Airbus takes on the C Series

“WE’RE THROWING a big stone into the water.” Airbus Group Chairman Tom Enders’ words on October 16 were an apt description of Airbus’s surprise move to acquire a majority stake in Bombardier’s C Series.

Subject to regulatory approval and for no equity investment, Airbus will acquire 50.01% of the C Series Aircraft Limited Partnership, leaving Bombardier with approximately 31% and Investissement Québec with 19%.

Airbus will provide procurement, sales, marketing and customer support expertise and plans to open a second production line at its Mobile, Alabama, Final Assembly Line to produce C Series destined for United States-based customers.

Airbus taking the C Series under its wing has many ramifications. Teal Group analyst Richard Aboulafia told AIR International: “Airbus gets a brand-new jet for free. Airbus gets a new product to build in the US, reinforcing its industrial presence and constituency there, for free. Airbus gets access to the latest composite wing technology, probably for free, although the lines between owning the C Series and having access to Bombardier’s Belfast facility [where the composite wings are produced] aren’t yet clear. This was a big victory for Airbus, by any measure.”

Airbus backing gives the C Series improved financial stability and its extensive global product supply and engineering chains should boost investor confidence in a C Series purchase, which the manufacturers hope will result in more sales.

In September and October, the US Commerce Department and US International Trade Commission, acting on petitions filed by Boeing, provisionally ruled to impose import duties of 300% on purchases of the C Series by US operators. If imposed (they are still subject to a final decision), the tariffis would affect Atlantabased Delta Air Lines’ order for 75 CS100s, the largest single C Series purchase. The ruling led to a trade spat between the United States and the Canadian and UK governments.

Industry analysts feel Boeing objecting to the C Series has backfired, as it hastened the move of the C Series into the arms of arch-rival Airbus. Aboulafia thinks Airbus taking on the C Series: “destroys Boeing’s trade case. They [and Commerce] can try to persist, but the new Alabama C Series line makes that futile.”

Writing on his website, he said: “Boeing pandered to the protectionist wing of the Republican Party. The epicentre of that wing is in Alabama, which loves factory jobs, even from foreign companies. Most likely, Commerce will rule it has no authority on jetliners exported from Alabama to Georgia.”

There are a number of other significant consequences from the deal. Taking on the C Series widens Airbus’s single-aisle airliner portfolio, with the 108–160-seat CS100 and CS300 complementing the larger A320neo and A321neo, which span the 150–240 seats segment.

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The C Series with its 108-160-seat capacity complements the larger A320neo in Airbus’ single-aisle line-up.
P Pigeyre/Airbus

Airbus has only sold 51 A319neos, its own off ering for the 100-150 seats market segment (Boeing has also struggled, selling just 75 737 MAX 7s). Therefore, adopting the C Series and the 534 examples sold so far means the European company leapfrogs Boeing in the segment.

Moreover, when those 534 C Series are added to 3,677 A320neos and 1,481 A321neos which had been sold by early November (compared to the 2,050 737 MAX 8s and 262 737 MAX 9s), Airbus has clearly tightened an already firm grip on the single-aisle airliner market overall.

In the single-aisle arena, Aboulafia wrote: “Boeing is being boxed into the 150-seat niche with the [737] MAX 8 as their only big seller.”

The C Series deal adds to the Airbus-Boeing rivalry for another reason. Boeing has been studying a New Mid-market Airplane (NMA) and a presentation at the Paris Air Show 2017 said a notional 200–250-seat airliner (dubbed the ‘797’ by some) could enter service in the mid- 2020s if it was launched in the next couple of years.

The C Series potentially gives Airbus a platform to counter a future NMA with an all-new midsize product of its own and access to technologies and production processes to produce it.

Aboulafia told AIR International: “If they pursue a growth A321neo with new technology, the C Series’ resin transfer infusion composite structure may be hugely valuable.”

The C Series could also help Airbus explore technologies for possible use in a future single-aisle to succeed the A320.

Mark Broadbent