Analyst predicts Airbus will eventually terminate CSeries program - Leeham News
Likely to remain unprofitable, Doug Harned, the analyst for Bernstein Research
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November 7, 2017
The Bombardier CSeries may go the way of the McDonnell Douglas MD-95, a Wall Street aerospace analyst predicts: that is the program is likely to remain unprofitable and be shut down.
Doug Harned, the analyst for Bernstein Research, draws a parallel between Airbus' acquisition of a majority stake in the CSeries program and Boeing's 1997 acquisition of McDonnell Douglas in which the MD-95 joined the Boeing family of airplanes.
The 110-seat MD-95 was renamed the Boeing 717. Boeing attempted to market the airplane, without success. Production was terminated after 156 airplanes were built.
Good airplane, no future
Harned acknowledged the 717 was a good aircraft. It remains in high demand on the used aircraft market. But it was an orphan—just one model was produced—and had no commonality with the larger Boeing 737 family.
Boeing was unable to reduce costs because suppliers, facing a low-production future, were unwilling to cut costs, Harned said.
He believes Airbus faces similar challenges with the CSeries.
Likely to remain unprofitable
Harned believes the CSeries, although in two models vs the one for the 717, will remain unprofitable, eventually leading to a decision by Airbus to shut the program down. (It should be noted that Bombardier has the right to repurchase Airbus' shares.)
He believes that like Boeing, Airbus won't be able to cut costs because suppliers already see a difficult path to profits.
Harned believes the CSeries needs to sell for about $30m to be profitable. Airlines want prices in the low $20m range, he said.
Harned also cast doubt on the current skyline quality (something LNC has noted many times), with the prospect of cancellations.