Market update: domestically cherished single aisles going global

  • Airbus begins its manufacturing facility at a $600m 21.5 hectare facility creating up to 300 direct jobs and thousands catalysed at Mobile Alabama.
  • Ribbon cutting ceremony with state and local officials, dignitaries from France, Germany and the UK, along with Airbus executives
  • Purpose; “..Commercial Aircraft production to become a true American and global manufacturer” (F. Bregier CEO)
  • Facility begins Final Assembly and cabin-fittings of (mostly American-carrier customer) narrowbody A320 family airplanes at rate 40-50 p/year. Can also manufacture A319s and (a big focus) on A321s
  • To deliver production-overspilled CEOs, before moving to NEOs in late 2017.
  • Airbus inherently proposed the Mobile facility as a “compliment to contract” of their tender process to compete against the KC-767 and then-proposed KC-X for the US Air Force’s tanker platform fleet-renewal program.
  • Government Contracts require incremental macroeconomic benefits to prove effective; jobs, currency and value spent, purchase contract currency, diversity in employment and etc.
  • The KC-X design-freeze converted from a 777 platform to a 767 platform in order to keep production line for the 767 alive. The 767-400 didn’t sell, and jobs were to go. Now called the KC-46 Pegasus and in-test for delivery around 2017.A320neo exceeding 737MAX sales, and backlog growing unsustainably
  • A320 to see “rate-50” per month by 2017, and citing logistical constraints, fragmentation of supply chain and diversity of demand and variants of aircraft for expansion-requirements.
  • Greater bargaining power to American-based customers.
  • 757 US domestic operations (usually non-winglet) at end of life maintenance requirements, hence retirement (UA, AA and others). Mobile plant focused on A321. Airline see A320 family to replace/compliment operations
  • Option to expand to other platforms (like A330 and A350) given demand.
  • Airbus FAL and cabin fittings for A320 family at Tianjin (China). Production gap of A330 nearly filled with order of 70 with contractual-requirement of cabin-fittings at Tianjin (first delivery 2018)
  • Big bets. Big possibilities. Business case at worst-case scanerio

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  • Meanwhile the 737MAX under final assembly line at Boeing’s Renton facility in Seattle.
  • Features new winglets and commonality to the current NG platform.
  • The MAX8 reaping sales, solid operating platform, high range, cabin flexibility. MAX9 and MAX7 to follow
  • New powerplants (CFM_LEAP) to feature the new aircraft soon, as first flight and test program nears
  • More than 2,700 orders, strong demand oriented on the MAX8.
  • Seeking to also lift output of their platform, and plans delivery Centre in China (a week ago)

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  • Comac is set to roll out its C919 aircraft head on with the A320neo and 737MAX family. Set to be much smoother than the troubled ARJ21.
  • It also put to ink a contract for the first airline carrier outside China to order the C919, being City Airways (DMK Thailand)
  • Curent orders stand at 517. Looking to expand further afield internationally.

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  • On the other hand with the C-Series, Bombardier pitches the CS100/CS300 business case to Airbus as a close-ended tender for a joint-venture with Airbus’ narrowbody product line to recover costs and an order dry-spell for the aircraft type.
  • Currently cutting production costs and taking all measures to mitigate cannibalization (no stretch for the Q400, CRJ900 and CRJ1000 improvements and production based on diversified operating structures the C-Series will serve).
  • Bombardier shares have fallen 73 per cent between early January and late August amid fears over the company’s debt position, up 15 per cent to C$1.77.
  • The C Series is intended to end the duopoly in the narrow-body jet market between Airbus’s A320 family and Boeing’s 737 (especially bottom-ended products of the 737-700, 737-7MAX, A318, A319ceo and A319neo. But it has won only 243 orders, well short of the 300 the company had targeted by the time of the aircraft’s entry into service.
  • Airbus had price-undercut and made marketing investments to squarely mitigate the C-series threat on the A320neo product line, especially the A319neo.
  • Boeing had a similar history post-acquisition of McDonnell Douglas, with 717s being produced post-acquisition. Yet starkly different for this scenario, as it is only a JV, and only for one model (so far as it is known)

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  • Also, Mitsubishi’s MRJ lines up for first flight, with currently no plans on any stretches (currently a shrink with the MRJ70).
  • Concerns were raised that the MRJ90 (being similar capacity to the current CRJ900 at around 90 seats single class or 80 seats dual class). The CRJ900 has an advantage in that it fits in the present Scope Clause for 76 seats regional operations for mainline carriers (especially in overflight/nav/ldg costs, leases/cost-recovery, cost of production, flight costs on shorter routes, maintaincence etc)
  • The MRJ is too heavy, and requires weight trimming. The MRJ has by virtue of more efficient engines and a more modern wing a lower fuel burn. With today’s lower fuel price, the question today is whether the difference be large enough to motivate a higher acquisition cost.
  • MRJ pitching to international airlines, with 154 aircraft order internationally (to grow by 20 as Eastern Airlines to firm MoU)
  • Japan’s aerospace industry flourishes with parts production, but the Mitsubishi Regional Jet is the first aircraft produced by a domestic Firm since being banned from developing aircraft by the US following its defeat in World War II.

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  • Meanwhile, Embraer invested into automatic production of their Embraeer family, especially the E-2 (E175, E190, E195).
  • With the announcements, the manufacturer is willing to increase output of the E-jet families
  • Development of the PW1900G for the E-2 family is well underway.

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