VV wrote:

There is a reason why there are only 500 orders for the C Series eleven years after its launch. There is a reason why there are only 36 orders for the A319neo and there is a reason why there are not so many orders for the E195-E2 so far.
And finally there is a reason why the 737-7 grew by 12 seats.

I think it reflects the fact 100-150 seater market is not so big, although Embraer could potentially reach about 1000 sales for the E195-E2, if they are disciplined enough in the future to obtain only sizeable orders from a small number of airlines such that the production cost is low. At least during the first five years of production.

I believe that there is some truth as to the real size of this niche market, how much will it be exactly? hard to predict.

However, I am wondering if the small size of this market is not on its way to become a threat to the E2, whatever its merits.
Hence, there is a whole bunch of post-acquisition costs which ultimately get reduced because of the mere quantity of aircrafts that have been sold. And if the market is so small as you point out quite convincingly, where is the tipping point when the remaining market share is too small to reduce the post-acquisition costs?

VV wrote:

Amiga500 wrote:

TObound wrote:

DL got one hell of a deal from Bombardier. Recall this as the genesis of Boeing's dumping petition.

Ach sure didn't the first 500 787 buyers get a helluva deal from Boeing.

I do not think so. If they had dumped their 787, they would have got a lawsuit from the EU for dumping.

helluva deal != dumping

(Although it obviously can if you sell into particular markets at a loss whereas you don't do that with your home markets.)

Naincompetent wrote:

VV wrote:

There is a reason why there are only 500 orders for the C Series eleven years after its launch. There is a reason why there are only 36 orders for the A319neo and there is a reason why there are not so many orders for the E195-E2 so far.
And finally there is a reason why the 737-7 grew by 12 seats.

I think it reflects the fact 100-150 seater market is not so big, although Embraer could potentially reach about 1000 sales for the E195-E2, if they are disciplined enough in the future to obtain only sizeable orders from a small number of airlines such that the production cost is low. At least during the first five years of production.

I believe that there is some truth as to the real size of this niche market, how much will it be exactly? hard to predict.

However, I am wondering if the small size of this market is not on its way to become a threat to the E2, whatever its merits.
Hence, there is a whole bunch of post-acquisition costs which ultimately get reduced because of the mere quantity of aircrafts that have been sold. And if the market is so small as you point out quite convincingly, where is the tipping point when the remaining market share is too small to reduce the post-acquisition costs?

That's a very interesting comment and I hope everyone reads Naincompetent's comment.

I have been following Embraer's E2 development since a while. It looks like a lot of the E1 production infrastructure has been reutilized for the E2. It means that from non-recurring cost perspective the E2 is quite inexpensive. It is certainly why the whole program costs below 2 billion dollars.

From that point, we can deduce that the unit cost, including the development cost, of the E2 is relatively low compared to the A220 although Bombardier had already written off more than five billion dollars in 2015 or so. This said, Airbus is building the second final assembly line in Alabama, adding some extra logistic costs like transport and so on. In addition it adds some level of complexity in the production system.

All in all, perhaps the unit production cost of the A220 will remain above that of the A220, although I do not know what the reality is.

How many orders means "successful"? I do not know.

As far as the market size is concerned, Naincompetent is right. It is not a big one, especially when you compare to the A320neo family that has more than ,6,000 orders after only nine years after its launch or 5,000 orders of 737 MAX only seven or eight years after its launch.

A lot of people think Boeing's participation will help E2 sales. I am not convinced about it. Well, there will be some kind of synergy, for sure, but the main driver for E19x-E2 sales is the market. This comment also applies to A220.

The marketing and sales effort of the A220 is now embedded in Airbus bigger organization and hence a bigger overhead costs.
Boeing Brasil will be a fully operational corporate entity. It is possible it will keep a certain level of modesty from ambition perspective and hence lower operating cost for the endeavor.

There are a lot of thing that we do not know as yet.

By the way I have just written an article related to the discussion here in my blog.
Moderator, if you consider the sentence above is a "self promotion" please only remove the line and do not delete the whole comment.

VV wrote:

The marketing and sales effort of the A220 is now embedded in Airbus bigger organization and hence a bigger overhead costs..

that is an odd take on economy of scale.....

best regards
Thomas

tommy1808 wrote:

VV wrote:

The marketing and sales effort of the A220 is now embedded in Airbus bigger organization and hence a bigger overhead costs..

that is an odd take on economy of scale.....

best regards
Thomas

What "economy of scale"?
ACLP funds the marketing and selling, but the way Airbus does things seems to be quite grandiose like the long demonstration tour and other things.

There is not any economy of scale here.

VV wrote:

tommy1808 wrote:

VV wrote:

The marketing and sales effort of the A220 is now embedded in Airbus bigger organization and hence a bigger overhead costs..

that is an odd take on economy of scale.....

best regards
Thomas

What "economy of scale"?
ACLP funds the marketing and selling, but the way Airbus does things seems to be quite grandiose like the long demonstration tour and other things.

There is not any economy of scale here.

LOL. A puny marketing tour is the basis of your argument? That is peanuts compared to the savings that a huge conglomerate such as Airbus can negotiate with it's suppliers.

Strato2 wrote:

VV wrote:

tommy1808 wrote:

that is an odd take on economy of scale.....

best regards
Thomas

What "economy of scale"?
ACLP funds the marketing and selling, but the way Airbus does things seems to be quite grandiose like the long demonstration tour and other things.

There is not any economy of scale here.

LOL. A puny marketing tour is the basis of your argument? That is peanuts compared to the savings that a huge conglomerate such as Airbus can negotiate with it's suppliers.

LOL indeed. The overall cost of the A220 is increasing steadily and that's the reason why they are requesting more cost reduction from the suppliers.

Chicken and egg.

VV wrote:

I have been following Embraer's E2 development since a while. It looks like a lot of the E1 production infrastructure has been reutilized for the E2. It means that from non-recurring cost perspective the E2 is quite inexpensive. It is certainly why the whole program costs below 2 billion dollars.

Tooling costs are a pittance compared to overall design costs.

The E2 will use new jigs & tools for the new wing. About the only carryover they have will be the fuselage jig & tools. Wing mating will be different due to the different wings and obviously engine mounting will be different. New undercarriage means new jigs & tools there too.


The reasons for the E2 being a fraction of the CSeries development costs are primarily (but not limited to):
- Embraer having a much tighter control of interfaces, processes & data than BBD and therefore less rework
- The E2 using a metallic wing
- The E2 being able to reuse much of the work that went into the KC390 FBW
- The E2 reused the E1 fuselage
- The E1 already being a digital aircraft, with all the benefits that comes from that as a basis for starting from.

The reuse of some jig & tools are trivial compared to the above.

VV wrote:

LOL indeed. The overall cost of the A220 is increasing steadily and that's the reason why they are requesting more cost reduction from the suppliers.

What planet are you on? Airbus have already negotiated something like a 10% cut in high volume parts (like fasteners) with many suppliers.


If each airframe sells for $20m, then 1% of that is $200k. Build cost has come down by multiples of that. Unless you are suggesting the sales campaign for each individual aircraft (such as the sales to Czech Airlines) is significantly more than $200k/frame, then your numbers don't begin to stack up.


They are requesting further cost reductions as build costs are still higher than they want (and probably need with some sale prices) them to be. Only someone that is either unknowledgeable or idiotic would conclude that means build costs are rising!



What did you do in Montreal?

VV wrote:

I have been following Embraer's E2 development since a while. It looks like a lot of the E1 production infrastructure has been reutilized for the E2. It means that from non-recurring cost perspective the E2 is quite inexpensive. It is certainly why the whole program costs below 2 billion dollars.

Amiga500 wrote:

Tooling costs are a pittance compared to overall design costs.

Interesting you mentioned it because the E2 is only a derivative of the E1 and that is why the E2 development cost is still below 2 billion.
Quite frankly, I do not even understand the purpose of your comment above.

Amiga500 wrote:

The E2 will use new jigs & tools for the new wing. About the only carryover they have will be the fuselage jig & tools. Wing mating will be different due to the different wings and obviously engine mounting will be different. New undercarriage means new jigs & tools there too.

Yeah, and so? I really do not understand your comment.
The whole C Series wings were designed specifically for the C Series from scratch and are produced in Belfast.
As it has been mentioned on several occasions, Bombardier wrote off about five billion dollars on C Series development in 2015 or so. Indeed Airbus only paid one symbolic dollar but it in no way means the wing of the A220 is cheaper overall than C Series.

Amiga500 wrote:

The reasons for the E2 being a fraction of the CSeries development costs are primarily (but not limited to):
- Embraer having a much tighter control of interfaces, processes & data than BBD and therefore less rework
- The E2 using a metallic wing
- The E2 being able to reuse much of the work that went into the KC390 FBW
- The E2 reused the E1 fuselage
- The E1 already being a digital aircraft, with all the benefits that comes from that as a basis for starting from.

The reuse of some jig & tools are trivial compared to the above.

Well, thank you for that information and it confirms that the E2 is cheaper to produce than A220. Thanks for the hint.

VV wrote:

VV wrote:

I have been following Embraer's E2 development since a while. It looks like a lot of the E1 production infrastructure has been reutilized for the E2. It means that from non-recurring cost perspective the E2 is quite inexpensive. It is certainly why the whole program costs below 2 billion dollars.

Quite frankly, I do not even understand the purpose of your comment above.

Then you obviously don't understand what you wrote when saying "production infrastructure".

Unless you mean the factory roof? Which is an even more ludicrous assertion than the reuse of the jig & tool sets being responsible for the development cost difference.

VV wrote:

Amiga500 wrote:

The reasons for the E2 being a fraction of the CSeries development costs are primarily (but not limited to):
- Embraer having a much tighter control of interfaces, processes & data than BBD and therefore less rework
- The E2 using a metallic wing
- The E2 being able to reuse much of the work that went into the KC390 FBW
- The E2 reused the E1 fuselage
- The E1 already being a digital aircraft, with all the benefits that comes from that as a basis for starting from.

The reuse of some jig & tools are trivial compared to the above.

Well, thank you for that information and it confirms that the E2 is cheaper to produce than A220. Thanks for the hint.

The only one of those that would feed into cheaper build costs is the metallic wing - and even that may change over time.

All others are non-recurring costs.

But do carry on demonstrating your great knowledge accrued in Montreal.

Amiga500 wrote:

...

They are requesting further cost reductions as build costs are still higher than they want (and probably need with some sale prices) them to be. Only someone that is either unknowledgeable or idiotic would conclude that means build costs are rising!

What did you do in Montreal?

OMG.

Is it really important to know what I did or did not do in Montreal?
It is as unimportant as what you did or did not do in your life in general.

As far as the A220 production cost compared to the E2, it is obvious the E2 is cheaper to produce despite the fact there are a lot of parts coming from different suppliers.

The last news I heard is that Airbus sent out hundreds of people from Toulouse with a very interesting expatriation incentive. I can hardly believe the effort is cheap. Most of the people are for program management and some for manufacturing process development.

And yes, I still have friends in all levels in Mirabel/Montreal who discuss with me on many subjects. For instance I can tell with certainty that rework and traveled work is still happening on the A220 production after almost three years of production phase.

I am sorry to tell you that I happen to know a little bit more than you imagine, but that's life.

VV wrote:

Well, thank you for that information and it confirms that the E2 is cheaper to produce than A220. Thanks for the hint.

how does an aircraft become cheaper to produce because of a list of reasons it was cheaper to develop?

best regards
Thomas

VV wrote:

The last news I heard is that Airbus sent out hundreds of people from Toulouse with a very interesting expatriation incentive. I can hardly believe the effort is cheap. Most of the people are for program management and some for manufacturing process development.

Those people have replaced BBD folks that were (badly) doing the same job. So the cost difference is the wage difference between who was BBD and who is Airbus, not always an extra body.

100 people at $100k a year is $10m.

Over 45 frames that is $0.22m/frame. At a $20m build cost that is ~1%. Like I said earlier, build cost has come down by multiples of that. So net build price is still down even including the additional overhead of program/process folks from Toulouse.

VV wrote:

And yes, I still have friends in all levels in Mirabel/Montreal who discuss with me on many subjects. For instance I can tell with certainty that rework and traveled work is still happening on the A220 production after almost three years of production phase.

Of course there is - sure they are not long after maturing to their final production parts in some cases!

Also telling where your info is from - which more or less confirms what I had suspected. I'm sure what your hearing is all riveting.

tommy1808 wrote:

VV wrote:

Well, thank you for that information and it confirms that the E2 is cheaper to produce than A220. Thanks for the hint.

how does an aircraft become cheaper to produce because of a list of reasons it was cheaper to develop?

best regards
Thomas

Didn't you read his list properly?

A lot of items in the list implies there is almost no learning curve. So yes the production cost is lower because a lot of the cost is staffing cost.
There are obviously other reasons, but I think you need to think about it again.

Not only it is cheaper to develop, it is cheaper to operate/produce.

Amiga500 wrote:

...

VV wrote:

And yes, I still have friends in all levels in Mirabel/Montreal who discuss with me on many subjects. For instance I can tell with certainty that rework and traveled work is still happening on the A220 production after almost three years of production phase.

Of course there is - sure they are not long after maturing to their final production parts in some cases!

Also telling where your info is from - which more or less confirms what I had suspected. I'm sure what your hearing is all riveting.

Well, you are absolutely free to think about me. It is not important.

I am just a little bit curious by your motivation to say that A220 is cheap to produce when it is not at all the case. You spend a lot of time writing things that obviously you do not understand dell, but it is okay for me.

By the way I am on holiday and that's why I spend so much time here since several days reading rubbish told by people. In addition is is raining so I am bored.

Hi everyone. I am new here. I also like A220 and I think it is better than E-195E2.

VV wrote:

tommy1808 wrote:

VV wrote:

Well, thank you for that information and it confirms that the E2 is cheaper to produce than A220. Thanks for the hint.

how does an aircraft become cheaper to produce because of a list of reasons it was cheaper to develop?

best regards
Thomas

Didn't you read his list properly?

A lot of items in the list implies there is almost no learning curve..

exactly. The way the Airbus A220 is made however still does have a learning curve to lower cost.

And 2.5 times the backlog drives cost down quite a bit all by itself.

it is cheaper to operate

well, if the smaller aircraft wasn´t cheaper to operate it wouldn´t even have the few orders it has.

46% of all E1 orders where 175, out of scope for the E2, and another 11% where the 170, that doesn´t exist as E2.... seems like Embraer killed a whole lot of the E1 market with the update.

On the plus side, few customers where E17x and E19x customers at the same time, so it is far from bleak, but considering ~900 Units was the total volume of E19x space sales in the last iteration with more ore less no competition in that size bracket the A220 may have already taken most of the market.

Didn´t you argue up-thread that the 100-150 seater market is smallish?

best regards
Thomas

VV wrote:

I am just a little bit curious by your motivation to say that A220 is cheap to produce when it is not at all the case.

Please point out anywhere where I have said the CSeries is cheap to make.

I have never said that because I know it is currently not cheap to make relative to its peers. I also know it is continuously becoming cheaper. That does not make it cheap.

The weight:cost tradeoff was done with projections of $200+ /barrel oil prices. The CFRP wing is overly expensive and complex for what the aircraft does on most missions (although it does enable long ranged operations due to its very high performance). The fuselage contains overly complex compound curvatures with resulting complexity in frame design.

tommy1808 wrote:

Didn´t you argue up-thread that the 100-150 seater market is smallish?

best regards
Thomas

Yes. That is absolutely the reason why low non-recurring cost is crucial. And it is also why the learning curve is important.

Considering the possible "low" volume (1,000 - 1,500 units in 15 years) it is of prime importance to have low costs from day one.

thompsonmax wrote:

Hi everyone. I am new here. I also like A220 and I think it is better than E-195E2.

Good for you.

thompsonmax wrote:

Hi everyone. I am new here. I also like A220 and I think it is better than E-195E2.

This is an enlightened and profound argument and explains everything now ...
Very technical indeed ...

This is a fascinating thread and very educational. One thing that I feel is missing is that nobody indicated that Embraer might have the same issues (rework, relatively high parts cost, lack of optimum production volume etc.) that the A220 has going forward. Isn't the A220 further along with dealing with and solving these issues than EMB? I come from a manufacturing background. The best way to be efficient is keeping as many people working flat out as possible with the best low cost inputs. Given the lack of volume I would suspect that EMB does not fulfill that objective at all. How much spare capacity do they have with excess staff at this point? Is it getting worse?
I believe that the A220 is improving on productivity/cost while EMB is likely going in the opposite direction for now at least. It will be interesting to see how this plays out going forward.

Skywatcher wrote:

This is a fascinating thread and very educational. One thing that I feel is missing is that nobody indicated that Embraer might have the same issues (rework, relatively high parts cost, lack of optimum production volume etc.) that the A220 has going forward. Isn't the A220 further along with dealing with and solving these issues than EMB? I come from a manufacturing background. The best way to be efficient is keeping as many people working flat out as possible with the best low cost inputs. Given the lack of volume I would suspect that EMB does not fulfill that objective at all. How much spare capacity do they have with excess staff at this point? Is it getting worse?
I believe that the A220 is improving on productivity/cost while EMB is likely going in the opposite direction for now at least. It will be interesting to see how this plays out going forward.

Just like A220, E19x-E2 parts are also built by different parties or contractors.

If I am not mistaken most of E2 wings are built by Embraer in-house and that's how they managed to have three different wings for E195-E2, E190-E2 and E175-E2. Each one is optimized for the expected mission of each aircraft variant.
Without their in-house capabiity it would have not been possible.

My understanding is the E2 is assembled on E1 assembly line that have been slightly adjusted. There t
I am still puzzled by the different opinions expressed here saying that A220 would have lower production cost. It may be the case, but when you look into the details it is very unlikely to be true.

Embraer has been producing the E190 (E1) and E195 (E1) at quite low production rate since a while now and they are making money anyway.

It is also likely E2 aerostructure suppliers are similar to those of the E1. So the learning curve is not so steep.

All the above being said, I am quite puzzled by the low production rate for the E2. Perhoas it is due to the number of orders that would not be able to support a higher production rate, in which case it would be a prudent approach before orders flow in in more consistent manner.

Once the joint venture with Boeing will be closed, it is likely they will use part of the money to speed up the production and then to chase more orders.

If I were at the joint-venture I would target big orders to keep a small number of different configurations. They need to persuade a big airline like Southwest to order 250 of E195-E2 and then just produce one unique configuration during two or three years until the production system becomes mature.

What is missing in this debate is whether

shareholder returns are greater derived from

the commonality, parts inventory, operational know how, and common type rating training with existing Ejet’s in an Airline / Airline Holding Companies fleet, VERSUS the complexities of introducing a new fleet type with NO commonality.

Or is the A220 a better long term investment with added variants which whose technicals cannot be met by other existing Boeing or Airbus fleet types, extant or proposed.

KlimaBXsst wrote:

What is missing in this debate is whether

shareholder returns are greater derived from

the commonality, parts inventory, operational know how, and common type rating training with existing Ejet’s in an Airline / Airline Holding Companies fleet, VERSUS the complexities of introducing a new fleet type with NO commonality.

Or is the A220 a better long term investment with added variants which whose technicals cannot be met by other existing Boeing or Airbus fleet types, extant or proposed.

I do not understand the above statement.

Is there anyway you can express it in a simpler way?

So what if A220 is a little more expensive to build? A220 is a little bit bigger than E2, making it possible to be used at a mainline carrier. It generates more revenue. A220 has jumped the gap to mainline, that's what scared Boeing so badly. E2 is just a large RJ. I don't see E2 catching on in North America ar all. Maybe it will garner some sales where ALPA scope clauses don't define the marketplace.

What I find an interesting omission is the relative cost difference between the aircraft. While specific contract prices vary they are all based of a list price.

What are the list prices of the A220 and the E2195?

Have a great day,

1) 100 seat airplane. Neither the A220 or the E2-195 are 100 seat airplanes. Both carry more than the 319 and 73G. Does anybody consider those airplanes to be 100 seaters? Mainline service for the 223 is > 130 seats and LCC configs are > 145 seats, with a max of 160 seats. The E2–195 is just ~130 seats in mainline service and 146 is LCC service. Where do people get this nonsense about these being 100 seat RJs?

2) Overall market size. If it’s only 1000 frames, the E2 is already screwed with the A220 having over 500 orders and verging on the first 100 delivered by this Christmas. Luckily for them, the market is several times that. There were > 2700 318s, 319s, 736s and 73Gs that were delivered. Suggesting the market size in this category is ~1000 frames is truly ignorant.

3) Long and thin routes. This is like arguing that the 787 is only being purchased for long and thin routes. The majority of the routes 787s fly are what the 767 used to fly. And some new long and thin routes. The A220 is the same. The 223 is a straight 319/73G replacement. And the 221 is an upgauged E195/CR1000 and that’s what it is replacing. The long and thin routes are a nice bonus where premiums warrant it. Just see some of the routes AC announced for their first 220s.

4) Blah blah blah costs. And still all the focus on costs and not much on profit potential for operators. It’s good a thing none of the folks in this thread manage businesses.

EMBSPBR wrote:

thompsonmax wrote:

Hi everyone. I am new here. I also like A220 and I think it is better than E-195E2.

This is an enlightened and profound argument and explains everything now ...
Very technical indeed ...

Not far from the depth some others have put up in this thread.....

VV wrote:

TObound wrote:

...

And economics is what it is. A physicist commenting on economics would be out of his/her depth. This is why your experience in the CSeries program is not translating into a matching interpretation of the program's sales. Selling airplanes is not the same thing as building them. Even if the fields are related.

If only you know what I know.

What you know is entirely irrelevant because you can’t discuss it here. And quite frankly I am starting to think you’re really inflating your resume through omission. This is bordering on trolling at this point.

You don’t get to assert authority about your experience while not being able to actually add anything of value to discussion. Put up or shut up as the line goes.

VV wrote:

What? I did not write the article issued by Financial Post about the trade between C Series order by Air Canada and the lawsuit concerning the maintenance. And it was Alain Bellemarre who said he would pull out of the deal if the lawsuit was not dropped.
Come on ....

I think the best way to it for the government is to leave Air Canada alone until some of the aircraft are delivered and then come back with the lawsuit.

And that says nothing about the airplane, despite your weak attempt to tie the two. Air Canada had an opportunity to leverage an order to remove legislative mandates that were frustrating them. They used it.

You still haven’t answered my other point. If the airplane is such a dog why are airlines like JetBlue and Air France ordering it? Why is AirBaltic building their entire business around it? Why is Delta putting on top up orders? Are all the CEOs, business analysts and network planners morons at all these airlines? Maybe you should send them your resume, and let them know there’s someone out there who knows better.....

VV wrote:

Well, You know that the C Series was launched for the second time in 2008 or eleven years ago. The total order is still around 500 after launch, including more than one year marketing and sales under Airbus.

Could make similar points about the E2. It’s tough to compete against Boeing and Airbus. I expect E2 and A220 sales will sell quite well now that the Big Two own those programs.

VV wrote:

I am afraid it reflects the reality os the market and it also applies to Embraer's aircraft.

You just can’t resist sour grapes....

Over 2700 736,73G, 318 and 319 were sold. They have to be replaced. Some will be upgauged. But there’s a lot of route/frequency combinations which require rotations with < 150 seats. Not to mention RJ routes that need to be upgauged.

Fundamentally, your assertion is that no airplane with less than 160 seats maineline or 180 seats LCC is feasible on any flight. Airline CEOs would laugh at that.

thompsonmax wrote:

Hi everyone. I am new here. I also like A220 and I think it is better than E-195E2.

I like turtles

TObound wrote:

...
What you know is entirely irrelevant because you can’t discuss it here. And quite frankly I am starting to think you’re really inflating your resume through omission. This is bordering on trolling at this point.

Well, as you said it is absolutely irrelevant. That is why you should consider only what is written here seriously and thoroughly.

TObound wrote:

You don’t get to assert authority about your experience while not being able to actually add anything of value to discussion. Put up or shut up as the line goes.

There is not any need to say anything about the aircraft when the issue is about the market. We will discuss about it further down.

TObound wrote:

VV wrote:

What? I did not write the article issued by Financial Post about the trade between C Series order by Air Canada and the lawsuit concerning the maintenance. And it was Alain Bellemarre who said he would pull out of the deal if the lawsuit was not dropped.
Come on ....

I think the best way to it for the government is to leave Air Canada alone until some of the aircraft are delivered and then come back with the lawsuit.

And that says nothing about the airplane, despite your weak attempt to tie the two. Air Canada had an opportunity to leverage an order to remove legislative mandates that were frustrating them. They used it.

LOL
I think the government should just let several aircraft to be delivered and then comes back with the lawsuit when the point of no return is reached since it would not bother Air Canada anyway. LOL

TObound wrote:

You still haven’t answered my other point. If the airplane is such a dog why are airlines like JetBlue and Air France ordering it? Why is AirBaltic building their entire business around it? Why is Delta putting on top up orders? Are all the CEOs, business analysts and network planners morons at all these airlines? Maybe you should send them your resume, and let them know there’s someone out there who knows better.....
[q/uote]

There are other things about aircraft sales than just the aircraft. The fact is that the total order since its launch in 2008 reaches only about 500 aircraft today. The C Series was marketed since eleven years when there was almost no other credible aircraft in the market segment.
Today it is in the same market as other aircraft like A319neo, E19x-E2 and so on. I do not expect the sales to be booming now when durin the last eleven years it obtained only 500.

I know it is difficult to accept, but that's the situation today.

TObound wrote:

VV wrote:

Well, You know that the C Series was launched for the second time in 2008 or eleven years ago. The total order is still around 500 after launch, including more than one year marketing and sales under Airbus.

Could make similar points about the E2. It’s tough to compete against Boeing and Airbus. I expect E2 and A220 sales will sell quite well now that the Big Two own those programs.

No, the E2 was launched only in 2013 or only six years ago. There is a difference of 5 years in term of launch between the C Seried second launch and E2's launch.
The scary thing is that E19x-E2 are being delivered when there are still a small number of CS100 and CS300 flying out there. In reality, the initial five year head start of the C Series is almost gone due to the delays on the C Series program.

TObound wrote:

VV wrote:

I am afraid it reflects the reality os the market and it also applies to Embraer's aircraft.

You just can’t resist sour grapes....

Over 2700 736,73G, 318 and 319 were sold. They have to be replaced. Some will be upgauged. But there’s a lot of route/frequency combinations which require rotations with < 150 seats. Not to mention RJ routes that need to be upgauged.

Fundamentally, your assertion is that no airplane with less than 160 seats maineline or 180 seats LCC is feasible on any flight. Airline CEOs would laugh at that.

Well, airline CEO can laugh and it does not matter.

You said more than 2,700 737-600, A318 and A319 were sold. That's true, but the market reality is way different today.
This is exactly what Bombardier execs thought back then. They expected to:

1. replace those aircraft on one-to-one basis
2. capture the market of regional jets where the routes would need bigger aircraft

After eleven years of marketing, there are only about 500 orders.

Again I repeat that the market has evolved since ten years and the C Series now needs to fight inside a market segment where there are several contenders that have all reached or almost reached certification (C Series, E19x-E2, A319neo, 737-7). That's a lot of offers in a limited space.

Obviously the A319neo is only interesting for some specific cases like when the need is only for a small number of small aircraft in an A32neo fleet. The same comment applies to 737-7 with 737 MAX family.

Both E19x-E2 and the C Series do not have much commonality with Boeing and Airbus narrowbody respectively.

If you look into it carefully then the C Series and the E19x-E2 are interesting only if the airline can build a big enough fleet of the aircraft.
It is also interesting for small airlines that need only small number of small aircraft and still do not have bigger narrowbody.

My comments apply for both E19x-E2 and C Series.
I know the situation is not comfortable for those small narrowbody, but that how it is.

That is why it is very important to make sure the production costs remain low, because the pressure is high from volume perspective and also from pricing perspective.

I sincerely hope the C Series would succeed, but there are indications its life would not be very simple. The E19x-E2's life is not much easier, but it has the advantage to be a derivative so it represents lower industrial and financial risks.

VV wrote:

After eleven years of marketing, there are only about 500 orders..

and yet they sold about as many A223 in 2018 alone as Embraer sold E-195E2 in 6 years....

best regards
Thomas

2175301 wrote:

What I find an interesting omission is the relative cost difference between the aircraft. While specific contract prices vary they are all based of a list price.

What are the list prices of the A220 and the E2195?

Have a great day,

Airbus decided to not publish the list price. I does not reflect the actual market price anyway.
So there is no point comparing the "list price" that does not necessarily exist anymore.

However, for your information and according to several aircraft value data, I noticed the market value for C Series or E19X-E2 vintage 2019 is about US$250,000 to US$300,000 per seat.

If you are lucky enough to work in an area you have access to those books (Avitas, Ascend and so on) then you can check it by yourself. Otherwise, the above is the order or magnitude.

Your question is indeed an interesting one. The pricing pressure exacerbate the importance of production cost.
In reality the aircraft pricing could be mitigated by a better service deal, but I still do not know what the service policy is for the C Series or the E19x-E2. Most probably it will be defined by Airbus and Boeing respectively.

If I were at Boeing Brasil, I would focus first on big orders from a limited number of airlines such that the production system only produces specific configuration at a time until it becomes really mature. They should focus on airlines like Southwest or Alaska.

tommy1808 wrote:

VV wrote:

After eleven years of marketing, there are only about 500 orders..

and yet they sold about as many A223 in 2018 alone as Embraer sold E-195E2 in 6 years....

Yes, in 2018 when Airbus needed to show off with big deals just after the partnership was announced.

It is a good thing for the C Series, but from now on the sales will be a little bit more complicated due to the fact the E195-E2 obtained its type certificate in April 2019.
I expect tougher sales campaigns from 2020 onward. In my opinion the C Series missed the opportunity to capitalize on the five year head start.

About 100 C Series have been delivered so far.
Only a few E190-E2 and E195-E2 have been delivered so far.

VV wrote:

tommy1808 wrote:

VV wrote:

After eleven years of marketing, there are only about 500 orders..

and yet they sold about as many A223 in 2018 alone as Embraer sold E-195E2 in 6 years....

Yes, in 2018 when Airbus needed to show off with big deals just after the partnership was announced.

so? You think they gave them away as advertising gift?

It is a good thing for the C Series, but from now on the sales will be a little bit more complicated due to the fact the E195-E2 obtained its type certificate in April 2019.

I didn´t know Embraer is such a terrible company that potential customers had any doubts at all that certification would happen...... they seemed to be pretty good with the on time/on budget before after all...

I expect tougher sales campaigns from 2020 onward. In my opinion the C Series missed the opportunity to capitalize on the five year head start.

yup, definitely rough start. So?

About 100 C Series have been delivered so far.
Only a few E190-E2 and E195-E2 have been delivered so far.

yes, and as things stand 2x A220 will be delivered for every E2-Jet. Conventional manufacturing wisdom would imply that gives Airbus a ~10 to 15% cost advantage to overcome the probably more expensive build.

best regards
Thomas

thompsonmax wrote:

Hi everyone. I am new here. I also like A220 and I think it is better than E-195E2.

excellent first post! The A220 is way better and airlines think likewise

VV wrote:

lightsaber wrote:

VV wrote:

Just to add something. I believe they should do something about the C Series landing performance.

Just saying.

Why? 1387m at MLW for A220-100
1509m for A220-300

1240 m E2-190
1412 m E2-195

Lightsaber

Why?
Well you will know perhaps one day.

"The Pythia was the name of the high priestess of the Temple of Apollo at Delphi who also served as the oracle, commonly known as the Oracle of Delphi.
...
The Pythia was established at the latest in the 8th century BC,[3] and was widely credited for her prophecies inspired by being filled by the spirit of the god (or enthusiasmos), in this case Apollo."
https://en.wikipedia.org/wiki/Pythia

There is no point in comparing the orders the A220 and the E2 had until the end of 2018 and, based on that, make a statement that the A220 tends to continue selling much more than the E2 from now on.

Every campaign before, the E2 may have participated with more conservative engineering margins regarding fuel burn and range for certain critical airports. That certainly has given advantage to the A220. In a more mature phase of the program, those conservative performance guarantees are probably gone.

Later, came Airbus, and also helped boosting sales campaigns for the A220.

Finally, it is important to notice that if we take apart 2 very specific massive orders - Delta's and JetBlue + Moxy's -, the differences in the order book are relatively small. We all know that BBD was very aggressive in pricing for Delta. And in the case of JetBlue + Moxy, range plus Airbus' full package of A321s + A220s may have mattered.

So, anything that happened until now is inconclusive to outlook the market-share for the under-150-seats segment. Things are changed and the future is totally open in my opinion.

GalaxyFlyer wrote:

I’d tend to agree with VV here—no 100-seat design has sold well, only a thousand frames of all designs, Fokker 100, MD-95/717, RJ85, CRJ 1000, Boeing 737-500/600. It’s just not a very profitable segment—mainline costs but RJ revenue streams. Scope is only part of it.

That said, the A220 design does give a great passenger experience, gives DL a chance to replace the Mad Dogs with a modern design with great economic. No matter what, the EMB 195 feels like a regional jet—2-2 seating, small windows. And it can be used for lots of routes that can generate premiums—East Coast to the ski airports, NE to smaller Florida cities non-stop in the winter, even some Caribbean or Mexico destinations.

Delta profits are made by matching aircraft size very closely to the demand by the hour. They don’t fly a 757 unless it can be filled, they’ll use a MD or a regional. This fleet size flexibility has been key to their profits.

GF

Interesting. Does Delta keep old planes which they fly only a few hours/ day so that they can always offer the demand of the hour? Or how do they do it?

Somebody once said the plane makes the market. Pilot shortage may spoil that argument, but otherwise a 100 (or 130) seat plane with reasonable CASM should sell like hotcake.

tphuang wrote:

...
It will certainly be used for that role since it's more economical than A320 (similar CASM much fewer seats), but it should be very eonomical in midcon routes too. It's the lowest capacity aircraft to fly 1200 to 3000 mile routes relatively economically. Sure, airlines do use regional jet for routes greater than 1000 miles, but CRJ and E-Jets really get uneconomical at longer range. B6 had in the past said that it costs almost as much to fly E90 as it does with A320 on routes like BOS-AUS.

Do CRJs/ E-Jets fail to climb to altitude/ have too short wing or why is that?
Can somebody confirm or reject that claim, let's say for 1800nm?

TObound wrote:

1) 100 seat airplane. Neither the A220 or the E2-195 are 100 seat airplanes. Both carry more than the 319 and 73G. Does anybody consider those airplanes to be 100 seaters? Mainline service for the 223 is > 130 seats and LCC configs are > 145 seats, with a max of 160 seats. The E2–195 is just ~130 seats in mainline service and 146 is LCC service. Where do people get this nonsense about these being 100 seat RJs?

2) Overall market size. If it’s only 1000 frames, the E2 is already screwed with the A220 having over 500 orders and verging on the first 100 delivered by this Christmas. Luckily for them, the market is several times that. There were > 2700 318s, 319s, 736s and 73Gs that were delivered. Suggesting the market size in this category is ~1000 frames is truly ignorant.

3) Long and thin routes. This is like arguing that the 787 is only being purchased for long and thin routes. The majority of the routes 787s fly are what the 767 used to fly. And some new long and thin routes. The A220 is the same. The 223 is a straight 319/73G replacement. And the 221 is an upgauged E195/CR1000 and that’s what it is replacing. The long and thin routes are a nice bonus where premiums warrant it. Just see some of the routes AC announced for their first 220s.

4) Blah blah blah costs. And still all the focus on costs and not much on profit potential for operators. It’s good a thing none of the folks in this thread manage businesses.

Great post.
However A220-100 is something around 110 seats. And while the 195-E2 sells best, it is the "overstretched" model. The 5 m shorter 190-E2 has something +- 100 seats. While arguing 100 seats isn't right, it isn't very wrong either.

2700 A319s ... were sold, but that time range of A321 ... were too short. But in the meanwhile aviation has grown in heaps. So who knows if ageing A319s / B737-700s are not replaced with similar sized aircraft.

I don't believe there is a sweet spot in the market. Introduce a great new plane and everything adjusts around it.

tommy1808 wrote:

tommy1808 wrote:

and yet they sold about as many A223 in 2018 alone as Embraer sold E-195E2 in 6 years....

VV wrote:

Yes, in 2018 when Airbus needed to show off with big deals just after the partnership was announced.

so? You think they gave them away as advertising gift?

Sort of. Please remember that US trade representative complained about a possible dumping policy when Delta orders was sealed. I agree it was not very legitimate, but the most important thing is that the <US trade representative issued a warning shot. I do not think they will make another complaint unless there is another case where there is a possible below cost sales in the US.

tommy1808 wrote:

It is a good thing for the C Series, but from now on the sales will be a little bit more complicated due to the fact the E195-E2 obtained its type certificate in April 2019.

I didn´t know Embraer is such a terrible company that potential customers had any doubts at all that certification would happen...... they seemed to be pretty good with the on time/on budget before after all...

that's exactly where a lot of people make a lot of wrong conclusion.
The reality is that Embraer is still selling or try to sell the first generation E190 and E195. Although the backlog is now quite small they still need the production facilities for the E1.

Unfortunately, the announcement of the joint-venture between Embraer and Boeing freezes a little bit the situation and many parties are now waiting the outcome of the joint-venture. It is possible further orders will only happen once the deal is closed in Q1 2019. I guess Boeing will also show off like Airbus did by announcing big orders during the first months after the closing of the deal. That's business as usual.

As for the different US orders fro Delta, Moxy and JetBlue, you need to look carefully into the names behind the deals. Not only at the airlines and Airbus, but the consulting company supporting the deal. I leave you to make your investigation on the subject. It is publicly available information.

tommy1808 wrote:

I expect tougher sales campaigns from 2020 onward. In my opinion the C Series missed the opportunity to capitalize on the five year head start.

yup, definitely rough start. So?

So the five years advantage between the C Series and E2 has gone.

Interestingly, the five years of gap between the C Series and E2 gave a net advantage to the E2 that can get a more mature engines starting at day one than those installed on the initial C Series.
And yes, Pratt & Whitney screwed up big time with the PW1000G program.

tommy1808 wrote:

About 100 C Series have been delivered so far.
Only a few E190-E2 and E195-E2 have been delivered so far.

yes, and as things stand 2x A220 will be delivered for every E2-Jet. Conventional manufacturing wisdom would imply that gives Airbus a ~10 to 15% cost advantage to overcome the probably more expensive build.

Well, I like your optimism.
I repeat, a lot of people underestimate too much the E19x-E2.

VV wrote:

tommy1808 wrote:

tommy1808 wrote:

and yet they sold about as many A223 in 2018 alone as Embraer sold E-195E2 in 6 years....

VV wrote:

Yes, in 2018 when Airbus needed to show off with big deals just after the partnership was announced.

so? You think they gave them away as advertising gift?

Sort of.

giving away 200 aircraft in a 1k Market would be beyond stupid. You better have some evidence lined up to support your claim that those where not for profit sales, after all

Please remember that US trade representative complained about a possible dumping policy when Delta orders was sealed.

that complaint was crushed.

the A220 had a really good year because the excellent aircraft wasn´t being build by a company on the verge of bankruptcy alone anymore. That is all.

best regards
Thomas

VV wrote:

tommy1808 wrote:

About 100 C Series have been delivered so far.
Only a few E190-E2 and E195-E2 have been delivered so far.

yes, and as things stand 2x A220 will be delivered for every E2-Jet. Conventional manufacturing wisdom would imply that gives Airbus a ~10 to 15% cost advantage to overcome the probably more expensive build.

Well, I like your optimism.
I repeat, a lot of people underestimate too much the E19x-E2.

There would be that 10% to 15% cost advantage if the A220 were assembled on the same technology assembly line as the E2/E1. Airbus is negotiating that parts advantage. Until line automation increases, Embraer buys back most of that.

Economy of scale matters. Airframers must produce 100+ narrowbody aircraft per year to be profitable due to the brutal economies if scale imposed by the MAX/NEO price war.

Great airframes create their own market. I believe both have an opportunity to sell.

DL, B6, and Moxy going to the A220 gave that airframe a much needed boost as LH group and AirBaltic were not enough. The E2 needs sales.

AeroMexico, with a potential order of 60, is the kingmaker (It is the only large order I am aware of in active bidding). That order is enough to push up E2 economics of scale.

TAP would be a nice win, but an order for 13 doesn't tip the scales much. The potential E2-175 sales campaigns are small (with US regionals excluded).

Embraer cannot wait until 2020 to sell. Airbus wants more than ALC and AF as a notable orders in 2019, but that was sufficient.

I am personally bummer Spirit avoided the size category.

This will be an interesting debate as every order will be contested.

Lightsaber

tommy1808 wrote:

VV wrote:

tommy1808 wrote:

so? You think they gave them away as advertising gift?

Sort of.

giving away 200 aircraft in a 1k Market would be beyond stupid. You better have some evidence lined up to support your claim that those where not for profit sales, after all

I do not think those aircraft were "given away" but I believe the terms and conditions of the purchase agreement were quite compelling and they would not be able to repeat it too often.

tommy1808 wrote:

[

Please remember that US trade representative complained about a possible dumping policy when Delta orders was sealed.

that complaint was crushed.

the A220 had a really good year because the excellent aircraft wasn´t being build by a company on the verge of bankruptcy alone anymore. That is all.

The complaint was rejected but the US trade representative made the point that they would not tolerate any future below cost A220 sales in the US.
There is only one solution left, that is to reduce the production cost.

From now on, there won't be any "splash" orders because the competition will be quite tough.

I am wondering today if everything is going according to their initial plan.

VV wrote:

I do not think those aircraft were "given away" but I believe the terms and conditions of the purchase agreement were quite compelling and they would not be able to repeat it too often.

With production ramping up and suppliers having to adjust pricing downwards there is no reason to assume they can´t continue that indefinitely while increasing margin on the sales, because

The complaint was rejected but the US trade representative made the point that they would not tolerate any future below cost A220 sales in the US..

and JetBlue and Moxie orders where after that, hence those 120 Aircraft where sold at a profit, winning against the cheaper to build, cheaper to fly, accoring to you, E-195E2, rendering your whole point mute. And that is despite the advantage sticking to the E-Series would have had for JetBlue.

best regards
Thomas

tommy1808 wrote:

VV wrote:

I do not think those aircraft were "given away" but I believe the terms and conditions of the purchase agreement were quite compelling and they would not be able to repeat it too often.

With production ramping up and suppliers having to adjust pricing downwards there is no reason to assume they can´t continue that indefinitely while increasing margin on the sales, because

The complaint was rejected but the US trade representative made the point that they would not tolerate any future below cost A220 sales in the US..

and JetBlue and Moxie orders where after that, hence those 120 Aircraft where sold at a profit, winning against the cheaper to build, cheaper to fly, accoring to you, E-195E2, rendering your whole point mute. And that is despite the advantage sticking to the E-Series would have had for JetBlue.

I repeat, Moxy, JetBlue and Delta sales are not representative of a normal sales campaign; You need to follow the names of the people involved in the transaction and other stuff. The next sales in the US will be quite problematic for the A220 because of the terms and conditions of the above mentioned sales.
As far as the US trade representative's complaint is concerned, there was obviously no evidence harm was done to US aircraft manufacturing industry and thus it was rejected.

However, as I repeatedly say, the US trade representative made a point that any future sales below cost will be subject of other complaints.

the only solution left is to reduce production cost to show that the sales is well above cost.

I repeat again that all future sales in the US have been made more difficult due to terms of the sales to delta, Moxy and JetBlue.

VV wrote:

I repeat, Moxy, JetBlue and Delta sales are not representative of a normal sales campaign;

repearing nonsense doesn´t make it true.

Moxy and JetBlue where sold at a profit, as per your own argument. End of story.

If i want to read inconsistent made up stuff i go read the national inquirer.

I repeat again that all future sales in the US have been made more difficult due to terms of the sales to delta, Moxy and JetBlue.

they can just offer the same prices, that already generate profits as per your argument, and increase margins along the way by driving down prices.

best regards
Thomas

VV wrote:

Naincompetent wrote:

VV wrote:

There is a reason why there are only 500 orders for the C Series eleven years after its launch. There is a reason why there are only 36 orders for the A319neo and there is a reason why there are not so many orders for the E195-E2 so far.
And finally there is a reason why the 737-7 grew by 12 seats.

I think it reflects the fact 100-150 seater market is not so big, although Embraer could potentially reach about 1000 sales for the E195-E2, if they are disciplined enough in the future to obtain only sizeable orders from a small number of airlines such that the production cost is low. At least during the first five years of production.

I believe that there is some truth as to the real size of this niche market, how much will it be exactly? hard to predict.

However, I am wondering if the small size of this market is not on its way to become a threat to the E2, whatever its merits.
Hence, there is a whole bunch of post-acquisition costs which ultimately get reduced because of the mere quantity of aircrafts that have been sold. And if the market is so small as you point out quite convincingly, where is the tipping point when the remaining market share is too small to reduce the post-acquisition costs?

That's a very interesting comment and I hope everyone reads Naincompetent's comment.

I have been following Embraer's E2 development since a while. It looks like a lot of the E1 production infrastructure has been reutilized for the E2. It means that from non-recurring cost perspective the E2 is quite inexpensive. It is certainly why the whole program costs below 2 billion dollars.

From that point, we can deduce that the unit cost, including the development cost, of the E2 is relatively low compared to the A220 although Bombardier had already written off more than five billion dollars in 2015 or so. This said, Airbus is building the second final assembly line in Alabama, adding some extra logistic costs like transport and so on. In addition it adds some level of complexity in the production system.

All in all, perhaps the unit production cost of the A220 will remain above that of the A220, although I do not know what the reality is.

How many orders means "successful"? I do not know.

As far as the market size is concerned, Naincompetent is right. It is not a big one, especially when you compare to the A320neo family that has more than ,6,000 orders after only nine years after its launch or 5,000 orders of 737 MAX only seven or eight years after its launch.

A lot of people think Boeing's participation will help E2 sales. I am not convinced about it. Well, there will be some kind of synergy, for sure, but the main driver for E19x-E2 sales is the market. This comment also applies to A220.

The marketing and sales effort of the A220 is now embedded in Airbus bigger organization and hence a bigger overhead costs.
Boeing Brasil will be a fully operational corporate entity. It is possible it will keep a certain level of modesty from ambition perspective and hence lower operating cost for the endeavor.

There are a lot of thing that we do not know as yet.

By the way I have just written an article related to the discussion here in my blog.
Moderator, if you consider the sentence above is a "self promotion" please only remove the line and do not delete the whole comment.

Thank you for your answer, though it leaves me a bit unsatisfied.
You make good points as to the relatively low production costs of the E2 due to the low development cost and the reuse of the E1 infrastructure.
However, my concern is more focus on the entire life of the aircraft after it leaves the plant and I understand that you focus more on what happens before the plane is delivered. (please tell me if I misunderstood)

When an airline evaluates future aircraft, they obviously look at the acquisition cost but also to all the maintenance, potential resale value, PIPs and so on. All of those depend a lot on the fleet size. My point being that in many cases those maintenance cost will grow to be more expansive than the original cost of the aircraft.
As we also all know, such costs tend to decrease when there are large fleets. The question is then two-fold. How many aircraft do you need to sale in this market to achieve such a scale that enables such a cost reduction? And also, what kind of commonality is there between the E2 and the E1, although such a commonality is unavoidably limited and is of no use for future PIPs ?

PS: I would be grateful if you could send me the link to your blog by MP