C Series Production is Stuck in Second Gear
Bombardier still maintain today that they will deliver 30 C Series aircraft this year. But the delivery rate remains at two aircraft per month after eight months
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9:00 - August 7, 2017 - Quebec, Canada
Bombardier still maintain today that they will deliver 30 C Series aircraft this year. But the delivery rate remains at two aircraft per month after eight months. And if it stays there any longer it will become increasingly difficult for Bombardier to meet their objectives.
Let's take a look at the 2017 deliveries so far: January: 0; February: 0; March: 2; April: 1; May: 2; June: 2; July: 2; August: 2 (projected).
At the beginning of the year we could already sense that something had gone wrong: For after a strong December there were no deliveries at all for a period of more than two months.
Apparently this was mainly due to quality control problems at aircraft interior supplier Zodiac. My understanding is that the situation is now under control. Yet, the aircraft delivery rate remains anemic.
The most striking feature of the delivery rate is that it remains stable at two aircraft per month.
This is not normal because we are supposed to see a production ramp up at this stage. After all the C Series has been in service for more than a year now. But we don't see any progress at all. In fact the delivery rate has remained constant at two aircraft per month for six months in a row, as if C Series production was stuck in second gear.
To be honest I don't know what's going on. But my understanding of the situation leads me to believe that production cannot easily be raised above the current rate because Pratt & Whitney may not be in a position to supply fast enough all the engines that would be required for a normal ramp-up.
Today P&W are barely able to supply enough engines for the current rate. The problem is that this rate is not sustainable if Bombardier are to achieve their goal of delivering at least 30 aircraft this year.
However, some progress have recently been made at P&W, and Bombardier now expect them to increase their production output so that they could deliver more aircraft. These expectations are based on the fact that two new factories have recently started to produce additional fan blades, which were not produced in sufficient quantities before.
Early production runs had a 70% rejection rate due to quality control problems. The acceptance rate is now at 75%, and production of fan blades has tripled. But there are still a number of issues with other engine parts as well. So despite their intense efforts it may take a while before they can raise production to the required level.
When all those issues will have been resolved we may see more C Series aircraft leaving the Mirabel factory, perhaps towards the end of the summer or early fall.
Still, I don't anticipate a big ramp-up because the delivery schedule does not warrant a rapid production increase. Because of the logistics involved Bombardier and their customers obviously did not want to take too many risks and the delivery schedule was kept at what was viewed as the most realistic level.
I took a close look at what appeared to me as the most plausible schedule and I now expect no more than 25 aircraft to be delivered before the end of the year.
Yet Bombardier still maintain that 30 aircraft will be delivered this year.
Actually, before the Paris Air Show they were projecting between 30 and 35 deliveries. But then the language started to change and they were now saying at least 30 for the year. And at the last quarterly review presentation they were now down to around 30.
It looks to me like a carefully worded lowering of the expectations: 30 to 35; at least 30; around 30.
In order to figure out how many airplanes will likely be delivered this year I have made some projections for each customer:
1. Swiss are scheduled to receive four more CS300 this year and there is a strong possibility that before the end of the year they will also take delivery of the two CS100 they have in long-term storage at Mirabel. They have taken delivery of five aircraft so far this year.
2. AirBaltic will take a maximum of eight aircraft this year. They have already taken delivery of four aircraft and are expected to get another four in the coming months.
3. Korean Air are the next customer in line to receive their first C Series, possibly as early as September. Their first aircraft will soon come out of the paint shop. They are expected to take delivery of five aircraft in the last four months of the year.
If we do the count we get a total of 24 deliveries for the year.
If my projections are accurate why would Bombardier be talking of 30 aircraft? They probably factored in some of the aircraft they had been operating since they came off the assembly line, namely FTVs and P1, the first production aircraft.
Some of them have now been sold and are currently undergoing verifications and modifications to bring them to current production standards. If they were delivered to their customers before the end of the year this would bring the total number of deliveries close to 30 aircraft, like Bombardier are anticipating.
What I find remarkable about this whole situation is that there is no accumulation of what we call « gliders » like we see at Airbus, where a number of aircraft are parked outside waiting for their engines.
It is as if Bombardier had adjusted their production on the assembly line to make sure that aircraft are produced at the same rate they are delivered.
That being said, some questions remain to be answered:
1. At what rate can Pratt & Whitney produce the PW1500G engine today?
2. At what rate would Bombardier produce the C Series if they could get all the engines they need?
3. At what rate would Bombardier's customers take their aircraft if Bombardier could deliver them?
If anyone knows the answer to one or more of these questions please contact me at email@example.com
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