL (Mirabel first IMHO, including completing this half finished FAL).

Once above is acheived (and with sufficient launch custumers and/or A320's "conversions"), a simple streched "CS500" could be launched (trading range for more capacity).

Before committing, AB would definitely have negociated an early purchase of the 49.99% it doesn't own. FWIW, clauses ($$$) already exists for such a possibility.
Last edited by ExMilitaryEng on Mon Dec 17, 2018 4:50 pm, edited 2 times in total.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 4:48 pm

I wonder if in the long run Airbus will try to Airbusify the cockpit for commonality with the rest of their portfolio.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 4:52 pm

No need to do so, they won’t get a common type rating at this point, the Collins cockpit has all the capability needed and redoing it all with 320 design would cost $300 million, at least.

GF
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 4:59 pm

JayinKitsap wrote:
The cs series delivered around 32 planes in 18, it needs to be like 10 per month to make a difference to Airbus.

I would guess that rate is a few years off.


Ding ding. No matter what the economics or powerpoint presentations say, Airbus knows it's a production mess. No way can they get remotely the same profit in the near or mid term out of an A220 frame they can out of an A32x. Throwing money at cutting united technologies out (Airbusification of the cockpit etc) won't help any of that.

If one were in the C-suite at Airbus, where would one prefer GTF deliveries be prioritized: A largely dead market for 150 seaters or A32x which is basically sold out through 2025-2027?

I've read that the completion center is the primary hold up in A220 production; has any major change/investment been made since the summer to expand/alleviate this? I haven't read about any. The A220 will remain a niche/small production aircraft (a la MRJ/SSJ), beholden to this role until Boeing/Embraer make their next move with NSA/E2. At that point, the program will face winding down, as all orphaned commercial programs "bought" on the cheap do in this industry, in quick order.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 5:21 pm

texl1649 wrote:
I've read that the completion center is the primary hold up in A220 production; has any major change/investment been made since the summer to expand/alleviate this? I haven't read about any.


:arrow: https://www.flightglobal.com/news/articles/airbus-begins-building-new-a220-assembly-facilities-454148/
:arrow: https://alabamanewscenter.com/2018/11/18/airbus-advances-project-to-build-new-alabama-a220-assembly-line/

It seems Airbus is seriously investing in boosting A220 deliveries.
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 5:30 pm

I always thought that with CETA being ratified now and Airbus investing in the CSeries and the Mirabel plant that they plan to work closer together with Canada, Maybe the Mirabel plant can produce parts for future Airbus airliners. Canada and Europa can work together on military programs such as a new fighter or MPAs. Interesting times ahead....
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 5:46 pm

keesje wrote:
texl1649 wrote:
I've read that the completion center is the primary hold up in A220 production; has any major change/investment been made since the summer to expand/alleviate this? I haven't read about any.


:arrow: https://www.flightglobal.com/news/articles/airbus-begins-building-new-a220-assembly-facilities-454148/
:arrow: https://alabamanewscenter.com/2018/11/18/airbus-advances-project-to-build-new-alabama-a220-assembly-line/

It seems Airbus is seriously investing in boosting A220 deliveries.

https://www.bombardier.com/en/media/new ... ercom.html says:

Under the agreement, Airbus will provide procurement, sales and marketing, and customer support expertise to the C Series Aircraft Limited Partnership (CSALP), the entity that manufactures and sells the C Series. At closing, Airbus will acquire a 50.01% interest in CSALP. Bombardier and Investissement Québec (IQ) will own approximately 31% and 19% respectively.

And:

The Investment Agreement contemplates Airbus acquiring a 50.01% interest in CSALP. Airbus will enter into commercial agreements relating to (i) sales and marketing support services for the C Series, (ii) management of procurement, which will include leading negotiations to improve CSALP level supplier agreements, and (iii) customer support. At closing, there will be no cash contribution by any of the partners, nor will CSALP assume any financial debt. It also contemplates that Bombardier will continue with its current funding plan of CSALP and will fund, if required, the cash shortfalls of CSALP during the first year following the closing up to a maximum amount of US$350 million, and during the second and third years following the closing up to a maximum aggregate amount of US$350 million over both years, in consideration for non-voting participating shares of CSALP with cumulative annual dividends of 2%, with any excess shortfall during such periods to be shared proportionately amongst Class A shareholders.


Since you want to talk about strategy, is the Mobile investment being made by Airbus, or is it being made by BBD out of the $350M it is on the hook to contribute, or some ratio of the partners?

Is the resulting facility going to be owned by CSALP, or is it going to be owned by Airbus and leased to CSALP?

I suppose if Airbus wanted to "do a solid" for the partnership it would fund the site itself to conserve the partnerships's capital, but it's not clear if that is the wisest strategy.

It's also not clear that the Faury administration will be as "international" in its outlook as the Enders administration has been.

We also read:

Airbus will benefit from call rights in respect of all of Bombardier’s interest in CSALP at fair market value, with the amount for non-voting participating shares used by Bombardier capped at the invested amount plus accrued but unpaid dividends, including a call right exercisable no earlier than 7.5 years following the closing, except in the event of certain changes in the control of Bombardier, in which case the right is accelerated. Bombardier will benefit from a corresponding put right whereby it could require that Airbus acquire its interest at fair market value after the expiry of the same period. IQ’s interest is redeemable at fair market value by CSALP, under certain conditions, starting in 2023. IQ will also benefit from tag along rights in connection with a sale by Bombardier of its interest in the partnership.

Lots of strategy decisions to be made, given that one way or the other any money Airbus itself puts in will benefit BBD+IQ for at least the next five years or so.
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 6:17 pm

The only news I’ve read is of the two ‘domed structures’ which I read as hangars for completion work on 2 aircraft. In the annals of exciting aviation development PR news history, this is pretty bottom dwelling, imho. The glacial ramp up has also continued, at the same rate of acceleration.

Sizable investments from the Airbus side and wholesale management change I have yet to see in the production/industrial teams. A few marketing guys, PR, some paint and a new model nomenclature do not indicate it’s actually going to ever get to 100 a year (triple today?)
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 7:05 pm

texl1649 wrote:
A few marketing guys, PR, some paint and a new model nomenclature do not indicate it’s actually going to ever get to 100 a year (triple today?)
You do realise Mirabel's FAL is only half finished, right? Multiple aircrafts shuffling around is required with the current configuration.

Also supplier's issues exist/existed and BBD was obviously not a very high priority for them. Furthermore BBD was sometime paying up to 3 times more for similar equipment / tooling / material (compared to Airbus). No points of increasing production before you can correct those external issues (and renegotiate some $$ suppliers contracts)

Some supplier's issues ($$ and quality) must have been resolved as Airbus is now increasing the FAL floor space with two new additions, and rearranging production to somewhat resemble the A320 process.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Mon Dec 17, 2018 9:13 pm

keesje wrote:
texl1649 wrote:
I've read that the completion center is the primary hold up in A220 production; has any major change/investment been made since the summer to expand/alleviate this? I haven't read about any.


:arrow: https://www.flightglobal.com/news/articles/airbus-begins-building-new-a220-assembly-facilities-454148/
:arrow: https://alabamanewscenter.com/2018/11/18/airbus-advances-project-to-build-new-alabama-a220-assembly-line/

It seems Airbus is seriously investing in boosting A220 deliveries.


In the FG article

"To support our ramp up, we need extra space in Mirabel, so we’ve started construction work for two new dome structures which will be ready around spring 2019," Airbus tells FlightGlobal.


These are usually temporary or semi-temporary structures like shown in the link below or what Tesla set up in its parking lot. They go in fast and are relatively cheap, but are short lived structures, in 10 years have to do something, in particular if they are in snow country. Notice there is very little snow on these domes, the poor insulation causes the building heat to melt the snow.

https://www.sprung.com/case-study/helic ... l-airport/
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 1:54 pm

That's exactly my concept of what they're building, #20. A couple glorified sheds isn't remotely close to a major industrial investment/recapitalization for this production system, and I think it is highly unlikely they are even using the Airbus side for funds; it's still basically Bombardier doing the bare minimum of investment to prop things along as required by the contract.

They've also been clear over the past 6 months that there will meanwhile be no CS500, which would have been a truly advantageous design vs. A320/738 if it had somehow been built, and deliverable in numbers at competitive costs/prices.

https://www.fliegerfaust.com/airbus-bom ... 50949.html
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 2:21 pm

texl1649 wrote:
That's exactly my concept of what they're building, #20. A couple glorified sheds isn't remotely close to a major industrial investment/recapitalization for this production system, and I think it is highly unlikely they are even using the Airbus side for funds; it's still basically Bombardier doing the bare minimum of investment to prop things along as required by the contract.

Bombardier is building/paying the planned FAL in Mobile?
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 2:43 pm

sciing wrote:
texl1649 wrote:
That's exactly my concept of what they're building, #20. A couple glorified sheds isn't remotely close to a major industrial investment/recapitalization for this production system, and I think it is highly unlikely they are even using the Airbus side for funds; it's still basically Bombardier doing the bare minimum of investment to prop things along as required by the contract.

Bombardier is building/paying the planned FAL in Mobile?


The Mobile line was announced pre-Airbus, and really was a direct response to the then pending trade case. I don't know how/why it makes sense now, nor have I read any indication anywhere that Airbus is the one assuming/footing the bill there. It's BBD who has the obligation to spend after all, and Airbus saying it will be purely cash flow positive for them.

Ultimately, I don't care who is spending on it though, the question remains, why? The trade case is done and it's just to be an assembly, not a production line. Until/unless Mirabel suddenly starts exceeding production:assembly capabilities, it seems like a silly duplication of effort, for net 30 planes a year.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 2:48 pm

texl1649 wrote:
sciing wrote:
texl1649 wrote:
That's exactly my concept of what they're building, #20. A couple glorified sheds isn't remotely close to a major industrial investment/recapitalization for this production system, and I think it is highly unlikely they are even using the Airbus side for funds; it's still basically Bombardier doing the bare minimum of investment to prop things along as required by the contract.

Bombardier is building/paying the planned FAL in Mobile?


The Mobile line was announced pre-Airbus, and really was a direct response to the then pending trade case. I don't know how/why it makes sense now, nor have I read any indication anywhere that Airbus is the one assuming/footing the bill there. It's BBD who has the obligation to spend after all, and Airbus saying it will be purely cash flow positive for them.

The Mobile line was announced in conjunction with the Airbus deal. Pre-Airbus BBD probably would have selected Wichita to open a US FAL for the C Series.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 2:51 pm

While the A220 (BCS1/3) solves the A319 problem, I don't see how Airbus can stretch this any further without compromising the A320neo, given how the A20N/A21N order book has split approximately halfway. By contrast, the 125-150 market segment has a good model in the A220-300. I have to wonder if Airbus will try to snag another potential customer for the model in American Airlines or United Airlines, in addition to existing US customers Delta and JetBlue (and likely Moxy). I don't see Spirit going for the model yet since their remaining A319s are, or will soon be, bought off lease and fully paid off and they desire long-term ownership now. As others have noted, I do expect a top-up order from DL as well as a top-up from B6 for the A220-100, as they need a smaller plane for short hops from JFK to the Cape Cod area and upstate New York, as one example.

A wild card could be Copa Airlines, as they likely still need an aircraft smaller than the Boeing 737-800 and are going away from the E190 and B737 (73G). In Europe, the A220-100 could do real damage to the Embraer 190-E1 and E2 (although thus far, most of the customers for the A220 are airlines directly). I could actually see leisure airlines ordering this model in the -300 variant, as well as a group-wide top-up order by Lufthansa to replace the oldest A319s (the -100 could be for CityLine and Air Dolomiti, while the -300 could be mainline and Eurowings).
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 3:20 pm

texl1649 wrote:
That's exactly my concept of what they're building, #20. A couple glorified sheds isn't remotely close to a major industrial investment/recapitalization for this production system, and I think it is highly unlikely they are even using the Airbus side for funds; it's still basically Bombardier doing the bare minimum of investment to prop things along as required by the contract.

They've also been clear over the past 6 months that there will meanwhile be no CS500, which would have been a truly advantageous design vs. A320/738 if it had somehow been built, and deliverable in numbers at competitive costs/prices.

https://www.fliegerfaust.com/airbus-bom ... 50949.html


Philippe Balducchi is the new CEO of the C Series Program. There is no announcement about rebranding the aircraft today, he said. A previous press report suggested the airplane will be renamed the CS210 (CS100) and A230 (CS300).

Wilhelm downplayed the prospect of a stretched C Series, the oft-talked about CS500, which would complete directly with the A320. Focus is on the ramp up of the C Series and ramp up of the A320 production to 60 next year and as much as 70 in the near future.


Confusing data in this article link, how old is it? Setting up the FAL in Mobile, certify it and bump up production requires enormous investment. No way BBD or Quebec is paying that. The Maribel extra space is probably to create some flexibility for cabin fitting, buffering, storage, system testing, etc. relieving the FAL and related facilities increasing production. Production rates will move up 5, 6, 8, 10, 12 the coming years creating air in the backlog.

The CS500 is still an option, priorities today might not be the same in 2020, 2022 or 2024. Also a CS500 wouldn't do 186 passengers, take containers, fly 3500NM and have A320/21NEO cockpit commonality. So overlapping for some operations, but far from the same. Same capacity would require a even further stretch of the CSeries A200 which is highly unlikely :biggrin: http://i191.photobucket.com/albums/z160/keesje_pics/CSeriesCS900Concpetdimensions.jpg
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 3:27 pm

Amiga500 wrote:
But unfortunately, Shorts (as mis-represented by east Belfast DUP idiot Gavin Robinson), are going to be within the UK as far as Brexit is concerned.

No they aren't.

Fairly recent news is that BBD/Shorts is looking to "relocate" in order that their products will still be regulated by an EU member and EASA. This might mean BBD establishing something like Bombardier (Ireland) or wherever to take advantage of member state rules.

To the eternal shame of the UK, Rolls Royce will certify all their engines via Rolls Royce (Deutschland). It doesn't take much mental gymnastics to work out that eventually this will result in actual manufacturing and jobs following the paper trail, as it will be cheaper than paying import and export tariffs. RR can't afford to be cast adrift on an island if Brexit goes hard, and Britain loses one of its premier brands.

Bombardier might also find relocating to somewhere like Ireland becomes necessary and Belfast could lose the industry.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 3:42 pm

keesje wrote:

The CS500 is still an option, priorities today might not be the same in 2020, 2022 or 2024. Also a CS500 wouldn't do 186 passengers, take containers, fly 3500NM and have A320/21NEO cockpit commonality. So overlapping for some operations, but far from the same. :biggrin: http://i191.photobucket.com/albums/z160/keesje_pics/CSeriesCS900Concpetdimensions.jpg


I don't see any basis upon which to believe your first assertions, that Airbus is the one investing in the Mobile line, but we can disagree until someone or other reports financials/discloses the investment. That will have to be more than a couple domes, and financial disclosure will have to be made in the next 6 months I think on this end.

However, I do see/want to believe your second point (quoted). Perhaps, as Boeing has hinted in their future 737 replacement, Airbus will move up a notch in size for the family too, creating a space for a later CS500, and for this project, there is time to consider some commonality even but I am guessing it (being the bigger/new Airbus) won't have a common type rating/cockpit with either the 320 or 220. A productive family of 3 models being produced/sold based on the A220 is much more sustainable, it would seem to me, than today's limited smallest and ideal CS300 versions. But I think 2020 is way too optimistic to see it take to the drawing boards/press releases.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 5:50 pm

Polot wrote:
The Mobile line was announced in conjunction with the Airbus deal. Pre-Airbus BBD probably would have selected Wichita to open a US FAL for the C Series.

That's what my research ( https://www.washingtonpost.com/news/bus ... in-alabama ) from October 2017 shows.

texl1649 wrote:
I don't know how/why it makes sense now, nor have I read any indication anywhere that Airbus is the one assuming/footing the bill there. It's BBD who has the obligation to spend after all, and Airbus saying it will be purely cash flow positive for them.

It's a little harder to track that down.

In Nov 2017, BBD's CEO ( https://montrealgazette.com/business/lo ... in-alabama ) said in US DoC filing (and also in a quarterly earnings call?) that BBD will be the one spending $300M to build a plant in AL.

In Feb 2018 ( https://www.fox10tv.com/news/airbus-bom ... ea869.html) there was a joint announcement:

Jeff Knittel, Chairman and CEO of Airbus Americas, said, "We will invest close to $300 million dollars. In doing so, there's a high likelihood that we will take the rate of our very successful single-aisle A320, A321 airplane up by 50 percent, and that will increase employment overall between 400 and 600 employees."

But when he says "we" he could be referring to the joint venture.

Given the earlier BBD announcement, my best guess is that it will come out of the funds BBD puts into the JV, yet those get capped to $350M over two years, so I doubt it will be enough.

texl1649 wrote:
Ultimately, I don't care who is spending on it though, the question remains, why? The trade case is done and it's just to be an assembly, not a production line. Until/unless Mirabel suddenly starts exceeding production:assembly capabilities, it seems like a silly duplication of effort, for net 30 planes a year.

It's hard to figure that out as well.

Anything Airbus puts in to the JV should make the JV more valuable, so it drives up Airbus's purchase price should it exercise its options to buy, which are at fair market value +5 years from now. If things don't go well, then it's basically its more to write off.

It might make sense for Airbus to finance the BFM buildings and lease them to the JV, so if the thing goes tango-uniform all they have to do is evict the JV from their property.

The only benefits I see for the JV is that the US content would stay within US borders, so any US-CA issues (beyond the ones addressed via NAFTA++) would be mitigated. Also there seems to be a (residual?) political gain to having a US facility. For instance EMB ( https://www.ainonline.com/aviation-news ... duction-us ) does assembly in the US as well. Maybe the Airbus co-location gains access to some potentially cheaper, potentially pre-trained workers ( although BFM is ramping up A32X production rate ) and (presumably) helps with Airbus integration.
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ExMilitaryEng
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 6:54 pm

Revelation wrote:
The only benefits (of a Mobile's A220 FAL) I see for the JV is that the US content would stay within US borders, so any US-CA issues (beyond the ones addressed via NAFTA++) would be mitigated. Also there seems to be a (residual?) political gain to having a US facility. For instance EMB ( https://www.ainonline.com/aviation-news ... duction-us ) does assembly in the US as well. Maybe the Airbus co-location gains access to some potentially cheaper, potentially pre-trained workers ( although BFM is ramping up A32X production rate ) and (presumably) helps with Airbus integration.

Totally agree with your assessment.

One additional aspect it that the ITC anti-dumping decision only covered the CS100 - which indeed Boeing doesn't have any competing products whatsoever.

However, while it still produces 737-700, Boeing might attempt a new complaint, this time covering the CS300. So to avoid any possible uncertainties, we can assume for sure that every CS300 destined for the US market will definitely be assembled in Mobile.
Last edited by ExMilitaryEng on Tue Dec 18, 2018 7:00 pm, edited 2 times in total.
 
texl1649
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 6:54 pm

I agree with what you've posted, Revelation. However, I don't see much of a residual political benefit to Airbus/Bbd. We may be aviation nuts and care a lot but I think the A220 is basically out of the tariff cross fire high beams for American politics at this point.

The main benefit to expediting/expanding/pushing Alabama I think for the whole CSALP venture is to drive production efficiencies and cost down; using BBD money (and canadian/regional subsidies) to co-locate the 'assembly' line in Alabama right next door to all the Airbus employees might be pretty clever as an industrial workaround strategy vs. the Mirabel ongoing disaster. They (Airbus) can posit it as required contractual investment, and trade-necessities, but also defeat the politics in Mirabel without any (Bombardier/Canadian) theatrics, if more and more work is put in Airbus Alabama over time. And Airbus has a pretty darn solid history of splitting work between two sites/countries.

Again, I don't care where the planes are really built personally, but it is about the only plausible explanation I can divine from the information we have today; Airbus seeking to Airbusify the A220 by building it substantively in/with/adjacent to it's facility, rather than BBD (which can't wait to minimize the losses/costs).
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 7:09 pm

texl1649 wrote:
I agree with what you've posted, Revelation. However, I don't see much of a residual political benefit to Airbus/Bbd. We may be aviation nuts and care a lot but I think the A220 is basically out of the tariff cross fire high beams for American politics at this point.

The main benefit to expediting/expanding/pushing Alabama I think for the whole CSALP venture is to drive production efficiencies and cost down; using BBD money (and canadian/regional subsidies) to co-locate the 'assembly' line in Alabama right next door to all the Airbus employees might be pretty clever as an industrial workaround strategy vs. the Mirabel ongoing disaster. They (Airbus) can posit it as required contractual investment, and trade-necessities, but also defeat the politics in Mirabel without any (Bombardier/Canadian) theatrics, if more and more work is put in Airbus Alabama over time. And Airbus has a pretty darn solid history of splitting work between two sites/countries.

Again, I don't care where the planes are really built personally, but it is about the only plausible explanation I can divine from the information we have today; Airbus seeking to Airbusify the A220 by building it substantively in/with/adjacent to it's facility, rather than BBD (which can't wait to minimize the losses/costs).

It is a balancing act.

The original announcement (link above) said:

CSALP’s headquarters and primary assembly line and related functions will remain in Québec, with the support of Airbus’ global reach and scale. Airbus’ global industrial footprint will expand with the Final Assembly Line in Canada and additional C Series production at Airbus’ manufacturing site in Alabama, U.S.

I presume that is there for the benefit of QI which still owns 19% of the JV.

It'll be interesting to see the workshare split going forward.

It's hard to know if BFM is mostly about political cover and Airbus integration and/or if it provides bottom line economic benefit.

We've seen by selling the Q series that BBD wants out of non-bizjet aviation so I agree they won't really care how things move around.

Their main objective is to maximize the JV's value so their 29% stake gets maximized.

Ironically the Canadian designed airframe may end up being made in the US whilst the US designed engines end up being made in Canada!
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JayinKitsap
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 7:38 pm

I am expecting the JV to keep the Mirabel employment stable to slowly increasing, possibly taking a number of workers being laid off by BBD. Moving current jobs to Alabama could cause a firestorm, but if stable levels adding to AL would cause much less disruption. However the cost of a production worker in Alabama is probably 2/3 to 3/4 the cost in Mirabel, due to work rules and the cost of benefits, etc so a lot will eventually go to the South.
 
ExMilitaryEng
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 7:42 pm

texl1649 wrote:
The main benefit to expediting/expanding/pushing Alabama I think for the whole CSALP venture is to drive production efficiencies and cost down; using BBD money (and canadian/regional subsidies) to co-locate the 'assembly' line in Alabama right next door to all the Airbus employees...

You seem to enjoy repeating that notion that we are using BBD's money to construct that Mobile CSeries FAL.

In reality, BBD has already committed to provide that additional contribution of up to 3 X US$350 million into "CSALP", in exchange for non-voting shares paying 2% interests annually. That money is now gone/committed. It has been converted into (current&future) CSLP capital.

Agreed, BBD's current costs of borrowing are about 7.5%, so 5.5% annually will be the net costs to BBD - or even less as the beneficiary, CSLAP, is 49.99% owned by BBD and IQ.

CSALP would the investing entity in Mobile. Not BBD.
 
texl1649
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 8:25 pm

ExMilitaryEng wrote:
texl1649 wrote:
The main benefit to expediting/expanding/pushing Alabama I think for the whole CSALP venture is to drive production efficiencies and cost down; using BBD money (and canadian/regional subsidies) to co-locate the 'assembly' line in Alabama right next door to all the Airbus employees...

You seem to enjoy repeating that notion that we are using BBD's money to construct that Mobile CSeries FAL.

In reality, BBD has already committed to provide that additional contribution of up to 3 X US$350 million into "CSALP", in exchange for non-voting shares paying 2% interests annually. That money is now gone/committed. It has been converted into (current&future) CSLP capital.

Agreed, BBD's current costs of borrowing are about 7.5%, so 5.5% annually will be the net costs to BBD - or even less as the beneficiary, CSLAP, is 49.99% owned by BBD and IQ.

CSALP would the investing entity in Mobile. Not BBD.


Look man, you just claimed I am 'repeating that notion' that we are seeing BBD money to construct the Mobile Cseries FAL, and then stated that BBD committed to spend $925MM (which is now committed to CSALP). I don't know what they're borrowing vs. spending (though their cash flow has been terrible) but it sure seems like the middle man entity of CSALP capital is your point of contention with my post. Ok, have a nice day/life etc, but it's kind of semantics to my mind.

The money's not coming from Airbus, so it has to ultimately come from either BBD/IQ or someone else, and it seems unlikely CSALP is getting the cash themselves (nor is it coming from the 19% IQ owns: IQ's ownership stems from quebec taxpayers giving/granting money to Bombardier). Of some note, when Quebec gave $1 Billion to BBD in 2015 (not ancient history), the leadership bragged that "Couillard said under the agreement, Quebec has a direct say in the development of the CSeries plane and a 20-year guarantee Bombardier will keep its headquarters, manufacturing and engineering facilities in the province." That was for a 49.5% stake....


I do agree Revelation too on the irony of the Canadian funded/developed plane likely getting built mostly in the USA (and 40 percent or more is from United Tech. I think I have read anyway), while Pratt/United Tech. is building the engines in Canada (oh, using GE sourced European built (Avios) gearboxes to boot). Now if they can somehow figure out a way to get more Chinese/Japanese components, it will approach the level of international sourcing the 787/A350 enjoy.
 
ExMilitaryEng
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 8:36 pm

JayinKitsap wrote:
I am expecting the JV to keep the Mirabel employment stable to slowly increasing possibly taking a number of workers being laid off by BBD., Moving current jobs to Alabama could cause a firestorm, but if stable levels adding to AL would cause much less disruption. However the cost of a production worker in Alabama is probably 2/3 to 3/4 the cost in Mirabel, due to work rules and the cost of benefits, etc so a lot will eventually go to the South

That's indeed the probable scenario.

I believe Mobile is still required anyways, just to ensure CS300 can be sold in the US. (the ITC decision only covered the CS100). While current Mobile production workers are about 2/3 the cost of those Mirabel, I'm not sure where they are at in their learning curve. We can pretend that some tasks will still be more cost-effective to be concentrated in Mirabel. Maybe not.

In any events, having two separate FALs should keep both work groups honest...

Some years ago, Montreal's aerospace machinists were definitely not easy group to deal with - an understatement here. It however improved a lot since then .
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 8:49 pm

ExMilitaryEng wrote:
In reality, BBD has already committed to provide that additional contribution of up to 3 X US$350 million into "CSALP", in exchange for non-voting shares paying 2% interests annually. That money is now gone/committed. It has been converted into (current&future) CSLP capital.

Yes, from BBD's point of view, the money is committed to CSALP.

From the "A220 Longer term Impact on Airbus Strategy" point ov view, what is more interesting is if Airbus is also investing into CSALP to make BFM happen, or if BFM is happening entirely from existing CSALP commitments, or if Airbus is building facilities that CSALP will lease.

The point being made earlier in this thread was that Airbus is showing commitment to A220/CSALP by investing in the BFM FAL, yet we're not sure to what degree that is true.

There's a whole spectrum of choices:
1) Airbus really wants to boost CSALP so they build out BFM on their dime and let CSALP lease the resulting facilities
2) Airbus straddles the fence on CSALP so they contribute more funds to CSALP to help the BFM build out
3) Airbus keeps a distance from CSALP so they let it use existing budgets to do the (unplanned) BFM build out
Last edited by Revelation on Tue Dec 18, 2018 9:09 pm, edited 1 time in total.
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ExMilitaryEng
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 9:00 pm

texl1649 wrote:
Look man, you just claimed I am 'repeating that notion' that we are seeing BBD money to construct the Mobile Cseries FAL, and then stated that BBD committed to spend $925MM (which is now committed to CSALP). I don't know what they're borrowing vs. spending (though their cash flow has been terrible) but it sure seems like the middle man entity of CSALP capital is your point of contention with my post. Ok, have a nice day/life etc, but it's kind of semantics to my mind.
The money's not coming from Airbus, so it has to ultimately come from either BBD/IQ... ...That was for a 49.5% (sic) stake....

In the next 3 years, CSALP will definitely spend way more than US$925M (basically a BBD loan to CSALP), and that will definitely include additional Airbus contribution.

Already in this year forward financial statements, Airbus included losses related to their CSALP investment. So Airbus must be already spending something into the CSALP, right?.

In Mobile, where that money will come from? Will it be Airbus, that will in turn lease it to CSALP?

Or will it be CASLP alone? If so, how much of that $350M has not been spent in Mirabel yet? How much more will be spent in Mirabel for those two new additions and the resulting production reshuffle? How much will be left (if any) for Mobile?

How can you pretend Airbus is not investing any money here, and that it's strictly all BBD's / Canadian taxpayer's moneys that's being spent in Mobile?
Last edited by ExMilitaryEng on Tue Dec 18, 2018 9:17 pm, edited 1 time in total.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 9:16 pm

ExMilitaryEng wrote:
In the next 3 years, CSALP will definitely spend way more than US$925M, and that will definitely include additional Airbus contribution. Already in this year forward financial statements, Airbus included losses related to their CSALP investment.
So Airbus must be already spending something into the CSALP, right?.
...
How can you pretend Airbus is not investing any money here, and that it's strictly all BBD's / Canadian taxpayer's moneys that's being spent in Mobile?

It'd be interesting to have an estimate of the burn rate over the next 3-5 years, but I don't know of any that has been published.

I think it's a safe presumption that BBD + QI aren't in a great position to add funding to CSALP, nor are public institutions too likely to want to buy financial instruments based on the JV's future earning potential.

Clearly Airbus is the one with the money, but as you're already pointing out, there's different ways for that contribution to be made.

If/when we learn more about the funding we'll learn more about how much risk Airbus feels it can/should be taking on.
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texl1649
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 9:35 pm

I haven’t seen documentation of forward losses to CSALP by Airbus, sorry if I missed them. They did say they got $1.4 Billion in intangible assets or so out of the program (Voila!), and liabilities of up to $2.2 billion from the program/deal (related to call prices on BBD shares I think). The opaque accounting thus far has made it impossible to see any actual commitment to funding the partnership/CSALP from Airbus’ perspective.

I’m not familiar, and would appreciate direction to, forward financial statements/losses Airbus has indicated for CSALP investments.
 
CFRPwingALbody
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 9:43 pm

Isn't CSALP producing CSeries/A220's at a cost. Might the agreement between Airbus and BBD that BBD covers fixed amounts the first three years of the agreement be to cover the negative results of the production proces!?.
Besides there are enough investments required in Mirabel to fulfill the current production commitments. BBD has committed to deliver CSeries planes at certain times, if they (CSALP) don't reach these datelines there are late delivery penalty payments. This adds to the cash drain on the A220/CSeries program. So in all fairness I think BBD has put a cap on their liabilities on the CSeries program.

Now to the main subject of this topic. How is the A220 going to impact Airbus strategy.
AFAIK the post here have only looked at the last 5mile of the marathon long CSeries/A220 production proces.
The current two FALs are in Mirabel, with 2/3 of the CRJ-completion hangars converted to do cabin outfitting, completion and flight test hangar duties. An A220 that rolls out of the Mirabel FAL is in a far less extansive production state than an A320 that rolls out of a FAL. That's the real problem of the A220 production and the reason why the CSeries program nearly was terminated.
AFAIK the CSeries/A220 has sub-assembly facilities in Canada (cockpit/nose), China (main fusalage) and the UK (wings).
These sub-assembly facilities are not part of CSALP, but they are fundamental for the succes of the A220.

Isn't Fliegerfaust (I know, credibility of this source) speculating that BBD wants to sell it's St-Laurent Facility!? That facility is used to produce sub-assemblies for CRJ and CSeries/A220.
And weren't there quality problems with fuselages from China?
Now add in A320 and you might get a very interesting change in production strategy that adds work in Canada, for BBD.
 
ExMilitaryEng
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 9:52 pm

texl1649 wrote:
I’m not familiar, and would appreciate direction to, forward financial statements/losses Airbus has indicated for CSALP investments.
I've seen the link here on A.net a few months ago. Will try to find it back.
 
texl1649
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 10:18 pm

Thx ExMilitary Eng. I am sure someone here can point it out quickly if you can't find it.

#41, I am suspicious you are right about the production challenges. The real crux of the production system is that it is basically an entirely 'hand built' aircraft today, compared to the automation @ B/A. And when built, it is largely unfinished needing a comparative eternity with thinly staffed completion folks (and associated suppliers).

There's no point in spending to make a ton of airframes/hulls if you can't finish/deliver them effectively, no matter who you are (a shame no one told Boeing this before the "terrible teen" 787's were all built.)
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Tue Dec 18, 2018 10:40 pm

texl1649 wrote:
There's no point in spending to make a ton of airframes/hulls if you can't finish/deliver them effectively, no matter who you are (a shame no one told Boeing this before the "terrible teen" 787's were all built.)

We used to have a few Boeing insiders on this board back then, and they insisted pushing the pre-teens and teens through the line was better than 'stop and fix'. Unfortunately they aren't around now to tell us if they've changed their minds about that. However A220's problems seem to be different. Boeing knew the plans were in progress and they had the resources to assure that eventually things would improve. It's not clear CSALP can make the same statement.
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Amiga500
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Wed Dec 19, 2018 10:59 am

Channex757 wrote:
Amiga500 wrote:
But unfortunately, Shorts (as mis-represented by east Belfast DUP idiot Gavin Robinson), are going to be within the UK as far as Brexit is concerned.

No they aren't.

Fairly recent news is that BBD/Shorts is looking to "relocate" in order that their products will still be regulated by an EU member and EASA. This might mean BBD establishing something like Bombardier (Ireland) or wherever to take advantage of member state rules.


That is only for EASA.

That stops an immediate certification problem, but does nothing for duties and tariffs holding up supplies in and out of factory and making it harder to get talent in from outside as and when needed.


Channex757 wrote:
Bombardier might also find relocating to somewhere like Ireland becomes necessary and Belfast could lose the industry.


IMO they are already in Ireland. ;)

That is not straightforward. Particularly given that the history here would add another layer of complexity to an already mammoth task.
Last edited by Amiga500 on Wed Dec 19, 2018 11:06 am, edited 1 time in total.
 
Amiga500
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Wed Dec 19, 2018 11:03 am

CFRPwingALbody wrote:
And weren't there quality problems with fuselages from China?


There is (to my knowledge) yet to be a Chinese built fuselage in a flying CSeries.

They are a mess.

All fuselage centre-sections currently being done in Belfast.
 
robbo2k
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Wed Dec 19, 2018 11:21 am

Mirabel + Mobile in 2021 = 60+60 per year.

First Aicraft from Mobile mid-2020 ..... A220-300 for Delta (yes.... A220-300)

New fab in Mobile have backlog (Delta A220-300, JetBlue, Moxie) = 150-200 aircraft.

In December 2018, Airbus delivery 6. (Air Tanzania, Korean, Swiss) + (2x Delta+ Swiss already delivered)
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Wed Dec 19, 2018 1:34 pm

ElroyJetson wrote:
The former C series is a great plane that fills a key slot in the commercial aviation industry. I hope Airbus maximizes its full potential.


I am really curious about what the airlines think of the airplane behind closed doors and what dispatch reliability figures are now. The Lufthansa Group and Korean never air their dirty laundry in public, so we would never expect criticism from them. Air Baltic is basing its brand image in the A220 since it will eventually make up their entire fleet, so they are publicly praising it. The media articles are all praise like this one

https://www.skiesmag.com/features/time- ... s-service/

There are teething issues with every airplane, so I have a feeling we just aren’t hearing about them. The A320neo and 737MAX issues appear more widely discussed, although A220 production delays are being reported and discussed

http://aviationweek.com/program-managem ... mes-delays

https://www.flightglobal.com/news/artic ... rg-444562/

I am not trying to criticize the airplane. I am genuinely curious and would love to learn more if anyone has any insights.
Last edited by Newbiepilot on Wed Dec 19, 2018 1:44 pm, edited 1 time in total.
 
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Channex757
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Wed Dec 19, 2018 1:37 pm

Amiga500 wrote:

That stops an immediate certification problem, but does nothing for duties and tariffs holding up supplies in and out of factory and making it harder to get talent in from outside as and when needed.


That will be the biggest pressure in the short to medium term. What major industry does stockholding nowadays? Everything is built to order, using Just In Time principles.

Certainly BBD will find the temptation irresistible to either move to a new Euro location such as in the south, or worst of all shut down Shorts and repatriate the work to Mirabel.

This uncertainty does nobody any favours.
 
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Re: A220 Longer term Impact on Airbus Strategy, the Canadian Connection

Wed Dec 19, 2018 2:08 pm

Jetsouth wrote:
Currently there are about 350 outstanding orders for the A220. On top of that, there is an order for 60 from JetBlue that may soon be firmed up. Just to clear up existing orders at current production rates will take 10 years. Those wanting to order large quantities of the jet may have to wait for up to 10 years to have their orders fulfilled based on current production rates. Even if they can ramp production up to 100 planes per year would take them 4 years just to clear off the backlog assuming that JetBlue firms up.


Well shouldn't Airbus and Bombardier be concerned that at the currently possible rates if production, the A-220 could be obsolete by the time large orders could be filled? Bombardier is producing in a year a little over half of a month's production of 737's. It would take over 20 years to produce as many A220's as Boeing produces in one year.

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