Airbus, Bombardier advise patience concerning A220 orders

When the partnership between Airbus and Bombardier was finalized in July 2018, giving the European aircraft manufacturer a majority stake in the Canadian-built C Series, there was both optimism and apprehension about what the deal might mean for suppliers.

The addition of a fifth original equipment manufacturer (OEM) to the Quebec aerospace sector was welcomed news–Airbus announced Canada would become its fifth home country, joining Bombardier, Pratt & Whitney Canada, Bell and CAE in the dynamic Montreal aviation cluster. But Airbus’ larger participation also came with a commitment to drive down costs on the C Series.

Nine months later, executives from both companies were urging patience as they continue to ramp up production and integrate the aircraft into the Airbus family.

“The whole purpose of the partnership is to take this fantastic [aircraft] . . . and unleash its potential,” Philippe Balducchi, chief executive officer of the C Series Aircraft Limited Partnership, told over 650 aerospace executives at the Global Supply Chain Summit on April 16 in Montreal.

Sales of the newly-renamed A220 have been modest since the deal closed–in December, JetBlue and startup Moxy each committed to 60 aircraft and Delta Air Lines added 15 to its original order of 75, while in January Air Vanuatu ordered four–but Balducchi assured suppliers the Airbus global sales team was heavily involved in the program.

“There is a strong focus of the Airbus management on this program,” he said. “We saw a renewed interest at the time that the partnership was announced. We have to be patient.”

Alain Bellemare, president and CEO of Bombardier, was equally buoyant about the prospects of the aircraft. “The entry into service has been remarkable–one of the best that I have seen in my career,” he said.

He admitted Bombardier did not have the balance sheet to “fully unleash the value of this aircraft,” but said the A220 is a “perfect fit” strategically with Airbus. He also urged patience on the sales front. “I think it takes a bit of time.”

In a room of domestic suppliers, both executives made no bones about the need to reduce the aircraft’s production costs. Bellemare acknowledged the price of components had been an ongoing issue for Bombardier and suggested Airbus would wield more clout. “They are bringing their supply chain leverage, which is exactly what we needed,” he said.

Added Balducchi: “We aim at double digit reduction and we are progressing there. The performance of the suppliers from a cost point is absolutely key.”

Still, with a backlog of over 7,000 aircraft across its fleets, he assured Canadian small and medium businesses that Airbus is well positioned to capitalize on the demand for planes to meet air travel demands in the coming decades, generating more opportunities throughout the supply chain.

One limiting factor to satisfying that growth “is our ability to deliver aircraft. So, the supply chain has to be ready to sustain that growth, which means investment, which means the capacity to ramp up,” he stressed.

“[They] also need to step up their quality level. Talking specifically about the A220, we are suffering some quality issues across the board,” though that is not unusual for a program in the ramp-up phase, he noted.

While Airbus is on pace to begin production of the A220 in Mobile, Ala., primarily for U.S. customers–“We are receiving parts currently which will go on the first aircraft to be delivered around [the middle of] next year,” said Balducchi–the supply base is expected to remain largely the same for the foreseeable future.

Betting on business jets

With the C Series in the hands of the Airbus sales and marketing teams, business jets are once again Bombardier’s primary focus. Bellemare said the company will continue to assess its options on the CRJ–the now 25-year-old series of regional jets has a backlog until 2020 and “. . . we’re trying to keep this product line going” providing that backlog can be increased–but the restructuring that has dominated headlines for the past several years has resulted in a renewed concentration on business aircraft.

“We still have 16,000 people, we still have 600 suppliers in Canada, we will continue to invest in R&D,” said Bellemare. “We’re almost through the last phase of our turnaround journey; another 12 to 18 months and then we will be at a different place.

“So [our] focus is around business aircraft,” he continued. “We produce the most business aircraft of any of our competitors. We are working now on the upgrade of our Global 5000 and 6000 with a new 5500 and 6500. We have the best aircraft in the midsize cabin with the Challenger 350. So, with the Global 7500, and 6500 and 5500, we will have the best portfolio in the industry.”

For suppliers wondering about additional opportunities with Airbus, both Balducchi and Bellemare pointed to the large Canadian military recapitalization program currently underway as a potential source for future work.

Airbus Defence and Space was awarded a $2.4 billion contract in December 2016 for 16 C295 fixed-wing search and rescue (FWSAR) aircraft to replace the Air Force’s aging fleet of CC-115 Buffalos and the CC-130H Hercules assigned to SAR duty.

Pratt & Whitney Canada is supplying the engines, L3 Wescam is providing electro-optical sensors, and CAE is delivering a complete SAR training centre. The first C295 will be delivered later this year.

Airbus is now eyeing the replacement of the CF-188 Hornet fighter jets–it is among four contenders with its Eurofighter Typhoon and will submit a bid “if we have an open competition, a clear competition,” said Balducchi. And the company will likely be a strong contender for the next strategic tanker transport capability that will replace the CC-150 Polaris.

“We don’t have much military work in Canada . . . [but] from these military investments, if you have the right offset requirements . . . that are directly linked to the work that we are all doing . . . you build from this,” said Bellemare. “It brings volume, it helps with your costs, it brings technology, and this technology can be used on commercial applications . . . And that is what we don’t have here in Canada versus the U.S. or Europe. Partners like Airbus who understand that this is something big and meaningful.”

Success on military contracts would mean more investment in Canada, said Balducchi, noting that the vibrant aerospace ecosystem and “drive for innovation” offer significant value to Airbus.

“My dream would be to have Mirabel as a small Toulouse.”