Aircraft may finally be breaking through the barriers
Bombardier announced a new C Series order as part of its quarterly results. Market speculation immediately spiked. This has been an event everyone has been waiting for, especially the announced alliance with Airbus.
Here is what we know: the customer is EU-based. That means deliveries from the Mirabel factory are outside the reach of the US Department of Commerce 300% tariff.
Here is what we have been able to discern. This is not an existing customer. This is a crucial item because it means fresh interest in the program. It would be wonderful for Bombardier if Lufthansa were to buy more aircraft but if Bombardier were to have a choice, a new customer is far more valuable. It means another customer has undertaken due diligence and found the C Series to be the best option for its fleet needs.
Another item we have been able to discern is that this order is for a combination of models. This is also very important as it means both models continue to gather interest. Program interest is crucial because it reflects momentum. Critics have noted, with cause, that the C Series program has lacked momentum.
A key question on everyone's mind is how the Airbus deal with Bombardier impacted this customer's decision? It must have had a supportive role. However, this customer had to be working with Bombardier long before the Airbus deal came to light. While the Airbus deal offers substantial market support, this new customer must have been well into its decision before the Airbus deal was made public.
Momentum is building for the C Series as evidenced by the news leak from Cairo about a deal with EgyptAir. We expect a deal to be announced at the Dubai show for CS100s. With the Airbus news now in the open, the market for the C Series feels different now. Airlines and lessors can review and consider the C Series without anywhere near the risk and concern they had even three months ago. The engines are proving to be as effective as promised, even if they are delivered more slowly than everyone wants. The aircraft is doing better than anyone might have expected at SWISS and airBaltic. The latter has already ordered more.
In conclusion, the C Series program may, at last, be breaking through the barriers that have been put in its path. It has a powerful and aggressive competitor now onside. This simplifies the work for Bombardier's marketing and sales team just as it simplifies the market response to the aircraft.
Addison Schonland is an analyst at airinsight.com