FLUG REVUE July 2005: Bombardier CSeries plans advance

July 2005

CSERIES SEEKS ENGINE

By Patrick Hoeveler

Right in the middle rather than alongside: Bombardier intends to position its planned CSeries right between the relevant products of Embraer and industry giants Airbus and Boeing. Following the sales launch on 15th March, the company has apparently met with “great interest” from several airlines. Montreal Mirabel has now been fixed as the final assembly site should the Canadians officially launch the programme. One decisive factor was a new trade union agreement with the Bombardier workforce in the province of Quebec. The factory in Belfast, Northern Ireland, will develop and produce wings, engine nacelles and composite tail assemblies. The development costs, which are estimated at US $2.1 billion, are to be borne one-third by each of Bombardier, subcontractors and the participating states. Letters of intent have been signed by the Canadian government, the province of Quebec and the United Kingdom promising contributions of $262.5 million, $87.5 million and $340 million respectively. The arrangements are bound to attract fresh controversy at the World Trade Organisation. Thus, the Market Analysis department of Embraer is already saying, “If the aircraft is based on subsidies, where is the physical value?” By contrast, the view taken in Montreal is, “We are convinced that our contracts with Canada and the United Kingdom are WTO-compliant. But we have to be prepared for everything.”

More worrying for the Canadians, however, is the still unresolved issue of which engine to use, as it is now official that no new engine model will be developed for the CSeries. Thus the International Aero Engines consortium, which was the likeliest to have been prepared to embark on such a project, is now saying, “We have not been able to come to mutually acceptable commercial terms with Bombardier.” Its competitor CFM had already given the new jet project the thumbs down when it was unveiled at Farnborough last year (see FLUG REVUE 9/2004). Even a modified version of the CFM56 is unlikely, as a spokesperson in Cincinnati pointed out, “CFM International and Bombardier Aerospace completed a joint evaluation of the CFM56 potential compatibility with the CSeries aircraft currently under development. CFM has concluded that a long term product strategies are not complimentary and have thus elected not to pursue any agreement with Bombardier at this time.” Although the company wishes to “leave the door open for future discussions”, the possibility of using a product developed jointly by GE and Snecma (now part of the Safran Group) behind the scenes is more or less ruled out. The same applies to possible increased thrust versions of the CF34-10 or SaM146, as these would then fall into the thrust segment of CFM, which is not allowed contractually. None of the other major European engine manufacturers appears to be very interested in the CSeries either. This leaves the Pratt & Whitney PW6000 the only suitable candidate.

Meanwhile East Hartford would not be drawn on the issue. “We will discuss with Bombardier if the technology available in our current products, including the PW6000, could be adapted to meet C-Series requirements and could we do this in a way that makes business sense for both companies.” It was still too early for technical questions. However, it is understood from industry sources that discussions have probably been going on for some time. The engine, which was actually developed for the rival Airbus A318, would be right for the CSeries as regards size and rating. Moreover, from a development point of view, this is the latest model. According to insider information, savings of between seven and ten percent would be possible with this model compared with other engine types. But here again there will just be a modified version of the PW6000 and not a completely new version, which would be “too expensive and too risky”.

A manager from Bombardier confirmed to FLUG REVUE: “We are currently in discussions with several engine manufacturers with regard to a derivative or improved version of an existing engine.” The new engine was originally supposed to be responsible for seven percent of the 15 percent reduction in operating costs for the whole aircraft compared with present models. This is now looking somewhat unlikely. “We will revisit our benchmark and the design of the aircraft. An eleven to twelve percent saving would still be quite an achievement,” he said. “So far we have been getting strong interest from the airlines. They are looking for us to come up with an engine. We need to find an engine as soon as possible. Le Bourget would be a good opportunity.”

In the industry it is believed that a new powerplant model would not be financeable. The risk of developing an engine for only one possible application is apparently much too high, especially as the market prospects are not clear-cut. Among the competition the project is even seen as simply an “attempt to keep something afloat”. Bombardier predicts a requirement for up to 6,000 aircraft in the 100 to 149 seat range over the next 20 years. On the other hand Airbus, for example, while forecasting 6,416 units in this category, expects only 3,293 of them to be in the class of 100 to 125 seats that is relevant for Bombardier. Given its own product range, Embraer’s top market analyst, Orlando Neto, does not agree with the Canadians’ high figures. “The competitive pressure lies more on Airbus and Boeing than on our side. It is a formidable challenge to create a value on top of what is there.” The aircraft in this category have not actually proved big moneyspinners as yet.

According to President Gary Scott, with the new commercial aircraft programme from Montreal this is now set to change. “The CSeries family is the perfect balance of leading-edge technology, improved operating economics and passenger comfort.” The centre fuselage and wings will largely be constructed out of aluminium alloys, while the tail cone and empennage will be built out of composite materials. The composite proportion was originally 20 percent, but could rise to compensate for the reduced savings to be had from the engine. Despite this, the company is sticking to its original timescales, with official programme launch scheduled for September, maiden flight in 2008 and entry into service in 2010. “An already existing engine type existed could have a favourable impact on the time schedule,” says the Bombardier manager. But before then they have to find themselves an affluent launch customer. In the USA, the requirement for a new type as a replacement for models like the MD-80 or older 737s may be large, but recently a large number of the American airlines were operating under Chapter 11.

From FLUG REVUE 7/2005

Last updated 10 June 2005

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