Suddenly, small is sexy. Airbus SE and Bombardier Inc. have joined forces to battle Boeing Co. in the short-haul jet market. The move by Airbus to take a majority stake in Bombardier’s all-new C Series, a narrow-body aircraft with 108 to 160 seats, will give the planemakers a more comprehensive offering against Boeing’s workhorse, the 737. It could even crimp China’s plane-building plans. Big long-haul jets might be seen in the background of more selfies, but for carriers, smaller planes are the real stars.
1. What’s the appeal of these smaller planes?
They meet the demands of the market, since most people fly shorter routes rather than between continents. Single-aisle aircraft are by far the biggest category in the commercial aviation market, providing the backbone of fleets. Boeing predicts a market for 29,530 narrow-bodied jets through 2036, or 72 percent of all deliveries. That’s valued at $3.18 trillion.
2. What’s special about the C Series?
It’s got a fuel-efficient build with carbon-fiber composite wings, a first in the narrow-body segment. It also offers a more modern design than either the Boeing 737, which dates from the late 1960s in its original form, or Airbus’s A320, which first flew in 1987.
3. Why did Bombardier and Airbus team up?
Bombardier was already struggling to sell its C Series, in the U.S. and elsewhere, when the U.S. Commerce Department slapped huge import duties on the jet in recent weeks. The department said subsidies from the Canadian government gave the C Series an unfair price advantage. So Airbus agreed to contribute its marketing clout by taking a 50.01 percent stake in the C Series -- without having to pay any upfront cash.
4. What’s in it for Airbus?
It expands Airbus’s offerings, since the C Series is a bit smaller than the A320. Airbus says it can avoid the U.S. tariffs by locating some production of the C Series -- which already has half of its content coming from the U.S. -- at its Alabama assembly plant. Bombardier, which has gotten 360 firm orders for the C Series, thinks the growing number of short-haul flights worldwide could spur sales of 6,000 planes of the C Series’ size over the next two decades. Airbus’s greater market reach should help sales. And some of the C Series technology may help Airbus build a bigger medium-haul plane to match Boeing’s planned replacement of the 757.
5. What does this mean for Boeing?
Stiffer competition, which it was hoping to avert by arguing the case for tariffs on the C Series planes. Boeing’s smallest 737 model is about the same size as the Canadian plane.
6. Why does this affect China?
China is developing its first mid-sized plane, the 174-seat C919, using customized parts from Boeing and Airbus models. It was already going to face headwinds in selling a plane without a proven track record. Now it will face even more competition as Airbus adds the C Series to its lineup.
The Reference Shelf
- The stock market sure liked the Bombardier deal.
- QuickTake explainers on China’s C919 and the dethroning of jumbo jets.
- Airbus owes a thank you to Boeing and Donald Trump, Bloomberg Gadfly columnist Chris Bryant writes.