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Seats being tested for fit in a C series fuselage interior (Christinne Muschi For The Globe and Mail)
Seats being tested for fit in a C series fuselage interior (Christinne Muschi For The Globe and Mail)

Bombardier lags in orders for narrow-body jets Add to ...

Airlines are opening their wallets to buy new, more fuel-efficient, narrow-bodied airplanes, but an Airbus SAS plane that won't arrive until 2016 has bested the new C series from Bombardier in some key deals.

Virgin America Airlines will be the first to fly the Airbus A320 with more fuel-efficient engines, building on a massive order of new-engine A320s from IndiGo airlines announced last week.

The Virgin America order Monday came on the same day that Air India said it wants to lease some Airbus A320s as well as some regional jets from Bombardier, though not the C series. In addition, Japan-based ANA said it will buy A320 models or 737 narrow-bodied aircraft from Boeing.

The flood of orders for Airbus underlines the difficulty Montreal-based Bombardier faces in breaking the dominant hold the Airbus-Boeing duopoly enjoys in the narrow-bodied market. Though Bombardier is spending some $3.4-billion (U.S.) to develop a competing aircraft in the segment, Airbus and Boeing have spent decades cranking out A320 and 737 models, giving them massive pricing power and economies of scale.

Gary Scott, president of Bombardier Commercial Aircraft, said the Virgin America and IndiGo purchases actually bode well for Bombardier.

"It's good to see orders in general," Mr. Scott said. "It says the industry is getting healthier."

He pointed out that the A320 is a bit larger than the 100- to 149-seat C series offerings. Airbus did not say how many of the Virgin America or IndiGo planes would be smaller versions within the A320 family that Bombardier has targeted with the C series.

Bombardier has 90 orders for the C series. But the plane is being used by some airlines to try to convince Airbus and Boeing to upgrade their existing aircraft amid fears of rising fuel prices.

Key customers are urging Boeing to develop more fuel-efficient engines to match the 15-per-cent fuel efficiency gain offered by the new Airbus engines. Bombardier is promoting similar fuel savings, plus lower maintenance and other costs that it says create a 20-per-cent operating cost advantage for the C series.

"We told [Airbus]if they didn't go ahead, we'd look at other options," David Cush, president of Virgin America, told reporters in quotes that were confirmed by the airline. The $5-billion order for 60 A320s was first reached at the Farnborough Air Show in July but kept under wraps until Airbus officially announced this fall that it would upgrade the engines to make them more fuel efficient.

The Virgin America deal follows a $16-billion order announced last week by IndiGo, which is believed to be the largest single aircraft order yet and includes 150 new-engine A320 models.

"The airline industry is strong and demand for aircraft is even stronger," John Leahy, Airbus's chief operating officer, said in a video on the company's website.

Bombardier seems to get close to deals for the C series, but "then, no cigar," said Addison Schonland, a long-time industry analyst and a principal of consulting firm AirInsight.

Mr. Schonland and other industry analysts pointed to a potential order of as many as 200 airplanes announced by Delta Airlines last week as key for the C series.

Delta is already a large Bombardier customer and operates about 500 of the Montreal-based company's regional jets. Delta merged with Northwest Airlines in 2009. Northwest was scheduled to be the launch customer for the C series to replace an aging fleet of DC-9 aircraft until it went into Chapter 11 bankruptcy protection and merged with Delta.

"That need has not gone away after the merger," Mr. Schonland said. "So I would believe that Bombardier is in with a good chance to secure an order from Delta, as it has a most compelling product in the right size and the right time frame," he said.

Mr. Scott reiterated that Bombardier is in advanced discussions with a handful of airlines.

"I do see orders happening in the not-too-distant future," he said, although he would not disclose a specific time period.

The C series represents "a material threat" to Airbus and Boeing, aviation consulting firm the Boyd Group said in a report last week that offered a forecast for 2011.

"The prediction is that the airline industry, faced with permanently higher jet [fuel]bills, will in 2011 produce more than cameo orders for the C series," the firm said.

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  • Bombardier Inc
  • Updated November 20 1:16 PM EST. Delayed by at least 15 minutes.

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