So, now Air France has a slide with a A220-500 and a question mark and this means that the A220-500 is a certainty? Surely NOT.
If you follow the same logic, you could say that Airbus is due to release a new A320 family or that Boeing will get some sales here.
Additionally, you could maybe say that Embraer may have some new orders too since their frame type is kept even though some of those might be quite old and soon in need of replacement..

For the A220-500 to come out of the paper, we need MORE than only Air France - who are the other airliners that are clearly (no speculations...) looking into it? Need at least 5 to substantiate good orders. Then, the WHOLE A220 family needs to become profitable since it is not at present. Additionally, Airbus surely needs to ramp up production AND buy the remaining shares of the project so that it can benefits for full profitability.

Then, with COVID19 hampering airline growth and expenditure... you get the jist

MavyWavyATR wrote:

That's gonna kill Boeing if Airbus goes through with a -500 stretch.

Let's just cut it short and say clearly that it will not kill Boeing at all.

A300neo wrote:

SA280 wrote:

The most important question to be answered is how much of the sales would come at the expense of A320 sales canibalization?

Seems AB doesn't care, they do the exactly same thing already now with the new 252t MTOW 330neos and their own A350. Delta changed some orders because of that. There probably is some benefit there ( I hope )

Both the A320 and A220 are supporting the same bottom line and are sold out for a long period.

An A320 can carry 186 passengers, https://www.seatguru.com/airlines/EasyJ ... 320_V2.php, optionally takes pallets containers, flies real far if required & offers strong commonality with the popular A321s. I don't see the A320 getting "eaten" by a A220-500 (production rate 4(?) a month).

I do see the A319 getting replaced over time, being replaced by A220s and the A220-500 being the more attractive option for operators already using A220s.
I think Airbus has opportunities to grow the A320 family a bit upwards, A321 demand seems to to support that.


keesje

keesje wrote:

A300neo wrote:

SA280 wrote:

The most important question to be answered is how much of the sales would come at the expense of A320 sales canibalization?

Seems AB doesn't care, they do the exactly same thing already now with the new 252t MTOW 330neos and their own A350. Delta changed some orders because of that. There probably is some benefit there ( I hope )

Both the A320 and A220 are supporting the same bottom line and are sold out for a long period.

keesje

Airbus currently has white tails out the wazoo. You can get an A220 or A320 or whatever you like from Airbus, tomorrow, at fantastic prices.

Six months ago, Airbus could not sell aircraft because it had none left to sell. Today, it has plenty to sell, but to first order approximation, there's no demand.

enplaned wrote:

keesje wrote:

A300neo wrote:

Seems AB doesn't care, they do the exactly same thing already now with the new 252t MTOW 330neos and their own A350. Delta changed some orders because of that. There probably is some benefit there ( I hope )

Both the A320 and A220 are supporting the same bottom line and are sold out for a long period.

keesje

Airbus currently has white tails out the wazoo. You can get an A220 or A320 or whatever you like from Airbus, tomorrow, at fantastic prices.

Six months ago, Airbus could not sell aircraft because it had none left to sell. Today, it has plenty to sell, but to first order approximation, there's no demand.

? They are building & delivering today, based on 6000 aircraft backlog. https://www.flightglobal.com/orders-and ... 85.article

enplaned wrote:

keesje wrote:

A300neo wrote:

Seems AB doesn't care, they do the exactly same thing already now with the new 252t MTOW 330neos and their own A350. Delta changed some orders because of that. There probably is some benefit there ( I hope )

Both the A320 and A220 are supporting the same bottom line and are sold out for a long period.

keesje

Airbus currently has white tails out the wazoo. You can get an A220 or A320 or whatever you like from Airbus, tomorrow, at fantastic prices.

Six months ago, Airbus could not sell aircraft because it had none left to sell. Today, it has plenty to sell, but to first order approximation, there's no demand.

Could you enlarge on that with some factual details....without any of your pure guesswork?

VV wrote:

[252t MTOW A330 or is it 251t?
Do you have more information on the 252t MTOW A330neo?

Sorry, of course just a typo, 251t is what I meant.

keesje wrote:

Both the A320 and A220 are supporting the same bottom line and are sold out for a long period.

An A320 can carry 186 passengers, https://www.seatguru.com/airlines/EasyJ ... 320_V2.php, optionally takes pallets containers, flies real far if required & offers strong commonality with the popular A321s. I don't see the A320 getting "eaten" by a A220-500 (production rate 4(?) a month).

I do see the A319 getting replaced over time, being replaced by A220s and the A220-500 being the more attractive option for operators already using A220s.
I think Airbus has opportunities to grow the A320 family a bit upwards, A321 demand seems to to support that.

I see a problem with that idea, and that is the 7m difference between the A320 and A321. Basically one can say that the A321 is already a double stretch. E.g. the A319 is just ~3.5m shorter. So if you design bigger wings for an A322 and A321, the same wing at the A320 is far too big & heavy. Sure you then could fly ~6000nm with that plane, but is there really a market for (very) long, thin routes with only ~150 passengers? Also how many of the usual A320 customers would be willing to pay the extra price for the new wing that is useless to them and might even result in higher airport fees, as Airbus will probably need wings > 36m span? Probably nobody, most customers would change to the A225. Thus there would be no need for a re-winged A320.

Still a new wing program is very costly, AB once stated that the wing for an A322 will cost them 2-3 billion Euros. Thus, I assume they would still consider as many models as possible, i.e. the usual triple, which would then result in A321/322/323. Problematic is then only the particular length of each fuselage. The A321 certainly will remain at 44.5m. Upper limit for the A323 might be around the B753's 54m. Let's say ~56m for a few rows extra, then an A322 could sit nicely in the middle around 50m.

So in the end the A225 really could take over the position of the A320. Only drawback of the whole idea would be the already spent money for the A321XLR and its old wing design. If there would be a new A321 with similar range and new wings, the investment into the XLR model was kind of wasted. The alternative would be A322/323 and even A324. That model however, would be really to big for single aisle. Thus, from that point of view, maybe AB should leave SA as it is and spend the money for new wings into a shorter subfamily of the A330. Even Boeing reconsidered their point of view and now think that MoM needs cargo capabilities, which needs wide-bodys. Well let's wait and see. I guess after Boeing's decision, we will also hear sth from Airbus.

regards A.

VV wrote:

Do you have more information on the 252t MTOW A330neo?

OT: The A339 is currently being offered at an intermediate 247T MTOW. Presumably, Airbus and the certification agencies have agreed on this tentative, increased safe figure while the A339 MTOW test campaign to 251T is still ongoing.

https://www.flightglobal.com/air-transp ... 96.article

Sorry I know this is OT, but what sort of real world range could be expected from a 247t/251t A339?

Devilfish wrote:

VV wrote:

Do you have more information on the 252t MTOW A330neo?

OT: The A339 is currently being offered at an intermediate 247T MTOW. Presumably, Airbus and the certification agencies have agreed on this tentative, increased safe figure while the A339 MTOW test campaign to 251T is still ongoing.

https://www.flightglobal.com/air-transp ... 96.article

Armodeen wrote:

Sorry I know this is OT, but what sort of real world range could be expected from a 247t/251t A339?
...

The range is too long for an aircraft of that size.

TObound wrote:

744SPX wrote:

Offering the 225 now could help take pressure off the 320 production line. Might be a good move to do it sooner (as in now) rather than later. Plus I don't see how it would kill the 320 as, it still carries somewhat more pax and has significantly more range. Could also draw off people who are only choosing the Max because of the long wait for 320 production slots.

The 220 is selling right now. That's the thing. They don't even need the 225. The 220 backlog at current ramp predictions has a 4 year backlog. And that's before DL has taken 223s. Before B6 and AF and have taken a single aircraft. And before Air Canada has taken their second 223. Air Baltic hasn't even taken half their 223 orders. Right now, DL, B6, AF and AC alone hold enough options and purchase rights to sell out the production line through 2025. And they are all but guaranteed to do that.

This is why there's no rush on the 225. Airbus has a solid 3 years to even make a decision. They can sort out ownership issues, optimize the production process, work on getting the price down and make PIPs which improve efficiency and boost range-payload.

Eventually if/when they pull the trigger on the 225, they'll be able to deliver in 2 years. It will be a very fast turn from the announcement to EIS. Paris airshow years are 2021 and 2023. The latter sounds great to have EIS in Summer 2025.

I think you can add UA to that list as well. A combination of A220-300/500 would be a perfect replacement for the A319/20’s and 737-7/8’s. The writing is on the wall with regards to that A350 order so why not purchase an aircraft you actually need. Look at all of the EWR Caribbean, Central and South America flights that would benefit from the A220.

EWR-BON,SJO,PLS,SXM,SAL,BOG,MEX,MBJ,STT,SKB,BQN,UVF,CZM,LIR,NAS,etc

I cannot see Airbus building what would be the BCS5, for these reasons:

1. A BCS5 It would cannibalize the A20N's sales...when Airbus could simply open up another FAL, possibly at YMX after CRJ production ends later this year.
2. I can't see Pratt & Whitney being interested in developing the engine power for it. The A20N has 27,000 lbs of thrust standard (which enables hot & high and short-runway operations previously restricted to the A319). Would P&W want to develop a PW1527G engine, and can it be done with an engine with 8 inches less diameter than the PW1127G? (Keep in mind that the PW1135G-JM for the A21N hasn't yet received an order - and that's really pushing that range.)
3. While the BCS3 is about 6 metric tons lighter than the A19N, it also has 400 nmi less range. The A20N's range is about 3500 nmi. The BCS5 would have about 3100 nmi range, less than the A320 with sharklets.

I really see 1 and 2 as more significant...cannibalizing A320 sales and limitations on the PW1500G.

Devilfish wrote:

VV wrote:

Do you have more information on the 252t MTOW A330neo?

OT: The A339 is currently being offered at an intermediate 247T MTOW. Presumably, Airbus and the certification agencies have agreed on this tentative, increased safe figure while the A339 MTOW test campaign to 251T is still ongoing.

https://www.flightglobal.com/air-transp ... 96.article

WV920 and 921 with 251t MTOW already in latest Airbus acaps April 2020
https://www.airbus.com/aircraft/support ... stics.html

aemoreira1981 wrote:

I cannot see Airbus building what would be the BCS5, for these reasons:

1. A BCS5 It would cannibalize the A20N's sales...when Airbus could simply open up another FAL, possibly at YMX after CRJ production ends later this year.
2. I can't see Pratt & Whitney being interested in developing the engine power for it. The A20N has 27,000 lbs of thrust standard (which enables hot & high and short-runway operations previously restricted to the A319). Would P&W want to develop a PW1527G engine, and can it be done with an engine with 8 inches less diameter than the PW1127G? (Keep in mind that the PW1135G-JM for the A21N hasn't yet received an order - and that's really pushing that range.)
3. While the BCS3 is about 6 metric tons lighter than the A19N, it also has 400 nmi less range. The A20N's range is about 3500 nmi. The BCS5 would have about 3100 nmi range, less than the A320 with sharklets.

I really see 1 and 2 as more significant...cannibalizing A320 sales and limitations on the PW1500G.

Pratt has already developed a thrust bump. The A225 wouldn't require 27k of thrust. Same wing area and less weight.

3100nm us enough West coast to Hawaii with winter (peak season) load restrictions. 2950nm is US Tcon. This makes the A225 a *perfect* A320CEO replacement.

The A320NEO will shift production to the A321. The engine is oversized (not as efficient) for the A320 and as noted, it is a heavy wing.

I think the A225 will happen, just not for years.

Lightsaber

Considering the fact Airbus decided that Airbus Canada has to finance itself (auto-financing) from February 2020 onward means that any future development of the A220 can only happen when the joint-venture between Airbus and the goverment of Québec starts to make money.

It simply means that it may never happen.

Read the article (click here).

“The new version of the joint venture has the capacity to borrow up to US $ 1.5 billion (C $ 2 billion) in the markets, enough to finance the investments required for the A220 to reach cruising speed. The program could lose money until 2025, according to Airbus.

“From now on, the joint venture will finance everything,” Airbus chief financial officer Dominik Asam told analysts last week.”

VV wrote:

Considering the fact Airbus decided that Airbus Canada has to finance itself (auto-financing) from February 2020 onward means that any future development of the A220 can only happen when the joint-venture between Airbus and the goverment of Québec starts to make money.

It simply means that it may never happen.

Read the article (click here).

“The new version of the joint venture has the capacity to borrow up to US $ 1.5 billion (C $ 2 billion) in the markets, enough to finance the investments required for the A220 to reach cruising speed. The program could lose money until 2025, according to Airbus.

“From now on, the joint venture will finance everything,” Airbus chief financial officer Dominik Asam told analysts last week.”

I just want to add a quote from the above mentioned press article.

Dominik Asam noted that Airbus could always choose to absorb the losses of the A220 with its cash. But whether the company draws from its coffers or chooses to go into debt for the joint venture, the accounting elements of the A220 will appear in Airbus' financial statements and balance sheet, he said.

Considering the situation this year and in the next three years, I think it is very unlikely Airbus will use its own cash to fund Airbus Canada.

VV wrote:

VV wrote:

“The new version of the joint venture has the capacity to borrow up to US $ 1.5 billion (C $ 2 billion) in the markets, enough to finance the investments required for the A220 to reach cruising speed. The program could lose money until 2025, according to Airbus.

“From now on, the joint venture will finance everything,” Airbus chief financial officer Dominik Asam told analysts last week.”

I just want to add a quote from the above mentioned press article.

Dominik Asam noted that Airbus could always choose to absorb the losses of the A220 with its cash. But whether the company draws from its coffers or chooses to go into debt for the joint venture, the accounting elements of the A220 will appear in Airbus' financial statements and balance sheet, he said.

Considering the situation this year and in the next three years, I think it is very unlikely Airbus will use its own cash to fund Airbus Canada.

That's a pretty broad statement. I think it's pretty likely Airbus will use its own cash (if needed) to keep Airbus Canada afloat and to continue filling the orders it currently has. The project is still worthy of investment, and now that it has been given the name Airbus Canada, prestige and politics are a part of the picture.

That said, I think it's pretty unlikely Airbus would use its own cash to start cutting metal for the A220-500 any time soon. I think they'd need a frank assessment of cost vs risk vs sales potential and I think that won't be possible till we're largely past the impact of covid.

Revelation wrote:

....
That's a pretty broad statement. I think it's pretty likely Airbus will use its own cash (if needed) to keep Airbus Canada afloat and to continue filling the orders it currently has. The project is still worthy of investment, and now that it has been given the name Airbus Canada, prestige and politics are a part of the picture.

That said, I think it's pretty unlikely Airbus would use its own cash to start cutting metal for the A220-500 any time soon. I think they'd need a frank assessment of cost vs risk vs sales potential and I think that won't be possible till we're largely past the impact of covid.

Your statement implies that you think Airbus really wants to make a lot of A220.
What if it is not the case or it is not the case any more?

Airbus executive already stated in February 2020 that the joint venture Airbus Canada will likely lose money until 2025 or so. With the current situation, I sincerely think the endeavor will be losing money until 2026 or even 2027.

Will Airbus throw its own cash into an endeavor they did not even start when the mother company is burning cash?
I have a lot of doubt about it.

Will Airbus throw its own cash into an endeavor they did not even start when the mother company is burning cash?
I have a lot of doubt about it.

In fact will they be allowed to fund non French projects under the Government support package terms?

fcogafa wrote:

Will Airbus throw its own cash into an endeavor they did not even start when the mother company is burning cash?
I have a lot of doubt about it.

In fact will they be allowed to fund non French projects under the Government support package terms?

Most probably the government funding is for R&T, thus it is a national funding and must not be used for foreign project.

However, there are always workarounds to indirectly funnel government funding. I am not going to discuss about it here.

VV wrote:

Your statement implies that you think Airbus really wants to make a lot of A220.
What if it is not the case or it is not the case any more?

Airbus executive already stated in February 2020 that the joint venture Airbus Canada will likely lose money until 2025 or so. With the current situation, I sincerely think the endeavor will be losing money until 2026 or even 2027.

Will Airbus throw its own cash into an endeavor they did not even start when the mother company is burning cash?
I have a lot of doubt about it.

Airbus decided to apply the name "Airbus Canada" to the operation and chose to use its own resources to buy out the BBD share instead of finding another partner and/or selling off the whole thing. I'm pretty confident they are committed to at least producing the current backlog.

VV wrote:

Considering the fact Airbus decided that Airbus Canada has to finance itself (auto-financing) from February 2020 onward means that any future development of the A220 can only happen when the joint-venture between Airbus and the goverment of Québec starts to make money.

That Airbus Canada should be self-financing is merely an aspiration. Airbus SE can change its mind at any time; no change to legal structure is necessary. (Now, you can argue that the Europeans providing 'launch aid' will be less inclined to support job production outside of their own countries...)

I think it is important in this thread to not underestimate the A220 series and its more than 600 sales ...

MUCaviation76 wrote:

I think it is important in this thread to not underestimate the A220 series and its more than 600 sales ...

It's hard to strike a balance. It's great to find market acceptance but it is also important to make a profit. We know a lot of the early A220 sales were made when BBD was desperate to have blue chip customers like DL and B6 on the order books. I can imagine they and other customers (except Air Baltic which has the luxury of government ownership) are wanting deferrals. All this will make it hard for Airbus to turn the screws on the supply chain, which is something they said needed to be be doing. It may all be more challenging than anticipated.

MUCaviation76 wrote:

I think it is important in this thread to not underestimate the A220 series and its more than 600 sales ...

Exactly

A clean sheet aircraft with a bright future. The A320 series is now 30 years old. Still selling but there’s nothing wrong with look towards the future.

I think the investments Airbus makes in the A220 program and the CEO's public comments during the COVID-19 crisis tell a lot.

https://business.financialpost.com/tran ... -this-year

The suggestions Airbus doesn't want to make a lot of the A220, seem rubbish. Maybe someone has hard time accepting he saw it vvrong for years.

MIflyer12 wrote:

...
That Airbus Canada should be self-financing is merely an aspiration.
...

I don't know if it is the case.

keesje wrote:

I think the investments Airbus makes in the A220 program and the CEO's public comments during the COVID-19 crisis tell a lot.

https://business.financialpost.com/tran ... -this-year
....

It was an article dated from 20 February 2020 before the Covid-19 crisis.
If it was during the crisis then M Faury would have not been able to go to Mirabel.

Your statement is misleading if not outright wrong. I hope you do not do it on purpose.

The article is not complete. You need to read this one. It is in French but I give you the link with Google translate.

You need to read this one (click here).

The new version of the joint venture has the capacity to borrow up to US $ 1.5 billion (C $ 2 billion) in the markets, enough to finance the investments required for the A220 to reach cruising speed. The program could lose money until 2025, according to Airbus.
“From now on, the joint venture will finance everything,” Airbus chief financial officer Dominik Asam told analysts last week.

Two months after your article, Faury, April 29, middle of the COVID-19 crisis:

“I would see it more positively for us,” Faury said. “The A220 is well-suited to the post-coronavirus market…It is a very good plane and a very good program at the right point in time for Airbus.”

https://www.forbes.com/sites/marisagarc ... ronavirus/

keesje wrote:

Two months after your article, Faury, April 29, middle of the COVID-19 crisis:

“I would see it more positively for us,” Faury said. “The A220 is well-suited to the post-coronavirus market…It is a very good plane and a very good program at the right point in time for Airbus.”

https://www.forbes.com/sites/marisagarc ... ronavirus/

Well, he is paid to say what is good for his company. You can believe him or not. It all depends on you.

The fact is that in February 2020 when things were good and beautiful, Airbus stated that Airbus Canada will have to finance itself.
With the current crisis and Airbus' cash situation, I do not think Airbus would be willing or even be able to fund Airbus Canada.

There is absolutely no way Airbus would sacrifice European employment for Airbus Canada. (the A220 program).

Airbus has a 8-9 year A320/321 backlog. Even longer now. Creating some air by converting to A220s seems the least of concerns, now the 737 is on its knees. Few A319NEO sales lost to the A220-300. If European employment was the holy grail, there would be no assembly lines in Tianjin & Mobile.

keesje wrote:

Airbus has a 8-9 year A320/321 backlog. Even longer now. Creating some air by converting to A220s seems the least of concerns, now the 737 is on its knees. Few A319NEO sales lost to the A220-300. If European employment was the holy grail, there would be no assembly lines in Tianjin & Mobile.

I simply don’t see Airbus having the financial resources to launch a new passenger derivative. Dropping production rates and order deferrals are destroying cashflow. Investing in a plane to compete with existing products in the Airbus portfolio would likely be an unwise use of money given that Airbus is looking at massive layoffs.

On paper, the estimated labor force of 35,000 people involved in production, and associated engineers and support, at Airbus would fall by the equivalent of some 14,000 full-time posts with the 40% underlying reduction, the sources said.

One industry source said the output trajectory pointed to the equivalent of 15-20,000 job cuts, depending on the pace of recovery and extent to which Airbus wants to preserve skills.

https://www.reuters.com/article/us-airb ... SKBN23A29F

The A220 isn’t earning money. Airbus has to figure out how to staff and make money with its multiple dispersed final assembly lines For the A320 running at reduced rate. An A220-500 competing with the A320 doesn’t make much sense now.

JFKalumni wrote:

TObound wrote:

744SPX wrote:

Offering the 225 now could help take pressure off the 320 production line. Might be a good move to do it sooner (as in now) rather than later. Plus I don't see how it would kill the 320 as, it still carries somewhat more pax and has significantly more range. Could also draw off people who are only choosing the Max because of the long wait for 320 production slots.

The 220 is selling right now. That's the thing. They don't even need the 225. The 220 backlog at current ramp predictions has a 4 year backlog. And that's before DL has taken 223s. Before B6 and AF and have taken a single aircraft. And before Air Canada has taken their second 223. Air Baltic hasn't even taken half their 223 orders. Right now, DL, B6, AF and AC alone hold enough options and purchase rights to sell out the production line through 2025. And they are all but guaranteed to do that.

This is why there's no rush on the 225. Airbus has a solid 3 years to even make a decision. They can sort out ownership issues, optimize the production process, work on getting the price down and make PIPs which improve efficiency and boost range-payload.

Eventually if/when they pull the trigger on the 225, they'll be able to deliver in 2 years. It will be a very fast turn from the announcement to EIS. Paris airshow years are 2021 and 2023. The latter sounds great to have EIS in Summer 2025.

I think you can add UA to that list as well. A combination of A220-300/500 would be a perfect replacement for the A319/20’s and 737-7/8’s. The writing is on the wall with regards to that A350 order so why not purchase an aircraft you actually need. Look at all of the EWR Caribbean, Central and South America flights that would benefit from the A220.

EWR-BON,SJO,PLS,SXM,SAL,BOG,MEX,MBJ,STT,SKB,BQN,UVF,CZM,LIR,NAS,etc

Firstly, UA's A350 order is canned and replaced by the A321 XLR (something which Boeing does not have an answer for).

Having said this, as of now, you can for get UA ordering the A220 because it does not see, for any reason, sense in ordering Airbus metal. As above, it ordered the A321XLR because 1st it could use this as leverage to get out of an A350 order which it does not want and 2nd because it is a profile of aircraft which it needs but that has no equivalent at Boeing.

The issue with the A220 is not performance. It is purely cash. It is not making money and does not look like making money any time soon even though it has a backlog of over 600 orders. From those, I would say only BT's one (and maybe the LH group) are potentially profitable ones. The others were from BBD's time where it was desperate to place it into the market so heavily under priced. Someone might mention that Boeing does it/ did it too but this does not help filling Airbus' coffers.

With the actual COVID19 scenario and further forecasts, the order is for orders to be deferred so this does not helps too even though aircrafts are churned out of production line.

I do not think, henceforth that we will see a UA order for the A220-100/300 (let alone the A220-500) neither see Airbus going for a project (A220-500) where, on the outset, it will not own all the profits on an environment where it simple does not have orders for it.

When/if Airbus buys the whole program outright, we will see - but, again - then I would expect them to review their whole portfolio and probably come with a product that unifies the A220 and A320 families in one to provide commonality. When?? Who knows...

I think companies that were recently boasting free cash flow, cost reductions, buy backs and certification efficiency with a 3 month horizon are now confronted.

A220 operators like JetBlue, Baltic and Delta clearly indicate the A220 is the right size post Covid-19. If a -500 can maximize profit/slot for Airbus why not? Recent MTOW bumps indicate the modifications, investments and risks might not be dramatic. A business case might close comfortably, if the market asks for it. That might very well be the case (AF, DL).

Tons of MD80s, F100s , A319s, 737-700s, 738s, A320s , 717s, 146s, E190s to be replaced this decade. Airlines aren't stumbling over each other to get new 737s, and Airbus is probably not as short sighted to miss the bigger picture.


keesje/Airbus

Boeing probably had a convincing storyline too, as to why they just couldn't close the business case on taking over the CSeries program a few years back. Maybe some assumptions were wishfull thinking, while others were dismissed as risk. Resulting in an epic strategic mistake.

Oh dear. Some are so wedded to their prejudices that even a global pandemic doesn't modify their rose colored vision for the A220 program. It has a (maybe) 600 unit backlog, but as many unheard posters have already said, IT LOSES MONEY. Please don't insult us with the "we'll make it up in volume" canard. Airlines aren't stumbling over themselves to get new anything. There is virtually no chance Airbus will be able to squeeze costs making production more scalable, or out of the subs with fanciful Powerpoint slides and now, especially now cash flow is important. BBD made a nice plane but it's a financial loser. But lets throw money at a stretch that will compete with of one our existing products (A20N) and is incompatible with our cash cow (A21N) which by the way we're having manufacturing problems with right now as well. Better hope that when you pitch it that you do it in a conference room on the ground floor so the fall doesn't kill you when they throw you out the window.

Maybe if you are on a 2 year horizon and see any investment as losing free cash flow, you're not going to be succesfull in this industry.

Maybe if you like to use strawman arguments you can have a more successful career in say, politics than this industry.

What's the BCS production rate these days? How long is it going to take to work off that backlog? How much MONEY will they lose on that backlog? Then now take more money (likely directly or indirectly from the taxpayers) and invest in an incompatible cannibal to their existing line. And where are they built? Is it in Toulouse or Hamburg?

Remember, make sure the conference room is on the ground floor.

Bricktop wrote:

It has a (maybe) 600 unit backlog, but as many unheard posters have already said, IT LOSES MONEY... ...There is virtually no chance Airbus will be able to squeeze costs making production more scalable, or out of the subs with fanciful Powerpoint slides and now, especially now cash flow is important. BBD made a nice plane but it's a financial loser...

Not too long ago, Airbus had a comfortable 50.01% controling stake in the A220 program. At that point, Airbus totally controlled sales - thus ensurring no A220 sales would ever be at the expense of A319/A320 sales. So really, no need for Airbus to increase its controlling stake in the A220 program, right?

At some point, Bombardier indicated it was not willing (or able to) to fulfill its remaining A220 program financial commitments. To start off, let's agree that Bombardier was already in a very weak bargaining position versus Airbus. It now just got worst big time!!!

Still, Airbus somehow assessed it is was worth it to pay US$591M to increase its controling stake from 50.01% to 75%!! (Just last February)

For such a money losing program (with no hopes of ever cutting unit costs to a profitable level), I find this transaction pretty expensive, isn't it?

ExMilitaryEng wrote:

At some point, Bombardier indicated it was not willing (or able to) to fulfill its remaining A220 program financial commitments. To start off, let's agree that Bombardier was already in a very weak bargaining position versus Airbus. It now just got worst big time!!!

Still, Airbus somehow assessed it is was worth it to pay US$591M to increase its controling stake from 50.01% to 75%!! (Just last February)

For such a money losing program (with no hopes of ever cutting unit costs to a profitable level), I find this transaction pretty expensive, isn't it?

I appreciate your post and definitely don't want to put words in your mouth, but it seems you're suggesting Airbus's motivation for A220 are mainly fiscal, and I think it's now a lot more complicated than that.

I think they may have had one set of expectations when they initially bought in at 50.01% and BBD was going to fund most of the ramp up. Since that point in time we had the Boeing WTO action and DL's response which brought them closer to Airbus. Then we had BBD's decision to exit the program without funding the ramp up, then we had Airbus's decision to buy the 25% stake (and somehow IQ was gifted an additional slice at the same time), then we had CV19 come along and change both market demand and supply chain health. A lot of things have changed.

As above I think Airbus's interest now has a lot more aspects to it than it did initially. Now we see it has elements of world politics (WTO), Canadian politics (Airbus planting the flag in Canada, IQ's involvement, AC's order, concerns over jobs, etc), customer politics (DL now more closely aligned with Airbus than ever, same for B6, AC, etc) and company politics (A220 vs A320 positioning, CA vs EU jobs, capturing emerging markets like Moxy, keeping pressure on Boeing, etc).

And yes, it is now a money losing program, and likely to lose more than projected because of CV19's impact on customer and supply chain health. Setbacks early in a program have big knock on effects. See A380, B787, etc.

Bottom line to me is Airbus may be both more tightly bound to the A220's future and be more likely to lose money on the enterprise than ever.

PS: https://www.reuters.com/article/us-airb ... SKBN20E2Z6 says Airbus was on track to put in as much as EUR 1B into A220 this year, not just to buy out BBD but presumably to deal with BBD's under investment in the ramp up.

The way I see it, the CSerie programm is 3 things in 1 :
- A plane design
- A factory line with it's supply chain
- A commercial offering for airlines

Bombardier succeded in designing both CS100 and CS300 as very efficient aircraft when compared to smaller the versions of A320 and 737. But Bombardier was also struggeling to ramp up production and win sales campaign and therefor was financialy at risk.

With Airbus "taking over" and integrating A220 to their fleet, previous limitation will be lifted:
- Airbus can invest more and continue to improve design with MTOW bumps and a futur stretch. The A220 could very weel be Airbus short term "replacement" for the lower end of the A320 family.
- Airbus can invest more and complete the industrialization to ramp up production. Airbus has experience in large scalle production from A320 and can improve the existing line or even open new ones. They can also negociate larger deals with suppliers.
- Airbus will use A220 in sales campaign to win market shares first. In a world where it was virtually 60%A320NEO / 40%737MAX, a 10% A220 impacting equally A320 and 737 will give 55%A320 / 35% 737 and 10% A220. With lower pricing A220 will free some A320 slots to increase A321 sales ration while trying to impose A220 into the market. If they succed, Airbus can concentrate 70-80% of the narrowbody market until Boeing passes the CDR of a completly new frame.

Even if the Covid is going to slow all that down, it is still a great strategy on paper since cash from the recovery plans will help and the MAX is still not cleared to fly.

keesje wrote:

If a -500 can maximize profit/slot for Airbus why not?.

I agree that if a -500 maximizes profit/slot, then it makes sense for Airbus to build it. Will it?

Right now the A220 is losing money and Airbus cut rate on the A320 due to lack of demand for slots.

An A220-500 development program would distract from efforts to make the A220 profitable and would steal orders from the A320, which could depress A320 rates. Does that make sense when Airbus is struggling to make payroll and is looking at significant layoffs?

ExMilitaryEng wrote:

Bricktop wrote:

It has a (maybe) 600 unit backlog, but as many unheard posters have already said, IT LOSES MONEY... ...There is virtually no chance Airbus will be able to squeeze costs making production more scalable, or out of the subs with fanciful Powerpoint slides and now, especially now cash flow is important. BBD made a nice plane but it's a financial loser...

Not too long ago, Airbus had a comfortable 50.01% controling stake in the A220 program. At that point, Airbus totally controlled sales - thus ensurring no A220 sales would ever be at the expense of A319/A320 sales. So really, no need for Airbus to increase its controlling stake in the A220 program, right?

At some point, Bombardier indicated it was not willing (or able to) to fulfill its remaining A220 program financial commitments. To start off, let's agree that Bombardier was already in a very weak bargaining position versus Airbus. It now just got worst big time!!!

Still, Airbus somehow assessed it is was worth it to pay US$591M to increase its controling stake from 50.01% to 75%!! (Just last February)
For such a money losing program (with no hopes of ever cutting unit costs to a profitable level), I find this transaction pretty expensive, isn't it?

The world has changed since February. Airbus has aggressive targets to make the A220 profitable. Those have all been upended. The A220 certainly has the possibility to become profitable. It now will take longer.

Airbus still has to address A220 reliability issues which are causing concerns

At the same time, SAS needs to make a decision on how to equip this platform. As Gustafson says: “As it comes to aircraft availability, it is more tricky. Not just the availability of the aircraft but also the reliability. Those technologies that are available – the Airbus A220 and the Embraer-option – both still have engine issues to solve before we feel they can operate with the robustness we anticipate and expect.”

https://airinsight.com/sas-demands-bett ... 220-or-e2/

In Canada and Europe, the plane is now under certain restrictions.
Above 29,000 feet, it can now be flown only at 94 percent of its power.
Moreover, pilots can't fly it above 35,000 feet if there's a danger of frost. It seems that the anti-freeze system may overtax the engines, set off alarms, and force the pilots to make an emergency landing.

https://www.inc.com/chris-matyszczyk/de ... ngers.html

airBaltic operates a fleet of 20 Airbus A220-300 aircraft. In the first two years of the aircraft’s operation, the airline replaced 50 engines. Having just 13 aircraft in that period means that almost every engine was replaced twice on average.

https://simpleflying.com/airbaltic-airb ... ne-change/

The problems aren’t insurmountable, but they will cost money to fix. Should Airbus invest in stretching the A220 or work with Pratt on fixing the A220?

Weatherwatcher1 wrote:

ExMilitaryEng wrote:

Bricktop wrote:

It has a (maybe) 600 unit backlog, but as many unheard posters have already said, IT LOSES MONEY... ...There is virtually no chance Airbus will be able to squeeze costs making production more scalable, or out of the subs with fanciful Powerpoint slides and now, especially now cash flow is important. BBD made a nice plane but it's a financial loser...

Not too long ago, Airbus had a comfortable 50.01% controling stake in the A220 program. At that point, Airbus totally controlled sales - thus ensurring no A220 sales would ever be at the expense of A319/A320 sales. So really, no need for Airbus to increase its controlling stake in the A220 program, right?

At some point, Bombardier indicated it was not willing (or able to) to fulfill its remaining A220 program financial commitments. To start off, let's agree that Bombardier was already in a very weak bargaining position versus Airbus. It now just got worst big time!!!

Still, Airbus somehow assessed it is was worth it to pay US$591M to increase its controling stake from 50.01% to 75%!! (Just last February)
For such a money losing program (with no hopes of ever cutting unit costs to a profitable level), I find this transaction pretty expensive, isn't it?

The world has changed since February. Airbus has aggressive targets to make the A220 profitable. Those have all been upended. The A220 certainly has the possibility to become profitable. It now will take longer.

Airbus still has to address A220 reliability issues which are causing concerns

At the same time, SAS needs to make a decision on how to equip this platform. As Gustafson says: “As it comes to aircraft availability, it is more tricky. Not just the availability of the aircraft but also the reliability. Those technologies that are available – the Airbus A220 and the Embraer-option – both still have engine issues to solve before we feel they can operate with the robustness we anticipate and expect.”

https://airinsight.com/sas-demands-bett ... 220-or-e2/

In Canada and Europe, the plane is now under certain restrictions.
Above 29,000 feet, it can now be flown only at 94 percent of its power.
Moreover, pilots can't fly it above 35,000 feet if there's a danger of frost. It seems that the anti-freeze system may overtax the engines, set off alarms, and force the pilots to make an emergency landing.

https://www.inc.com/chris-matyszczyk/de ... ngers.html

airBaltic operates a fleet of 20 Airbus A220-300 aircraft. In the first two years of the aircraft’s operation, the airline replaced 50 engines. Having just 13 aircraft in that period means that almost every engine was replaced twice on average.

https://simpleflying.com/airbaltic-airb ... ne-change/

The problems aren’t insurmountable, but they will cost money to fix. Should Airbus invest in stretching the A220 or work with Pratt on fixing the A220?

I think we have heard over the years many instances the strategies of

- "let's fix our current business first, before we do something new"
- "with the current backlog / market position, there is no need to invest even if airlines ask for it"

I think often those reasonable strategies were abused to reduce costs / investments, milk the portfolio, boast free cash flow, stock value and directly linked executive salaries.

We have seen that in the end you hit the wall. Because you drained the company & have no reserves for updating your portfolio / survive crisis.
At that time, the executives have retired & the Wall Street guys have left the room, loaded.
While the loyal, embedded, profit sharing executors lose their jobs.

A serious aerospace company has a 10-20 year planning horizon & isn't governed by today's stock price / market sentiments.

- You sail with the wind when possible, but put on the engine when required -

Unless you had to meet 3Q18 free cash flow expectations, so sold-leased back the engine to the equity fund.
Who used borrowed money, and pragmatically need 20% ROI for dividends / keep growing stock value

The A220 is like the 787. A really advanced aircraft that loses money for years until it will bring in a lot of return. Or that is the hope

Southwest Airlines has already indicated that it will be reexamining its fleet strategy after the MAX disaster and the proposed A220-500 would make complete sense from a CASM and range flexibility standpoint. What other choices are there for SWA outside of Boeing? The E2 has very little market interest and is now disassociated from Boeing. Sure, the A220-300 could be a great stop-gap, but the lower CASM on the A220-500 would make the fleet diversification strategy even more compelling for SWA's Board of Directors who are probably leery of departing from the single-fleet strategy. Gary Kelly has already indicated he was impressed with the A220 when they first conducted a review of the airplane a year or two ago.

So, if I am Gary Kelly I am already approaching Airbus and saying, "As a part of a much-needed fleet diversification strategy, I will entertain buying a large number of A220-300s initially, but only if Airbus commits to starting production of the A220-500 by XYZ date (with a big follow-on order of A220-500s)." How could Airbus turn down an opportunity to gain SWA (especially an all-Boeing customer) or another leading LCC as a customer? Obviously it would have to be a big-volume deal to cover incremental development costs - but I can't imagine there would be so many big changes in stretching the 300 to the 500 since Airbus/Bombardier already has experience stretching the 100 to the 300 (probably similar part commonality benefits). There are plenty of older 737NGs and A319/20s that can be replaced by more fuel efficient and flexible airplanes like the proposed A220-500. Clearly Air France agrees.

But of course, many of these arguments were more compelling pre-Corona virus when the airline industry landscape was very different and airlines were flush with cash for new orders. Only time will tell I guess........

Since the backlog/production constraint is lifted from the A32x program for now, the A225 is financially not wise for Airbus. Every A32x produced has an high profit margin. Every A22x has a negative margin. Financially, they have an negative incentive in developing the A225 for the coming 3-4 years which will compete with the A320.

When the production limitation of the A32x is costing Airbus orders the A225 will regain positive incentive to develop.

Unless we have an scenario where an customer like SWA orders 300 A225's, which seems highly unlikely with the current crisis.

keesje wrote:

I think we have heard over the years many instances the strategies of

- "let's fix our current business first, before we do something new"
- "with the current backlog / market position, there is no need to invest even if airlines ask for it"

I think often those reasonable strategies were abused to reduce costs / investments, milk the portfolio, boast free cash flow, stock value and directly linked executive salaries.

We have seen that in the end you hit the wall. Because you drained the company & have no reserves for updating your portfolio / survive crisis.
At that time, the executives have retired & the Wall Street guys have left the room, loaded.
While the loyal, embedded, profit sharing executors lose their jobs.

A serious aerospace company has a 10-20 year planning horizon & isn't governed by today's stock price / market sentiments.

- You sail with the wind when possible, but put on the engine when required -

Unless you had to meet 3Q18 free cash flow expectations, so sold-leased back the engine to the equity fund.
Who used borrowed money, and pragmatically need 20% ROI for dividends / keep growing stock value

Most of this may appropriate as a critique of Boeing, but is totally irrelevant as to Airbus. The reminder is just bland, insipid, dewy-eyed straight-from-Business 101 boilerplate with no basis in current reality.

The A22V may in the past have even been looked by BBD and Airbus. I would be very surprised if it hadn't. Virtually everyone here has been acknowledging A's leadership in the NB market. Dominance in fact, and the numbers show it. Look at the backlog and it's silly not to. Heck, not only was the A2XN selling like hotcakes, the only competitor had its offering grounded! High fives all around. But that doesn't allow serious people to ignore real problems that Airbus has in actually getting those planes in customers hands, and they need to get planes and not pie in the sky. Having orders is great: There's no company without them, right BBD?. But as BBD found, even if you sell planes at an expected but "acceptable" loss to get that foot in the door, you need to actually build them and if that is more difficult/costly than originally thought, then it really isn't ???, profit. It's $$$, losses. And that's where Airbus is now with the A22X project. A22X "production line" is not like VW, it's like Aston Martin. Fulfilling the orders they ALREADY HAVE even at the most optimistic rate will take more than 6 years. Boosting that rate is going to cost serious capital, but Airbus can certainly do that where BBD couldn't. Maybe they will also pull a Boeing (heavens forfend!) and stick it to the suppliers.

So now let's have a look at Airbus's market dominant home-grown NB line. It consists of 2 products in reality, the A20N and the nonpareil A21N. Multiple thousands of real orders for each, sold out for years. But Airbus acknowledges there have been production difficulties in getting them out the door. Insurmountable? Of course not, but all the talk about going to rate 67 or whatever is right out the window isn't it? While I know that a focus on cash flow is scoffed at by many here, in the real world it matters. For that, deliveries have to happen, or there may be contract penalties tacked on too.

Now where does the A22V fit in to the product line? Oh wait, it nudges into the A20N's lane. So what's an Airbus exec to do? Imagine this pitch meeting.

Q: "You know the A220 is difficult to scale and expensive to build, right?" A: "I am a visionary. Practical considerations like that are below my pay grade.".
Q: "Is the A22V compatible with the 5-figure number of A320 family we have sold?" A: "No it isn't."
Q: "So now we're selling two incompatible products to our customers?" A: "Yes"
Q: "The -100 and -300 fit into niches below the A20N perfectly, but a -500 eats into it, correct?" A: "Err, it might"
Q: "So you want to make the A21N into a vitrual orphan?" A: "Not at all. Let me show you my Powerpoints of the A22N"

Sounds of breaking window on the 9th floor. (I did warn you )

Ps.: the number 1 prio should be getting reliability up the bar
Number 2 getting production cost down and production rate up
Number 3 getting more sales, which support investments in the previous subject
After all this they can put the development of the A225 on the agenda...

Bricktop wrote:

keesje wrote:

I think we have heard over the years many instances the strategies of

- "let's fix our current business first, before we do something new"
- "with the current backlog / market position, there is no need to invest even if airlines ask for it"

I think often those reasonable strategies were abused to reduce costs / investments, milk the portfolio, boast free cash flow, stock value and directly linked executive salaries.

We have seen that in the end you hit the wall. Because you drained the company & have no reserves for updating your portfolio / survive crisis.
At that time, the executives have retired & the Wall Street guys have left the room, loaded.
While the loyal, embedded, profit sharing executors lose their jobs.

A serious aerospace company has a 10-20 year planning horizon & isn't governed by today's stock price / market sentiments.

- You sail with the wind when possible, but put on the engine when required -

Unless you had to meet 3Q18 free cash flow expectations, so sold-leased back the engine to the equity fund.
Who used borrowed money, and pragmatically need 20% ROI for dividends / keep growing stock value

Most of this may appropriate as a critique of Boeing, but is totally irrelevant as to Airbus. The reminder is just bland, insipid, dewy-eyed straight-from-Business 101 boilerplate with no basis in current reality.

The A22V may in the past have even been looked by BBD and Airbus. I would be very surprised if it hadn't. Virtually everyone here has been acknowledging A's leadership in the NB market. Dominance in fact, and the numbers show it. Look at the backlog and it's silly not to. Heck, not only was the A2XN selling like hotcakes, the only competitor had its offering grounded! High fives all around. But that doesn't allow serious people to ignore real problems that Airbus has in actually getting those planes in customers hands, and they need to get planes and not pie in the sky. Having orders is great: There's no company without them, right BBD?. But as BBD found, even if you sell planes at an expected but "acceptable" loss to get that foot in the door, you need to actually build them and if that is more difficult/costly than originally thought, then it really isn't ???, profit. It's $$$, losses. And that's where Airbus is now with the A22X project. A22X "production line" is not like VW, it's like Aston Martin. Fulfilling the orders they ALREADY HAVE even at the most optimistic rate will take more than 6 years. Boosting that rate is going to cost serious capital, but Airbus can certainly do that where BBD couldn't. Maybe they will also pull a Boeing (heavens forfend!) and stick it to the suppliers.

So now let's have a look at Airbus's market dominant home-grown NB line. It consists of 2 products in reality, the A20N and the nonpareil A21N. Multiple thousands of real orders for each, sold out for years. But Airbus acknowledges there have been production difficulties in getting them out the door. Insurmountable? Of course not, but all the talk about going to rate 67 or whatever is right out the window isn't it? While I know that a focus on cash flow is scoffed at by many here, in the real world it matters. For that, deliveries have to happen, or there may be contract penalties tacked on too.

Now where does the A22V fit in to the product line? Oh wait, it nudges into the A20N's lane. So what's an Airbus exec to do? Imagine this pitch meeting.

Q: "You know the A220 is difficult to scale and expensive to build, right?" A: "I am a visionary. Practical considerations like that are below my pay grade.".
Q: "Is the A22V compatible with the 5-figure number of A320 family we have sold?" A: "No it isn't."
Q: "So now we're selling two incompatible products to our customers?" A: "Yes"
Q: "The -100 and -300 fit into niches below the A20N perfectly, but a -500 eats into it, correct?" A: "Err, it might"
Q: "So you want to make the A21N into a vitrual orphan?" A: "Not at all. Let me show you my Powerpoints of the A22N"

Sounds of breaking window on the 9th floor. (I did warn you )

Stop introducing reality into this fanciful discussion.

Bricktop wrote:

keesje wrote:

I think we have heard over the years many instances the strategies of

- "let's fix our current business first, before we do something new"
- "with the current backlog / market position, there is no need to invest even if airlines ask for it"

I think often those reasonable strategies were abused to reduce costs / investments, milk the portfolio, boast free cash flow, stock value and directly linked executive salaries.

We have seen that in the end you hit the wall. Because you drained the company & have no reserves for updating your portfolio / survive crisis.
At that time, the executives have retired & the Wall Street guys have left the room, loaded.
While the loyal, embedded, profit sharing executors lose their jobs.

A serious aerospace company has a 10-20 year planning horizon & isn't governed by today's stock price / market sentiments.

- You sail with the wind when possible, but put on the engine when required -

Unless you had to meet 3Q18 free cash flow expectations, so sold-leased back the engine to the equity fund.
Who used borrowed money, and pragmatically need 20% ROI for dividends / keep growing stock value

Most of this may appropriate as a critique of Boeing, but is totally irrelevant as to Airbus. The reminder is just bland, insipid, dewy-eyed straight-from-Business 101 boilerplate with no basis in current reality.

The A22V may in the past have even been looked by BBD and Airbus. I would be very surprised if it hadn't. Virtually everyone here has been acknowledging A's leadership in the NB market. Dominance in fact, and the numbers show it. Look at the backlog and it's silly not to. Heck, not only was the A2XN selling like hotcakes, the only competitor had its offering grounded! High fives all around. But that doesn't allow serious people to ignore real problems that Airbus has in actually getting those planes in customers hands, and they need to get planes and not pie in the sky. Having orders is great: There's no company without them, right BBD?. But as BBD found, even if you sell planes at an expected but "acceptable" loss to get that foot in the door, you need to actually build them and if that is more difficult/costly than originally thought, then it really isn't ???, profit. It's $$$, losses. And that's where Airbus is now with the A22X project. A22X "production line" is not like VW, it's like Aston Martin. Fulfilling the orders they ALREADY HAVE even at the most optimistic rate will take more than 6 years. Boosting that rate is going to cost serious capital, but Airbus can certainly do that where BBD couldn't. Maybe they will also pull a Boeing (heavens forfend!) and stick it to the suppliers.

So now let's have a look at Airbus's market dominant home-grown NB line. It consists of 2 products in reality, the A20N and the nonpareil A21N. Multiple thousands of real orders for each, sold out for years. But Airbus acknowledges there have been production difficulties in getting them out the door. Insurmountable? Of course not, but all the talk about going to rate 67 or whatever is right out the window isn't it? While I know that a focus on cash flow is scoffed at by many here, in the real world it matters. For that, deliveries have to happen, or there may be contract penalties tacked on too.

Now where does the A22V fit in to the product line? Oh wait, it nudges into the A20N's lane. So what's an Airbus exec to do? Imagine this pitch meeting.

Q: "You know the A220 is difficult to scale and expensive to build, right?" A: "I am a visionary. Practical considerations like that are below my pay grade.".
Q: "Is the A22V compatible with the 5-figure number of A320 family we have sold?" A: "No it isn't."
Q: "So now we're selling two incompatible products to our customers?" A: "Yes"
Q: "The -100 and -300 fit into niches below the A20N perfectly, but a -500 eats into it, correct?" A: "Err, it might"
Q: "So you want to make the A21N into a vitrual orphan?" A: "Not at all. Let me show you my Powerpoints of the A22N"

Sounds of breaking window on the 9th floor. (I did warn you )

I see all the reasons why Boeing didn't buy the CSeries program, which proved an epic mistake btw

The A220-500 could a real a A320 competitor, if you simply ignore the latter can carry 186 passengers, containers, fly far and is fully competible with 6000 A320/19/21s in the air and 6000 in the backlog. CS production rate is climbing to 4-5 a month, so a real threath here for the Airbus NEO program..