Airliners.net

VV wrote:

Well, they did/do not have intimate knowledge of the aircraft and they did not design it. Would you bet the farm on something you did not even design?

I am not so sure I would.

..... does beg the question as to who the daft bloke was at Airbus who decided to put the company name and reputation on said product....I thought Leahy retired.

PepeTheFrog wrote:

PepeTheFrog wrote:

Revelation wrote:

For instance, if Airbus can make $4B become available, does it make sense to spend it on buying out A220 versus spending it on building a super-FAL for A320 family using the A380 halls at TLS and/or financing a A322 stretch as a NMA entrant, and letting BBD's missteps play out a bit further?

Airbus might do both. Companies the size of Airbus have multiple investments running.

The A321 XLR line in TLS will become reality, and they will buy the remaining CSeries shares.

As predicted: https://www.airbus.com/newsroom/press-r ... louse.html

Step 1 announced, step 2 to come.

So the A380 line becomes an A321 line.

I predict step 2 is wait to buy more from bombardier.

Step 3 is further increase A220 production.

Step 4 is A225 with possible stepping stone of an A233ER variant.

Lightsaber

Getting a big pile of expensive R&D for "free" with he biggest string attached to this R&D is an aircraft that has the possibility to sell 1000+, probably 2000+ frames over its lifetime is not a bad deal at all. Even if at the end of the A220 in 15 years+ there is a loss of 2B for airbus, that is only a bit more than 100 million dollars a year for a lot of R&D, a new customer base and the elimination of a competitor.

I would make that deal every day.

FluidFlow wrote:

Getting a big pile of expensive R&D for "free" with he biggest string attached to this R&D is an aircraft that has the possibility to sell 1000+, probably 2000+ frames over its lifetime is not a bad deal at all. Even if at the end of the A220 in 15 years+ there is a loss of 2B for airbus, that is only a bit more than 100 million dollars a year for a lot of R&D, a new customer base and the elimination of a competitor.

I would make that deal every day.

Right, but the topic of this thread is not Airbus but BBD's participation in ACLP, and it is turning out BBD's offer to Airbus was at best ill-conceived and at worst disastrous.

Revelation wrote:

Right, but the topic of this thread is not Airbus but BBD's participation in ACLP, and it is turning out BBD's offer to Airbus was at best ill-conceived and at worst disastrous.

BBD needed to partially offload the program - it'd be completely dead by now if they tried to continue alone.
Their mistake* was in leaving themselves wholly on the hook for the further investment. It should have been structured such that additional investment would affect proportion of program owned (or similar).

*after a long, long list of mistakes that brought them to that point.

Revelation wrote:

FluidFlow wrote:

Getting a big pile of expensive R&D for "free" with he biggest string attached to this R&D is an aircraft that has the possibility to sell 1000+, probably 2000+ frames over its lifetime is not a bad deal at all. Even if at the end of the A220 in 15 years+ there is a loss of 2B for airbus, that is only a bit more than 100 million dollars a year for a lot of R&D, a new customer base and the elimination of a competitor.

I would make that deal every day.

Right, but the topic of this thread is not Airbus but BBD's participation in ACLP, and it is turning out BBD's offer to Airbus was at best ill-conceived and at worst disastrous.

All depends on what they wanted to accomplish, if my memory is accurate, this started after Boeing launched then lost their "dumping claim".

Revelation wrote:

FluidFlow wrote:

Getting a big pile of expensive R&D for "free" with he biggest string attached to this R&D is an aircraft that has the possibility to sell 1000+, probably 2000+ frames over its lifetime is not a bad deal at all. Even if at the end of the A220 in 15 years+ there is a loss of 2B for airbus, that is only a bit more than 100 million dollars a year for a lot of R&D, a new customer base and the elimination of a competitor.

I would make that deal every day.

Right, but the topic of this thread is not Airbus but BBD's participation in ACLP, and it is turning out BBD's offer to Airbus was at best ill-conceived and at worst disastrous.

Disastrous for BBD; miraculous for Airbus.

Was this bad choice (for BBD) the catalyst for BBD to fully divest its Commercial Aviation Branch (CSeries, then Dash8 and finally CRJ)?

lightsaber wrote:

PepeTheFrog wrote:

PepeTheFrog wrote:

Airbus might do both. Companies the size of Airbus have multiple investments running.

The A321 XLR line in TLS will become reality, and they will buy the remaining CSeries shares.

As predicted: https://www.airbus.com/newsroom/press-r ... louse.html

Step 1 announced, step 2 to come.

So the A380 line becomes an A321 line.

I predict step 2 is wait to buy more from bombardier.

Step 3 is further increase A220 production.

Step 4 is A225 with possible stepping stone of an A233ER variant.

Lightsaber

I think their previous prediction was that Airbus would pack up the A220 line and relocate it to TLS, despite a lot of the supply chain being in Montreal.

Amiga500 wrote:

Revelation wrote:

Right, but the topic of this thread is not Airbus but BBD's participation in ACLP, and it is turning out BBD's offer to Airbus was at best ill-conceived and at worst disastrous.

BBD needed to partially offload the program

Bombardier didn't need to offload the program. Bomardier just needed to issue a small amount more shares. The implications of this for the controlling family are considerable. They lose control of the family business but I would expect that the share price would counter-intuitively double in price if existing shareholders were diluted and they'd have no problems selling bonds at low interest rates for the rest.
Bombardier have many bonds issued at over 7% which is outrageously high. If I remember correctly once you get over 7% and bond duration is 10 years(checked my calculator) you are basically paying back an additional dollar for ever dollar you borrow.

Amiga500 wrote:

Revelation wrote:

Right, but the topic of this thread is not Airbus but BBD's participation in ACLP, and it is turning out BBD's offer to Airbus was at best ill-conceived and at worst disastrous.

BBD needed to partially offload the program - it'd be completely dead by now if they tried to continue alone.
Their mistake* was in leaving themselves wholly on the hook for the further investment. It should have been structured such that additional investment would affect proportion of program owned (or similar).

*after a long, long list of mistakes that brought them to that point.

Yes, but what is still weird to me is the article says the issue is the ramp up is costing more than planned, which suggests that BBD's plan did not expect them having to spend as much as they committed to spend?

I do agree that committing to spend without any value being conveyed back was a big mistake. It encourages Airbus to get every penny it can out of BBD since there is no reason not to, and since BBD gave board control to Airbus, BBD has no say in spending levels.

Revelation wrote:

Amiga500 wrote:

Revelation wrote:

Right, but the topic of this thread is not Airbus but BBD's participation in ACLP, and it is turning out BBD's offer to Airbus was at best ill-conceived and at worst disastrous.

BBD needed to partially offload the program - it'd be completely dead by now if they tried to continue alone.
Their mistake* was in leaving themselves wholly on the hook for the further investment. It should have been structured such that additional investment would affect proportion of program owned (or similar).

*after a long, long list of mistakes that brought them to that point.

Yes, but what is still weird to me is the article says the issue is the ramp up is costing more than planned, which suggests that BBD's plan did not expect them having to spend as much as they committed to spend?

I do agree that committing to spend without any value being conveyed back was a big mistake. It encourages Airbus to get every penny it can out of BBD since there is no reason not to, and since BBD gave board control to Airbus, BBD has no say in spending levels.

Fits the history of Bombardier constantly underestimating how much this project would cost.

I suspect they didn't think they'd be spending the full $350 million per year for 3 years. And I suspect they didn't think their rail business would get hit that hard at the same time.

Something to keep in mind about BBD is that they used their rail business as the anchor, the way that Boeing uses their defence business.

Ultimately, I think it's less the incompetence on the CSeries than on the rail side and the $1+ billion spent on the Global 7500 and the $1.4 billion spent on the now cancelled Learjet 85 all happening concurrently with the CSeries that cost them the program.

There's also the strategic mistakes. Trying to launch with the CS100 to fly under the Big Boys radar with a wing that big was stupid. They should have launched with the CS300 and then built the CS500 before the CS100. You come at the King, you best not miss.

TObound wrote:

Revelation wrote:

Amiga500 wrote:

BBD needed to partially offload the program - it'd be completely dead by now if they tried to continue alone.
Their mistake* was in leaving themselves wholly on the hook for the further investment. It should have been structured such that additional investment would affect proportion of program owned (or similar).

*after a long, long list of mistakes that brought them to that point.

Yes, but what is still weird to me is the article says the issue is the ramp up is costing more than planned, which suggests that BBD's plan did not expect them having to spend as much as they committed to spend?

I do agree that committing to spend without any value being conveyed back was a big mistake. It encourages Airbus to get every penny it can out of BBD since there is no reason not to, and since BBD gave board control to Airbus, BBD has no say in spending levels.

Fits the history of Bombardier constantly underestimating how much this project would cost.

I suspect they didn't think they'd be spending the full $350 million per year for 3 years. And I suspect they didn't think their rail business would get hit that hard at the same time.

Something to keep in mind about BBD is that they used their rail business as the anchor, the way that Boeing uses their defence business.

Ultimately, I think it's less the incompetence on the CSeries than on the rail side and the $1+ billion spent on the Global 7500 and the $1.4 billion spent on the now cancelled Learjet 85 all happening concurrently with the CSeries that cost them the program.

There's also the strategic mistakes. Trying to launch with the CS100 to fly under the Big Boys radar with a wing that big was stupid. They should have launched with the CS300 and then built the CS500 before the CS100. You come at the King, you best not miss.

Other management which would have come after share dilution would have addressed those strategic errors. The bombardier family are probably their own worst enemy.

Revelation wrote:

For what it is worth, https://www.ainonline.com/aviation-news ... 20-program describes the partnership deal in these terms:

Under the deal, which closed in July 2018, Bombardier agreed to fund cash shortfalls of up to $925 million over the course of three and a half years, and the partners' Class A shareholders would share the cost of any excess shortfall. The deal also allowed for Bombardier to force Airbus to take its entire stake in the program in 2026 or Airbus could oblige Bombardier to sell the stake.

I don't know where the 925 Mio $ come from.
I read Bombardier has to pay 350 Mio $ the first year.
The 350 Mio $ for year 2 + 3 combined can be later sold to Airbus including 2% interest/ year. There shouldn't be a problem to finance this.
"any excess shortfall during such periods to be shared proportionately amongst Class A shareholders."
https://www.bombardier.com/en/media/new ... ercom.html

So 700 Mio $ surely has to come from Bombardier. Everything beyond Bombardier has to finance it's share. But I'm not sure what are class A shareholder.

If Airbus wants to invest 3 billion $ in ramp up, Bombardier may get problems to finance it.
Bombardier has the right to sell it's stake at market value. What's that supposed to mean? That if a Chinese bidder is willing to pay 2 billion $ for Bombardier's stake Airbus can choose to buy it for the same rate or leave it for the Chinese bidder?

Sokes wrote:

I don't know where the 925 Mio $ come from.
I read Bombardier has to pay 350 Mio $ the first year.
The 350 Mio $ for year 2 + 3 combined can be later sold to Airbus including 2% interest/ year. There shouldn't be a problem to finance this.
"any excess shortfall during such periods to be shared proportionately amongst Class A shareholders."
https://www.bombardier.com/en/media/new ... ercom.html

So 700 Mio $ surely has to come from Bombardier. Everything beyond Bombardier has to finance it's share. But I'm not sure what are class A shareholder.

If Airbus wants to invest 3 billion $ in ramp up, Bombardier may get problems to finance it.
Bombardier has the right to sell it's stake at market value. What's that supposed to mean? That if a Chinese bidder is willing to pay 2 billion $ for Bombardier's stake Airbus can choose to buy it for the same rate or leave it for the Chinese bidder?

Agree, I don't know where the ainonline figures came from, I'm ok using the info you quote.

Since the deal closed July 2018 then we can presume the year 1 obligation is gone, then one would think the year 2+3 obligation would not tax BBD too badly.

As you suggest, then, it could be that the cost of the ramp up is higher than expected (maybe due to unplanned MOB expense?) and is driving all the figures into the red.

leghorn wrote:

Amiga500 wrote:

Revelation wrote:

Right, but the topic of this thread is not Airbus but BBD's participation in ACLP, and it is turning out BBD's offer to Airbus was at best ill-conceived and at worst disastrous.

BBD needed to partially offload the program

Bombardier didn't need to offload the program. Bomardier just needed to issue a small amount more shares.

I don't think they'd have got enough takers at sufficient price at that time.

BBD probably needed ~$2-3B USD at that point to give airlines enough confidence in long term existence of support.

BBD's board made many, many mistakes - but the Lear85 was probably the mistake that sunk the company. It probably cost in excess of $2B USD. We know of the write off - which was probably minimized to avoid bruising Pierre's ego too much, but that doesn't include all the other costs incurred to that point.

leghorn wrote:

The implications of this for the controlling family are considerable. They lose control of the family business but I would expect that the share price would counter-intuitively double in price if existing shareholders were diluted and they'd have no problems selling bonds at low interest rates for the rest.

I do understand where you are coming from, but I really doubt they'd have raised enough money via issue to make the difference.

Amiga500 wrote:

leghorn wrote:

The implications of this for the controlling family are considerable. They lose control of the family business but I would expect that the share price would counter-intuitively double in price if existing shareholders were diluted and they'd have no problems selling bonds at low interest rates for the rest.

I do understand where you are coming from, but I really doubt they'd have raised enough money via issue to make the difference.

I suggest following procedure:
If equity falls below 15% new shares have to be issued to reach 20% again. The company can choose more than 20%. Everybody can make bids. Everybody pays the rate of the lowest bid which still got a share.
To say a reasonable company can't raise equity is not credible. It's only a question of price.

leghorn wrote:

TObound wrote:

Revelation wrote:

Yes, but what is still weird to me is the article says the issue is the ramp up is costing more than planned, which suggests that BBD's plan did not expect them having to spend as much as they committed to spend?

I do agree that committing to spend without any value being conveyed back was a big mistake. It encourages Airbus to get every penny it can out of BBD since there is no reason not to, and since BBD gave board control to Airbus, BBD has no say in spending levels.

Fits the history of Bombardier constantly underestimating how much this project would cost.

I suspect they didn't think they'd be spending the full $350 million per year for 3 years. And I suspect they didn't think their rail business would get hit that hard at the same time.

Something to keep in mind about BBD is that they used their rail business as the anchor, the way that Boeing uses their defence business.

Ultimately, I think it's less the incompetence on the CSeries than on the rail side and the $1+ billion spent on the Global 7500 and the $1.4 billion spent on the now cancelled Learjet 85 all happening concurrently with the CSeries that cost them the program.

There's also the strategic mistakes. Trying to launch with the CS100 to fly under the Big Boys radar with a wing that big was stupid. They should have launched with the CS300 and then built the CS500 before the CS100. You come at the King, you best not miss.

Other management which would have come after share dilution would have addressed those strategic errors. The bombardier family are probably their own worst enemy.

Other "management" would put an actually qualified CEO at the top, not just a family member. If they had not cut costs so drastically at rail (causing lots of follow on problems), not built the Lear 85, and gone slower on the Global 7000, they'd still be holding on to the CSeries or been in a far less distressed position. A proper CEO would have stopped them from over committing to that much.

Amiga500 wrote:

leghorn wrote:

Amiga500 wrote:

BBD needed to partially offload the program

Bombardier didn't need to offload the program. Bomardier just needed to issue a small amount more shares.

I don't think they'd have got enough takers at sufficient price at that time.

BBD probably needed ~$2-3B USD at that point to give airlines enough confidence in long term existence of support.

BBD's board made many, many mistakes - but the Lear85 was probably the mistake that sunk the company. It probably cost in excess of $2B USD. We know of the write off - which was probably minimized to avoid bruising Pierre's ego too much, but that doesn't include all the other costs incurred to that point.

leghorn wrote:

The implications of this for the controlling family are considerable. They lose control of the family business but I would expect that the share price would counter-intuitively double in price if existing shareholders were diluted and they'd have no problems selling bonds at low interest rates for the rest.

If the market had any faith in the management share price would rise and bond sales would get away at lower interest rates.

I do understand where you are coming from, but I really doubt they'd have raised enough money via issue to make the difference.

Issue is the market has no confidence in management and share price would increase with new management and bonds could be sold to a receptive audience at less punitive rates of interest.

Sokes wrote:

To say a reasonable company can't raise equity is not credible. It's only a question of price.

Bombardier (particularly when under Pierre) were not a reasonable company.

Yes, I agree with leghorn that if class A shares had been issued and bought by the right people in sufficient numbers, it would have meant the dismissal of Pierre almost immediately.

But - unless you could buy a majority voting stake and be assured of control of the boardroom - would you invest? I sure as hell wouldn't.

Revelation wrote:

Yes, but what is still weird to me is the article says the issue is the ramp up is costing more than planned.

Because Airbus is pushing for a higher production rate than first planned.

Two years ago, rate 14 was not part of the plan.

Amiga500 wrote:

Sokes wrote:

To say a reasonable company can't raise equity is not credible. It's only a question of price.

Bombardier (particularly when under Pierre) were not a reasonable company.

O.k., you got me here.
I need to correct myself. I meant to say in the auction everybody who bid more than the lowest bid still being served pays the price of this said bid.

PepeTheFrog wrote:

Revelation wrote:

Yes, but what is still weird to me is the article says the issue is the ramp up is costing more than planned.

Because Airbus is pushing for a higher production rate than first planned.

Two years ago, rate 14 was not part of the plan.

What? It absolutely was part of the plan. Bombardier was delusional enough to think they would hit rate 15 by 2020.

A more in depth article on BBD from the Montreal Gazette. A quote near the end by a rail customer discussing whether they would ever enter into another contract with BBD

“I think about Lucy putting down the football and Charlie Brown being convinced she’s not going to pull it away again,” he said. “The definition of insanity is doing the same thing and expecting a different outcome.”

https://montrealgazette.com/investing/b ... 32597f53e1

leghorn wrote:

https://montrealgazette.com/news/local-news/fitzgibbon-expects-a220-talks-with-airbus-bombardier-to-wrap-in-10-days

TFA says:

Quebec is working with Bombardier Inc. and Airbus SE to find ways of preserving aerospace jobs as well as the province’s US$1-billion investment in the A220 narrow-body jet program — and a dénouement may be less than two weeks away.

The A220 “is a program that is super important for Quebec,” Economy Minister Pierre Fitzgibbon told reporters Tuesday morning after a speech in Montreal. “I’m working closely on this with Bombardier and Airbus, and we want to find solutions. We’re looking at several formulas, and we’re probably about 10 days away from concluding. I’m very focused on preserving these jobs, solidifying them, and protecting the government’s $1-billion investment.”

It also says the idea of QC putting any more money into the investment would set off political firestorms.

JayinKitsap wrote:

A more in depth article on BBD from the Montreal Gazette. A quote near the end by a rail customer discussing whether they would ever enter into another contract with BBD

“I think about Lucy putting down the football and Charlie Brown being convinced she’s not going to pull it away again,” he said. “The definition of insanity is doing the same thing and expecting a different outcome.”

https://montrealgazette.com/investing/b ... 32597f53e1

Minnan-Wong is a bit of a known showboat in Toronto. I wouldn't put that much faith in his comments.

Also, in the same time that Bombardier has had issues with rail delivery, so did Siemens and Alstom. I've said before though that Bombardier should ditch the rail business. They'd get a good price for it. And they can get in before the Chinese really crush margins in the sector.

Revelation wrote:

leghorn wrote:

https://montrealgazette.com/news/local-news/fitzgibbon-expects-a220-talks-with-airbus-bombardier-to-wrap-in-10-days

TFA says:

Quebec is working with Bombardier Inc. and Airbus SE to find ways of preserving aerospace jobs as well as the province’s US$1-billion investment in the A220 narrow-body jet program — and a dénouement may be less than two weeks away.

The A220 “is a program that is super important for Quebec,” Economy Minister Pierre Fitzgibbon told reporters Tuesday morning after a speech in Montreal. “I’m working closely on this with Bombardier and Airbus, and we want to find solutions. We’re looking at several formulas, and we’re probably about 10 days away from concluding. I’m very focused on preserving these jobs, solidifying them, and protecting the government’s $1-billion investment.”

It also says the idea of QC putting any more money into the investment would set off political firestorms.

As I predicted before. Quebec is looking out for the interests of taxpayers and workers in the province. I don't buy the argument that it would create a political firestorm, given the number of jobs at stake. Maybe in the rest of Canada. But nobody in Quebec really cares what the rest of Canada thinks anyway.

I think the likely conclusion is a bailout where IQ and/or Airbus take some or all of BBD's stake in the A220 along with BBD's obligations for funding what's left of the program. I could even seen this being a bit of a backdoor bailout of BBD. I could easily see IQ taking on half or more of BBD's stake in agreement to fund all their 2020 and 2021 ramp up obligations.

TObound wrote:

As I predicted before. Quebec is looking out for the interests of taxpayers and workers in the province. I don't buy the argument that it would create a political firestorm, given the number of jobs at stake. Maybe in the rest of Canada. But nobody in Quebec really cares what the rest of Canada thinks anyway.

I think the likely conclusion is a bailout where IQ and/or Airbus take some or all of BBD's stake in the A220 along with BBD's obligations for funding what's left of the program. I could even seen this being a bit of a backdoor bailout of BBD. I could easily see IQ taking on half or more of BBD's stake in agreement to fund all their 2020 and 2021 ramp up obligations.

Regardless, I'm glad they should be able to let us know what they plan to do in two weeks or less, no paralysis of analysis in evidence.

Does anyone really perceive any scenario whereby the program does not continue?

The question is what is the next step in the progression? Airbus have had, what, 2 years to study and plan. Over the last 30 years or so, with the exception of the A380, (perhaps the 340 but that wasn't really costly), every move that they have made has been correct. I'm confident that they will make the investment to stabilize the program. Their continued involvement will result in the continuing ramp up and more orders will flow. Good times ahead for the A220 series.

If I were leading Airbus, I would invest $4B in this program and launch the 500. I would also announce my own NMA, beating Boeing to the punch yet again. If they were to build a 7 abreast airplane they would have the whole range covered, 5 a/b=220 series, 6 a/b 320 series, 7 a/b new airplane, 8 a/b 330 series, 9 a/b 350 series. Game. Set. Match.

If Airbus launches the A225 and A322 this year all predictions will point to 80% marketshare in the bread and butter segment for the next decade.
Boeing will never allow that and it will be forced to do an clean sheet, which will restore the balance. I am starting to feel that doing nothing earns the most money for Airbus at the moment.

JonesNL wrote:

If Airbus launches the A225 and A322 this year all predictions will point to 80% marketshare in the bread and butter segment for the next decade.
Boeing will never allow that and it will be forced to do an clean sheet, which will restore the balance. I am starting to feel that doing nothing earns the most money for Airbus at the moment.

Marketshare =/= profit share. At some point, the marginal return on investing in a program doesn't justify the investment. That is what Airbus is up against. They have a ton of work to do with their ramps for the NEO and the 220. No development before that. And with the A220, unless something special is announced in two weeks, I can't see the 225 being launched until they can buy out IQ as a minimum. Investing in the 225 requires the partners to have the cash. Bomardier clearly doesn't. And Airbus doesn't want to split half the profits, while making the eventual buy back more expensive. I am going to say there will be no 225 launch for another 3.5 year at least.

With the 220 production line effectively sold out till at least the end of 2023, I am not sure it's a big deal if they don't launch the 225 for another 3-4 years anyway. When they do, they'll be able to roll out in 2 year anyway. So turn around will be quick.

There is also something to be said for keeping their powder dry. Tieing up development resources only to get caught flat-footed by a major launch from Boeing would not be a good thing. They need to be ready to compete with whatever Boeing does after the MAX debacle is resolved.

Marriage made in heaven they said...turns out not really so. The plane is a fine plane, but the program is still in doldrums.

jeffrey0032j wrote:

Marriage made in heaven they said...

Dunno where you read that. It's much closer to a shotgun wedding. It was a pretty hostile takeover of the CSeries by Airbus.

jeffrey0032j wrote:

The plane is a fine plane, but the program is still in doldrums.

How do you define "doldrums"? I don't see a program that is ramping up as being in the "doldrums".

TObound wrote:

jeffrey0032j wrote:

Marriage made in heaven they said...

Dunno where you read that. It's much closer to a shotgun wedding. It was a pretty hostile takeover of the CSeries by Airbus.

If we're going to use such analogies, I'd suggest it was a marriage of convenience on the part of BBD.

A marriage of convenience is contracted for reasons other than that of relationship of love. Instead, such a marriage is entered into for personal gain or some other sort of strategic purpose, such as political marriage. Some cases in which those married do not intend to live together as a couple, typically marry only for one of them to gain the right to reside in a country.

Ref: Wiki.

Such marriages don't often end well, IMO.

JonesNL wrote:

If Airbus launches the A225 and A322 this year all predictions will point to 80% marketshare in the bread and butter segment for the next decade.
Boeing will never allow that and it will be forced to do an clean sheet, which will restore the balance. I am starting to feel that doing nothing earns the most money for Airbus at the moment.

Thing is, it takes 10 years or so to bring a new jetliner to the market. That means Boeing basically lost this decade to Airbus in the narrowbody market.

PepeTheFrog wrote:

JonesNL wrote:

If Airbus launches the A225 and A322 this year all predictions will point to 80% marketshare in the bread and butter segment for the next decade.
Boeing will never allow that and it will be forced to do an clean sheet, which will restore the balance. I am starting to feel that doing nothing earns the most money for Airbus at the moment.

Thing is, it takes 10 years or so to bring a new jetliner to the market. That means Boeing basically lost this decade to Airbus in the narrowbody market.

Yes, agree. Glad to see you posting realistic numbers. Seems like just yesterday Boeing said they were gonna do the 787 in 3 years, and that they were gonna be able to snap the pieces together on the production line in 72 hours. Yet, fanboys on this site still endlessly repeat Boeing drivel.

The lead time is why I think Airbus will launch the 500 soon. As a frame of reference for a follow on model, Boeing has been working on the 777x for 7 years already. To have the more modest 500 ready by 2024-25, Airbus need to launch soon.

SteelChair wrote:

PepeTheFrog wrote:

JonesNL wrote:

If Airbus launches the A225 and A322 this year all predictions will point to 80% marketshare in the bread and butter segment for the next decade.
Boeing will never allow that and it will be forced to do an clean sheet, which will restore the balance. I am starting to feel that doing nothing earns the most money for Airbus at the moment.

Thing is, it takes 10 years or so to bring a new jetliner to the market. That means Boeing basically lost this decade to Airbus in the narrowbody market.

Yes, agree. Glad to see you posting realistic numbers. Seems like just yesterday Boeing said they were gonna do the 787 in 3 years, and that they were gonna be able to snap the pieces together on the production line in 72 hours. Yet, fanboys on this site still endlessly repeat Boeing drivel.

The lead time is why I think Airbus will launch the 500 soon. As a frame of reference for a follow on model, Boeing has been working on the 777x for 7 years already. To have the more modest 500 ready by 2024-25, Airbus need to launch soon.

I think it is smarter for Airbus to launch the A322 first. It is easier for them to increase the total output of the A32x line with 10p/month(+16%) than to increase the A22x production with 10p/month(200%) (not exact numbers). They should launch the A225 when they have a better grip on the production side of the program.
So this year the A322 and next year the A225.

JonesNL wrote:

SteelChair wrote:

PepeTheFrog wrote:

Thing is, it takes 10 years or so to bring a new jetliner to the market. That means Boeing basically lost this decade to Airbus in the narrowbody market.

Yes, agree. Glad to see you posting realistic numbers. Seems like just yesterday Boeing said they were gonna do the 787 in 3 years, and that they were gonna be able to snap the pieces together on the production line in 72 hours. Yet, fanboys on this site still endlessly repeat Boeing drivel.

The lead time is why I think Airbus will launch the 500 soon. As a frame of reference for a follow on model, Boeing has been working on the 777x for 7 years already. To have the more modest 500 ready by 2024-25, Airbus need to launch soon.

I think it is smarter for Airbus to launch the A322 first. It is easier for them to increase the total output of the A32x line with 10p/month(+16%) than to increase the A22x production with 10p/month(200%) (not exact numbers). They will launch the A225 when they have a better grip on the production side of the program.

Normally I would agree with you, but doesn't the 322 include a new wing? If so, then that is a major upgrade which will take much more time and €€. The 500 is a simple stretch, one that was designed in from the start of the design process.

In fact, the 322 is so major, I'm not even sure they are going to do it.

SteelChair wrote:

JonesNL wrote:

SteelChair wrote:

Yes, agree. Glad to see you posting realistic numbers. Seems like just yesterday Boeing said they were gonna do the 787 in 3 years, and that they were gonna be able to snap the pieces together on the production line in 72 hours. Yet, fanboys on this site still endlessly repeat Boeing drivel.

The lead time is why I think Airbus will launch the 500 soon. As a frame of reference for a follow on model, Boeing has been working on the 777x for 7 years already. To have the more modest 500 ready by 2024-25, Airbus need to launch soon.

I think it is smarter for Airbus to launch the A322 first. It is easier for them to increase the total output of the A32x line with 10p/month(+16%) than to increase the A22x production with 10p/month(200%) (not exact numbers). They will launch the A225 when they have a better grip on the production side of the program.

Normally I would agree with you, but doesn't the 322 include a new wing? If so, then that is a major upgrade which will take much more time and €€. The 500 is a simple stretch, one that was designed in from the start of the design process.

In fact, the 322 is so major, I'm not even sure they are going to do it.

I am not sure if it includes a new wing. But I could think of an possibility where they do an CFRP wing for the A322 to prepare the supply chain for an high volume production of said wing. Airbus has commented a couple of times that one of the biggest hurdles in moving to CFRP wings for the A32x replacement is in getting an reliable high output of 70 - 80 sets per month. It is true that it would take more time and €, but it would be strategically a smarter move. And the EIS would be quite similar.
A322 ATO: 2020 EIS: 2024
A225 ATO: 2021 EIS: 2024
Would make 2024 quite a busy year for Airbus.

Why would any OEM EIS a frame well in the middle of the backlog? Any potential 322 should not be entering service before 2027 at the earliest. The 225 doesn't need to enter service till 2025 given current orders and options for the 220. They only need 3 years from ATO to EIS for the 225. Probably 4-5 years for ATO to EIS on the 322. That means neither is launching before 2022. And that's assuming the ownership situation works out on the 220. They may just end up waiting till 2025 to launch the 225 after they've bought out IQ and BBD. They could still EIS the 225 by 2028.

The limiting factor on a lot of their plans are the engine makers. They are currently aiming for about rate 63 on the 320 and rate 10 on the 220 in about 2 years. Assuming 60% share for CFM Leap on the 320, that means Pratt has to put out at least 70 engines per month in 2022. If we assume that by 2025, Airbus is at rate 70 for the 320 and rate 15 for the 220, and a 50:50 split on the 320, the demand on Pratt jumps to 100 engines per month. 43% growth over the next 5 years. That's not necessarily the easiest thing.

Simply manufacturing 80-90 narrowbodies per month is a heavy demand on the supplier chain. Its why they are so focused on production and not as much on development. They need to spend time rejigging their production facilities (A380 hangar repurposed for example) and giving their suppliers some breathing room. I can't see anything new launching before 2022 because of all that.

TObound wrote:

Why would any OEM EIS a frame well in the middle of the backlog? Any potential 322 should not be entering service before 2027 at the earliest. The 225 doesn't need to enter service till 2025 given current orders and options for the 220. They only need 3 years from ATO to EIS for the 225. Probably 4-5 years for ATO to EIS on the 322. That means neither is launching before 2022. And that's assuming the ownership situation works out on the 220. They may just end up waiting till 2025 to launch the 225 after they've bought out IQ and BBD. They could still EIS the 225 by 2028.

The limiting factor on a lot of their plans are the engine makers. They are currently aiming for about rate 63 on the 320 and rate 10 on the 220 in about 2 years. Assuming 60% share for CFM Leap on the 320, that means Pratt has to put out at least 70 engines per month in 2022. If we assume that by 2025, Airbus is at rate 70 for the 320 and rate 15 for the 220, and a 50:50 split on the 320, the demand on Pratt jumps to 100 engines per month. 43% growth over the next 5 years. That's not necessarily the easiest thing.

Simply manufacturing 80-90 narrowbodies per month is a heavy demand on the supplier chain. Its why they are so focused on production and not as much on development. They need to spend time rejigging their production facilities (A380 hangar repurposed for example) and giving their suppliers some breathing room. I can't see anything new launching before 2022 because of all that.

From my perspective the EIS can be later, but the earlier the ATO the more first movers orders Airbus will collect. Right now nobody has an idea what Boeing will do. So, they have no other choice than to order as quickly as possible to make sure they get their spot in the ever longer line in the backlog. But if they wait until 2022, Boeing might already snag some of the customers to be their launch customers for the clean sheet that will be either in the a322 segment or in the A225 segment.
I agree that the supply chain is already heavily strained in growth.
So ATO fast and delay EIS.

JonesNL wrote:

TObound wrote:

Why would any OEM EIS a frame well in the middle of the backlog? Any potential 322 should not be entering service before 2027 at the earliest. The 225 doesn't need to enter service till 2025 given current orders and options for the 220. They only need 3 years from ATO to EIS for the 225. Probably 4-5 years for ATO to EIS on the 322. That means neither is launching before 2022. And that's assuming the ownership situation works out on the 220. They may just end up waiting till 2025 to launch the 225 after they've bought out IQ and BBD. They could still EIS the 225 by 2028.

The limiting factor on a lot of their plans are the engine makers. They are currently aiming for about rate 63 on the 320 and rate 10 on the 220 in about 2 years. Assuming 60% share for CFM Leap on the 320, that means Pratt has to put out at least 70 engines per month in 2022. If we assume that by 2025, Airbus is at rate 70 for the 320 and rate 15 for the 220, and a 50:50 split on the 320, the demand on Pratt jumps to 100 engines per month. 43% growth over the next 5 years. That's not necessarily the easiest thing.

Simply manufacturing 80-90 narrowbodies per month is a heavy demand on the supplier chain. Its why they are so focused on production and not as much on development. They need to spend time rejigging their production facilities (A380 hangar repurposed for example) and giving their suppliers some breathing room. I can't see anything new launching before 2022 because of all that.

From my perspective the EIS can be later, but the earlier the ATO the more first movers orders Airbus will collect. Right now nobody has an idea what Boeing will do. So, they have no other choice than to order as quickly as possible to make sure they get their spot in the ever longer line in the backlog. But if they wait until 2022, Boeing might already snag some of the customers to be their launch customers for the clean sheet that will be either in the a322 segment or in the A225 segment.
I agree that the supply chain is already heavily strained in growth.
So ATO fast and delay EIS.

There's just no need to worry about Boeing. They don't have the resources or the willingness to launch the NMA and something to compete against the 220 at the same time. And even if they launched those programs today, they aren't going to enter service till 2027. And they are probably still a long ways off from a launch, especially after announcing they are going back to the drawing board. Delaying ATO buys time to see what technology is maturing. Also gets much firmer commitments if they know deliveries are 3-4 years away. The MAX fiasco has probably bought Airbus a half decade on their development timeline.

TObound wrote:

Why would any OEM EIS a frame well in the middle of the backlog? Any potential 322 should not be entering service before 2027 at the earliest. The 225 doesn't need to enter service till 2025 given current orders and options for the 220. They only need 3 years from ATO to EIS for the 225. Probably 4-5 years for ATO to EIS on the 322. That means neither is launching before 2022. And that's assuming the ownership situation works out on the 220. They may just end up waiting till 2025 to launch the 225 after they've bought out IQ and BBD. They could still EIS the 225 by 2028.

The limiting factor on a lot of their plans are the engine makers. They are currently aiming for about rate 63 on the 320 and rate 10 on the 220 in about 2 years. Assuming 60% share for CFM Leap on the 320, that means Pratt has to put out at least 70 engines per month in 2022. If we assume that by 2025, Airbus is at rate 70 for the 320 and rate 15 for the 220, and a 50:50 split on the 320, the demand on Pratt jumps to 100 engines per month. 43% growth over the next 5 years. That's not necessarily the easiest thing.

Simply manufacturing 80-90 narrowbodies per month is a heavy demand on the supplier chain. Its why they are so focused on production and not as much on development. They need to spend time rejigging their production facilities (A380 hangar repurposed for example) and giving their suppliers some breathing room. I can't see anything new launching before 2022 because of all that.

I think you are making a good point about timing the market.

It's kind of hard to suggest you need to launch a new model when you and your partners can't build the current model fast enough.

If you launch earlier than you need to, you expose you and your partners to risks such as economic recessions.

It's best to keep developing stuff in the background and only launch when you can minimize risk and maximize reward.

PepeTheFrog wrote:

Thing is, it takes 10 years or so to bring a new jetliner to the market. That means Boeing basically lost this decade to Airbus in the narrowbody market.

It's survivable. Airbus lost a decade at the high end of the widebody market via A340-600 and A380 and will march on via A350. Boeing lost a decade with 767 vs A330 and is marching on with 787.

I think it's pretty clear Boeing realized in 2011 that A32x would do better than MAX but found itself in a position where it could project strong financial reward via MAX and not able to predict any positive financial reward from what they were then pitching as NSA.

Now of course the MAX tragedy has ruined MAX's financial reward equation, but I think Boeing's plan to go with MAX in 2011 was the right decision based on what they knew at the time.

As much as people don't want to admit it, Boeing was let down by engineers who didn't do the work needed to understand and/or communicate why hooking up the MCAS algorithm to an unreliable AoA sensor was a bad thing, not because the decision to go with MAX over NSA was a bad thing.

Revelation wrote:

TObound wrote:

Why would any OEM EIS a frame well in the middle of the backlog? Any potential 322 should not be entering service before 2027 at the earliest. The 225 doesn't need to enter service till 2025 given current orders and options for the 220. They only need 3 years from ATO to EIS for the 225. Probably 4-5 years for ATO to EIS on the 322. That means neither is launching before 2022. And that's assuming the ownership situation works out on the 220. They may just end up waiting till 2025 to launch the 225 after they've bought out IQ and BBD. They could still EIS the 225 by 2028.

The limiting factor on a lot of their plans are the engine makers. They are currently aiming for about rate 63 on the 320 and rate 10 on the 220 in about 2 years. Assuming 60% share for CFM Leap on the 320, that means Pratt has to put out at least 70 engines per month in 2022. If we assume that by 2025, Airbus is at rate 70 for the 320 and rate 15 for the 220, and a 50:50 split on the 320, the demand on Pratt jumps to 100 engines per month. 43% growth over the next 5 years. That's not necessarily the easiest thing.

Simply manufacturing 80-90 narrowbodies per month is a heavy demand on the supplier chain. Its why they are so focused on production and not as much on development. They need to spend time rejigging their production facilities (A380 hangar repurposed for example) and giving their suppliers some breathing room. I can't see anything new launching before 2022 because of all that.

I think you are making a good point about timing the market.

It's kind of hard to suggest you need to launch a new model when you and your partners can't build the current model fast enough.

If you launch earlier than you need to, you expose you and your partners to risks such as economic recessions.

It's best to keep developing stuff in the background and only launch when you can minimize risk and maximize reward.

The duopoly is very different. Even if a global recession came in, at worst it might take a year off the backlog off. I'm not even sure Airbus would mind a recession all that much. Let's them avoid production rate increases.....

There's just no point launching early. And especially not before Boeing shows their hand. An early ATO means they are locked into whatever tech was mature enough to employ at the time (particularly important on engines). It means they are locked into whatever economic conditions there are and how much airlines are willing to pay and commit to an aircraft they will see in over a half decade. It's one thing to launch early on a whole new type. It's another to launch early on a derivative/upgrade that everyone knows they can pull off in 3-4 years.

The MAX fiasco means Boeing isn't launching anything for another year or two at least. And whatever they launch isn't going to enter service for another 4-5 years after that. So why not take the time to mature a lot of tech, see where engines are going and work on scaling up new production techniques, etc. All in addition to delivering a lot of the backlog that is there.

There's also something to be said for building up a war chest. Especially for an OEM that doesn't have a strong defence business. Having 10 billion Euros in the bank on reserve to be deployed is a good thing.

TObound wrote:

The MAX fiasco means Boeing isn't launching anything for another year or two at least. And whatever they launch isn't going to enter service for another 4-5 years after that. So why not take the time to mature a lot of tech, see where engines are going and work on scaling up new production techniques, etc. All in addition to delivering a lot of the backlog that is there.

There's also something to be said for building up a war chest. Especially for an OEM that doesn't have a strong defence business. Having 10 billion Euros in the bank on reserve to be deployed is a good thing.

As per our NMA thread, it appears Boeing is convinced the regulators will require a next generation cockpit for any future clean sheets, and that will be the long pole in the tent with regard to launching a new product.

Advantage Airbus, they have certified cockpits from A220 through A350 and so they can "grandfather" for a very long time while Boeing carries the burden of bashing out what the regulators deem a next generation cockpit to be.

I expect all those threads against grandfathering to go very quiet in the near future.

To be honest, I'm hoping grandfathering is more or less scrapped.

Why should safety be compromised* just because it was deemed good enough decades ago?

*particularly given amendments to the FARs/JARs typically come off the back off accidents.


If something meets the current regulations, fine, let it remain unchanged. But, if something doesn't meet the current regulations - it needs changed. I think its an absolute farce that any airframer is allowed to play semantics and games with passenger's safety in the interests of their own bottom line.

Amiga500 wrote:

To be honest, I'm hoping grandfathering is more or less scrapped.

Why should safety be compromised* just because it was deemed good enough decades ago?

*particularly given amendments to the FARs/JARs typically come off the back off accidents.


If something meets the current regulations, fine, let it remain unchanged. But, if something doesn't meet the current regulations - it needs changed. I think its an absolute farce that any airframer is allowed to play semantics and games with passenger's safety in the interests of their own bottom line.

The concept of safety being compromised.....and new is always better......hmmm.

Hasn't the super modern ultra up to date A350 had a series of in flight shut downs due solely to fluid spills in the cockpit? Hmmm....

TObound wrote:

JonesNL wrote:

TObound wrote:

Why would any OEM EIS a frame well in the middle of the backlog? Any potential 322 should not be entering service before 2027 at the earliest. The 225 doesn't need to enter service till 2025 given current orders and options for the 220. They only need 3 years from ATO to EIS for the 225. Probably 4-5 years for ATO to EIS on the 322. That means neither is launching before 2022. And that's assuming the ownership situation works out on the 220. They may just end up waiting till 2025 to launch the 225 after they've bought out IQ and BBD. They could still EIS the 225 by 2028.

The limiting factor on a lot of their plans are the engine makers. They are currently aiming for about rate 63 on the 320 and rate 10 on the 220 in about 2 years. Assuming 60% share for CFM Leap on the 320, that means Pratt has to put out at least 70 engines per month in 2022. If we assume that by 2025, Airbus is at rate 70 for the 320 and rate 15 for the 220, and a 50:50 split on the 320, the demand on Pratt jumps to 100 engines per month. 43% growth over the next 5 years. That's not necessarily the easiest thing.

Simply manufacturing 80-90 narrowbodies per month is a heavy demand on the supplier chain. Its why they are so focused on production and not as much on development. They need to spend time rejigging their production facilities (A380 hangar repurposed for example) and giving their suppliers some breathing room. I can't see anything new launching before 2022 because of all that.

From my perspective the EIS can be later, but the earlier the ATO the more first movers orders Airbus will collect. Right now nobody has an idea what Boeing will do. So, they have no other choice than to order as quickly as possible to make sure they get their spot in the ever longer line in the backlog. But if they wait until 2022, Boeing might already snag some of the customers to be their launch customers for the clean sheet that will be either in the a322 segment or in the A225 segment.
I agree that the supply chain is already heavily strained in growth.
So ATO fast and delay EIS.

There's just no need to worry about Boeing. They don't have the resources or the willingness to launch the NMA and something to compete against the 220 at the same time. And even if they launched those programs today, they aren't going to enter service till 2027. And they are probably still a long ways off from a launch, especially after announcing they are going back to the drawing board. Delaying ATO buys time to see what technology is maturing. Also gets much firmer commitments if they know deliveries are 3-4 years away. The MAX fiasco has probably bought Airbus a half decade on their development timeline.

I agree, they don’t need to worry too much about Boeing. But having the market for yourself for 1-2 years before Boeing has anything to offer is an opportunity that can not be underestimated. At least, that’s what I think. Airbuses would be selling while Boeing will be in the design fase. All orders would land at Airbus as there is no other option. If the time difference between the ATO of A and B are 6-12 months a lot of airlines will just wait it out.

And to be honest there is not much secrecy or too much to reveal for an A225 and A322. I think even Boeing has the numbers run for the possible competitors, I would think really poorly of them if they didn’t.

Revelation wrote:

TObound wrote:

The MAX fiasco means Boeing isn't launching anything for another year or two at least. And whatever they launch isn't going to enter service for another 4-5 years after that. So why not take the time to mature a lot of tech, see where engines are going and work on scaling up new production techniques, etc. All in addition to delivering a lot of the backlog that is there.

There's also something to be said for building up a war chest. Especially for an OEM that doesn't have a strong defence business. Having 10 billion Euros in the bank on reserve to be deployed is a good thing.

As per our NMA thread, it appears Boeing is convinced the regulators will require a next generation cockpit for any future clean sheets, and that will be the long pole in the tent with regard to launching a new product.

Advantage Airbus, they have certified cockpits from A220 through A350 and so they can "grandfather" for a very long time while Boeing carries the burden of bashing out what the regulators deem a next generation cockpit to be.

I expect all those threads against grandfathering to go very quiet in the near future.

Amiga500 wrote:

To be honest, I'm hoping grandfathering is more or less scrapped.

Why should safety be compromised* just because it was deemed good enough decades ago?

*particularly given amendments to the FARs/JARs typically come off the back off accidents.


If something meets the current regulations, fine, let it remain unchanged. But, if something doesn't meet the current regulations - it needs changed. I think its an absolute farce that any airframer is allowed to play semantics and games with passenger's safety in the interests of their own bottom line.

Not all grandfathering is equal. There's very little that an A320 would be deviating from. On the flip side, the 737 is the only airplane in the Boeing line up without some kind of centralized alerting system (EICAS/ECAM). So when Boeing says that regulators may ask them for a "next gen cockpit", it's looking more like it's only "next gen" for Boeing. This is the kind of grandfathering that disappears.

https://www.seattletimes.com/business/b ... ew-alerts/

I can't think of any major deviation from current standards on the A320. If anybody can, I'd love to read about it.

There is stuff that could be mandated like force feedback control columns, synthetic vision, etc. But I've not yet seen any indication that some of this stuff would be imposed. I think it's more that regulators will expect any aircraft to implement what every other modern airliner has these days: full redundant FBW, centralized alerting, etc.

JonesNL wrote:

TObound wrote:

JonesNL wrote:

From my perspective the EIS can be later, but the earlier the ATO the more first movers orders Airbus will collect. Right now nobody has an idea what Boeing will do. So, they have no other choice than to order as quickly as possible to make sure they get their spot in the ever longer line in the backlog. But if they wait until 2022, Boeing might already snag some of the customers to be their launch customers for the clean sheet that will be either in the a322 segment or in the A225 segment.
I agree that the supply chain is already heavily strained in growth.
So ATO fast and delay EIS.

There's just no need to worry about Boeing. They don't have the resources or the willingness to launch the NMA and something to compete against the 220 at the same time. And even if they launched those programs today, they aren't going to enter service till 2027. And they are probably still a long ways off from a launch, especially after announcing they are going back to the drawing board. Delaying ATO buys time to see what technology is maturing. Also gets much firmer commitments if they know deliveries are 3-4 years away. The MAX fiasco has probably bought Airbus a half decade on their development timeline.

I agree, they don’t need to worry too much about Boeing. But having the market for yourself for 1-2 years before Boeing has anything to offer is an opportunity that can not be underestimated. At least, that’s what I think. Airbuses would be selling while Boeing will be in the design fase. All orders would land at Airbus as there is no other option. If the time difference between the ATO of A and B are 6-12 months a lot of airlines will just wait it out.

And to be honest there is not much secrecy or too much to reveal for an A225 and A322. I think even Boeing has the numbers run for the possible competitors, I would think really poorly of them if they didn’t.

Having time doesn't mean that they have to announce new models. Maturing tech, optimizing production, helping suppliers become more efficient and building up financial reserves are all very useful activities that will make them more competitive in the long run. As it stands, they are juggling a lot with production. And a lot of these activities will be necessary.

The only reason I think they might develop some stretches soon is to give their engineering talent something to do. But that doesn't in any way mean they need to announce it or offer it. They can do a ton of development work with out announcing a thing. They'll be ready to counter any rumour of a Boeing ATO with their own. And be able to offer EIS within 3-5 years. That's the power of good prep.