Airbus - Bombardier
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3:00 (07:00 UCT) - October 23, 2017 - Quebec, Canada, by Normand Hamel for Fliegerfaust.com
October 16, 2017 will go down in history as a major turning point in commercial aviation when Bombardier announced an alliance with Airbus to commercialize the C Series.
This happened only six months after Boeing initiated an all-out attack on Bombardier in an attempt to kill the C Series.
But this move had the opposite effect of what was intended by Boeing and actually gave a new lease on life to the C Series programme. And in its attempt to weaken Bombardier, Boeing made Airbus stronger than ever.
Unlike Boeing, Airbus' original intention was not to move for the kill, but to proceed by asphyxiation. It would have taken more time, but would have been less brutal and probably more effective.
One way or another, the C Series didn't have much of a chance against the Big Two. But there was always hope that Bombardier would be able to find its place under the sun. However in the end Boeing will have cast too big of a shadow for Bombardier to grow and prosper.
Yet, the C Series was too young and too vigorous to die. So in a desperate attempt to save its precious child Bombardier went to Airbus for protection against Boeing's vicious attacks.
From left to the right :Pierre Beaudoin, Bombardier Chairman of the board - Tom Enders, Airbus CEO - Alain Bellemare, Bombardier President & CEO - Fabrice Brégier, Airbus COO & President of Airbus Commercial Aircraft
This transaction opens a new chapter in commercial aviation history and brings the battle in the narrowbody sector to a whole new level. A battle that Boeing is now almost certain to lose.
For the entire 737 business case rests on a single variant, the 737-8, which will progressively get squeezed out of the market by the CS500 and A320, and possibly also by an A320.5 with the same capacity as the MAX 8.
Boeing has all its eggs in the same basket and that basket is about to fall off the sky. Without the 737 Boeing's future is compromised, and this once great company will have to reinvent itself, or face oblivion in the commercial aviation sector.
At the same time Boeing's best friend is now becoming it's worst enemy, and you can be sure that the President of the United States will sanction this deal as if it was his own.
The Montréal visit
Only four days after this deal rocked the planet the new boss was in town: the Air Boss. To watch Tom Enders speak to smiling and cheering Bombardier employees in an empty CRJ hangar in Mirabel was an eerie sight. In fact it was quite surreal.
On stage with Enders were Fabrice Bergier, the president of Airbus Commercial Aircraft, along with Bombardier's top brasses: Rob Dewar, Fred Cromer, Alain Bellemare and Pierre Beaudoin. Everyone on the stage had a huge smile on their face, as if they had just made the Deal of the Century.
Alain Bellemare, Bombardier President & CEO with Tom Enders, Airbus CEO at the Chamber of Commerce of Metropolitan Montreal formerly known as Board of Trade of Metropolitan Montreal October 20, 2017Photo by Graham Hughes, Canadian Press
Bombardier were in a bind, for all sales prospects had been frozen the instant Boeing filed its fake-news based complaint.
When I heard the announcement of this friendly takeover I almost choked. But a bit of French wine helped me to swallow my nationalistic pride. Yet, it took me several more days to digest this startling news.
And I was not alone, for the whole world was stunned as no one apparently had seen this coming. We all thought that the window of opportunity had closed in 2015 when Airbus rejected Bombardier's offer to take a participation in the C Series programme.
I was relieved at the time that the Gouvernement du Québec had come to the rescue to take Airbus' place. But that could only be a temporary solution, for Bombardier needed a White Night in its fight against Boeing.
The problem was that the market believed in the C Series but not in Bombardier. The latter had a good recovery plan, but supplier issues kept deliveries at a very slow pace. And since each plane delivered brings new cash in, the less deliveries you make the less cash you have on hand.
The slow deliveries, compounded with Boeing's machinations, meant that the whole programme was doomed. It could have survived for a while but Bombardier had to find a solution quickly, otherwise the whole company's future would have been threatened.
So Airbus were approached once again, but this time they were more receptive. Apparently the offer was not much different than the first time, but Airbus were now less preoccupied by urgent issues and the C Series had made tremendous progress in the interval.
The aircraft was now certified and had entered service with two different airlines, both of them extremely satisfied with the performances of the aircraft. Performances that keep improving.
The employees seem to be relieved. Until now they had lived in uncertainty and many of them have actually lost their jobs in the restructuring. Now the future looks brighter.
My understanding is that everyone working on the C Series will remain an employee of the existing C Series Aircraft Limited Partnership. But make no mistake, from now on you will be working for Airbus because the new partner has a controlling interest.
There are also other concerns that I will try to address in what follows.
The Mobile plant will only assemble the airplanes that will be sold for the American market. And Mirabel will remain the site where all the other airplanes are assembled.
Since the US represents about 30% of the world market it means that Mirabel will still manufacture and deliver about 70% of the C Series sold worldwide.
Obviously the sales prospects are much better now, and if necessary a second assembly line may eventually have to be built in Mirabel.
This would bring total capacity to 280 airplanes per year, plus what will be produced at Mobile. That would be the limit of this particular area and a new one would have to be selected on the Mirabel site, which still has plenty of space available for expansion.
First A320 assembled at Airbus new plant in Mobile, Alabama , USA
However, the first assembly line in Mirabel has not been completed yet and a secondary assembly line will have to be built to bring the output to 140 a year with the first line.
This might be confusing for the casual observer because Airbus and Boeing have continuous assembly lines, whereas in Mirabel the lines are split. That's because of the specific area that had originally been selected.
Bombardier wanted to take advantage of the existing CRJ facilities and planned to build the C Series assembly lines around them.
However, the space and configuration that were available in that particular area made it necessary to split the initial assembly line (FAL) in two sections that would be 200 feet apart: one FAL assembling the aircraft's basic structure and the other completing the interior in a separate building.
An identical second assembly line can be built parallel to the first one and the buildings would be contiguous in a 2+2 configuration; or if you prefer, one pair of FAL 1 facing a pair of FAL 2.
Airbus Mobile Plant in Alabama, USA
The next step
So where do we go from here? Well, first they have to answer the phones that haven't stopped ringing since the deal was announced. Apparently many airlines are eager to place an order now that they know the programme's future has been secured.
But don't hold your breath, for no new orders will be announced until this deal is sealed, sometime in the second half of 2018.
In the meantime Bombardier will be working on the design of the new Alabama assembly line. Who will pay for the new line is not clear. But it will be built nevertheless and as fast as possible.
Apparently it might start producing Delta's first airplanes as early as 2019. Delta don't mind to wait because they know they will be getting the best aircraft in the world for what they plan to do: increase their share of a long neglected market.
Of course a new building would have to be erected on the existing Mobile site, but some of the tooling to assemble the aircraft is already available. These are leftovers from the time when the first flight test aircraft (FTV) were assembled in an improvised CRJ hangar called Hangar Y, pending construction of a proper final assembly building.
What is Airbus bringing to the party? First they will bring their formidable sales force. Add to this a considerable marketing savoir-faire. And most importantly they will support the C Series with an infrastructure that would have taken Bombardier decades to develop on its own.
Another important aspect is the clout Airbus brings to the negotiations with suppliers, many of whom they share. In fact Airbus believes it can lower the C Series production costs by as much as 10%.
The C Series is the biggest winner here. It will not only survive, but will also continue to thrive and evolve. And most importantly, the employees can now look at the future with supreme confidence.
Obviously Airbus also stands to benefit a great deal from this new endeavour. For they now have access to state-of-the art technologies that will be implemented in their future designs.
Mainly they get access to the Resin Transfer Infusion technology developed by Bombardier. They are also interested in the C Series cockpit and avionics, which are more advanced than what Airbus has been using on the A320 and various other models.
Bombardier is losing a lot in this transaction. For its adventure in commercial aviation is practically over now. However it is likely to remain the largest business aircraft manufacturer.
It certainly took a lot of guts, and brains, to do what they did. And I would like to take this opportunity to salute the extraordinary vision of Laurent Beaudoin, the son-in-law of Joseph-Armand Bombardier who created this world-class company in 1942.
Boeing is definitely the biggest loser in this transaction and the only one responsible for the fiasco. They have upset just about everyone, starting with their own customers.
Their ill-advised maneuvers gathered support only from Washington. And even that is now up in the air. And in order to survive Boeing will remain one of the most subsidized company in the US.
We still have to hear the ITC ruling. But no matter what the outcome is the C Series ordered for the US market will be assembled in Alabama. And while we are waiting for the court decision Bombardier will start working on a plan to build a C Series final assembly line in Mobile.
Various instances still have to approve the deal, but this should be a simple formality. We can expect everything to unfold very quickly because Delta are waiting for their planes.
I expect everything to work fine, unless Boeing throws another monkey wrench into the Air Bomber plans of attack. No matter what, I consider this a done deal.
Alain Bellemare, Bombardier President & CEO with Fabrice Brégier, Airbus COO & President of Airbus Commercial Aircraft
The French connection
The fact that Alain Bellemare holds an aeronautical engineering degree from the École Nationale Supérieure d'Ingénieurs en Construction Aéronautique (ENSICA), in Toulouse, may have given him the connections he needed to open the doors of the Airbus fortress.
The beauty of this transaction is that the two companies share common languages and similar cultural traits. In fact both communicate internally and externally in English, and both share the European culture, which is still very present in Montréal 375 years after it was founded by people who had crossed the Atlantic in search of a new beginning.
And a new beginning is now also offered to the C Series with this transatlantic alliance.
The author can be contacted at the following address: email@example.com
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