Mark Collins – Bombardier: A Justification For Feds Giving Company Money it Says Doesn’t Need

Further to this post,

Bombardier Says Doesn’t Need Federal Bailout

Ottawa can claim the moolah is to develop a bigger CSeries version that Delta would like (and maybe other airlines). ‘Twould be a sweet deal for Bombardier since the company clearly doesn’t have the development cash itself; but such a move upward into the heart of Airbus’ and Boeing’s narrow-body market would certainly engender a pretty fierce reaction from those two–and governments on their side?

Possible Bombardier-Delta deal leads to talks of a bigger C Series jet

Bombardier Inc. almost won a crucial order from Delta Air Lines Inc. the last time the airline bought new single-aisle planes, but a deal fell apart when the plane maker told Delta it would not make a bigger version of its C Series aircraft.

Now, as the two companies again appear close to a single-aisle order, the industry is abuzz with chatter about whether Bombardier has agreed to stretch the CS300 to include a plane for Delta that would offer as many as 175 seats.

The negotiations on a new Delta order have their roots in the 2011 competition, when the C Series made the finals, battling against Airbus Industrie and Boeing Co.

In that order, Delta chose 100 Boeing 737-900 jets as the mainstay of its larger single-aisle fleet, or planes with more than 150 seats. It delayed ordering replacements for its smaller and older single-aisle jets that seat 100 to 150 passengers, giving Bombardier’s C Series another kick at the can.

An order from Delta now would be a breakthrough for the C Series…

Bombardier resisted building a larger CS500 version of the plane, believing the 100-to-150-seat segment represented the best niche for a new, more fuel-efficient plane and that Airbus and Boeing would be less likely to take steps to make sure the C Series never got off the ground if their cozy duopoly in the market above 150 seats was not threatened.

Bombardier miscalculated. In a deal announced earlier this year between Boeing and United Airlines, Boeing offered a 75-per-cent discount from the list price of the 737NG, indicating how anxious the company is to keep Bombardier out.

A commitment to a CS500 or a promise to study whether it could make a larger plane could signal that other airlines want a brand-new airplane and not Airbus or Boeing planes with new engines on aircraft that were designed decades ago.

British Airways has also asked about a larger version of the plane…

…an aerospace industry source in Europe said he would bet money that the official announcement of the Delta deal will not include a CS500, saying Bombardier does not have the cash to develop a larger model and will need to wait until the revenues generated by the smaller CS100 and CS300 planes starting rolling in later this year…

Hence the need for fed funding now. Meanwhile some serious snark about the feds:

Kevin Libin: We’ll beg Bombardier to take our handouts if we have to

Mesdames et messieurs, faites vos jeux.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

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7 thoughts on “Mark Collins – Bombardier: A Justification For Feds Giving Company Money it Says Doesn’t Need”

  1. Big Delta deal confirmed:
    https://www.google.ca/search?num=100&q=bombardier+delta+75+cseries&oq=bombardier+delta+75+cseries&gs_l=serp.3…38100.40157.0.41423.3.3.0.0.0.0.251.468.0j2j1.3.0….0…1c.1.64.serp..0.0.0._FdvL-afI1M

    Apparently at a heavy loss per plane (40-50%?), production not likely to be profitable until at least after 2020. Thus need fed money to keep going. Hell of a way to run a capitalist railroad, as it were–but I do wish them my best. How vicious will Boeing/Airbus get in reply with even deeper pockets?

    Mark Collins

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