Sales will depend on profit, at least from the seller's perspective.
Airbus is working on break even for the A220:https://www.worldglobal.co.uk/2021/02/1 ... in-aisles/Asam says there is a “drive to cut costs” and that the break-even point is about 150 aircraft – although he says the company believes it can bring this “down a bit” by the mid-decade.
I assume that is per year (I'm not certain). Per this link, production could be much higher at 160 to 170 per year.https://www.fliegerfaust.com/a220-news-2645172486.html
So this makes selling a large number a priority (or accept fate and ramp down the program). This makes the Southwest potential order for 300 a dang fascinating exercise. We are talking about a single order, with the domino effect, able to bring the program to profitability. (In my opinion.)
What isn't being mentioned is the profit from ancillary sales. The more aircraft out there, the lower the cost to manufacture because vendors are making a good profit off aftermarket support. This doesn't help Airbus as much directly (it does help, but not as much as the vendors as their business model is based on support). For example, if Pratt sells another thousand PW1500s, that means I cannot find the link right now (sorry), so take it as my opinion, but doubling production cuts the per unit costs 13%. So 1000 more engines in service means about 130 units need overhaul per year. So if production goes to 170 A220 per year, having a thousand in service cuts vendor costs. If we assume a minimum production lot of 25 (cost per unit =1), we get an equation of cost per unit=1.92*(units per year)^-.201.
So a vendor with 300 units (170 new + 130 used) has a cost 11% lower per unit than one just producing for new. This is one reason going up against the NEO and MAX is so incredibly difficult. The automation in their production is outstanding and constantly being improved to cut unit costs.
So with some new orders we not only get the production rate improvement, we get a vendor benefit for new production. Now, I don't expect vendors to cut parts costs for spares, but I would expect Airbus to eek out a new build discount. That drives up future overhauls/spare sales, so the vendors are "happy enough." (Of course they would like more profit day1, but that isn't going to happen.)
What this has to do with sales campaigns is success breeds success in aviation. Without economics of scale, every aircraft line is dead. This is why almost every business jet is an evolution of prior lines, just sold as something incredibly news, but in reality an evolution. e.g., the Cessna Latitude uses the wing, tail, engines and nacelles of the Soverign. The Longitude builds off the Latitude, utilizes an old Hawker wing, and uses Honeywell engines that are very mature from competitors' product lines.
This is why Pratt has the PW1500/PW1900/PW1200/PW815/PW812 so related. To get up those economics of scales to improve the business case.
So I think Airbus will sell the A220. I think they will go for selling the Southwest order at break even pricing as the increased economics of scale will stop the losses on other sales. With the inevitable increase in other orders post a Southwest sale, that would bring the A220 to profitability. Once a bunch are in service, and used enough to need MRO work, the vendors will be more profitable so that Airbus can extract more price concessions and we get into a virtuous cycle.
Good point. The cash cost of doing the A220 over the 320 would be bad for Airbus.
Take into account the opportunity cost of doing the 220 over the 320 and it would exponentially worse for Airbus.
I still see lots of potential of the A220 in the Airbus portfolio. And we're NOT talking about selling the A220 over the A320!
Airbus totally controls A220 pricings anyways. If it feels a 319neo (or a A319/A320neo pkg) could be a good fit for a particular client, it will price it accordingly (and jack up the A220 price).
Otherwise, if it sees zero potential for its 319/320, may as well sell the A220 at competitive prices - and avoid losing a sale to Boeing (or Embraer)!
SWA is good example as no ways they would ever consider the A319neo, while the A220 "could" be a good fit.
Furthermore, as the A220 is still very early in its "decreasing unit costs curve", each additional sale contributes a big deal in decreasing unit costs - plus helps getting PIPs earlier.
Airbus must always consider the Embraer/Boeing competition. As much as some here want to make a big deal out of certain issues, aircraft are pretty darn fungible. One can estimate future costs pretty well. Airbus must be looking over their shoulder and not wanting the Embraer E2-190 and in particular E2-195 to achieve great economics of scale. I'm not saying Airbus will be silly,
Your reference to funding PiPs is also important. While we have seen a great improvement in A220 dispatch reliability with customers like Swiss much happier. We had another thread where I posted links on Lufthansa group having a 99.8% dispatch reliability expectation. The A220 seems to be finally meeting that high expectation
First link expectations, but 2 years ago A220 not meeting LH's requirements:viewtopic.php?f=3&t=1427277
Now meeting expectations (November 2020):https://skiesmag.com/news/airbus-a220-p ... y-turmoil/
So now more PiPs. Small improvements in maintenance, but now for efficiency or payload at range. I won't list every PiP, but for example the MTOW increases will help some customers.
So sales are needed. I think the A220 (ex C-series) has the right concept ideas. It is not to debug, improve (PiP), but mostly get down manufacturing costs. To do that Airbus must sell the type. I'm bummed no air show this year, but once they restart, I expect the A220 to improve sales and with every hundred or so sold, it will make it so that more airlines would consider the type. This is why with a potential order of 300, the Southwest order must be considered very seriously as I believe that will domino to another 200 to 300 more. Having over a thousand sold will make the vendors accept short term payout cuts to stay on a program with long term potential.
5 months without TV. The best decision of my life.