fly18725

I think there's less utility for a small mainline aircraft in United's network because of the nature of its hubs. They're all in larger cities with strong O&D and low cost competition. United wants to use larger planes with lower per seat costs and there's usually the traffic to support it. I'm sure that there are some markets where a 100 seat aircraft works. I'm not sure there are enough of them to justify the additional cost of another fleet type. AA certainly doesn't think so.

entropy

Boeing sells aircraft below marginal production cost (ehem, 787 is now only barely profitable on a per-frame production cost basis)

and was dumping aircraft (the 73Gs for ~20M a copy) to keep BBD out.

I do not believe BBD is an efficient organization, in fact they're pretty awful in general. , wasteful and fully dependent on the government teat.

by all accounts, the C-series is a very capable, efficient clean sheet aircraft and is bringing much needed competition to the space. DL's MD-95s serve them very well and its a shame Boeing stopped producing them, but its ultimately a fundamentally inefficient 40 year old airframe, like the 737.

smxflyer

​​​​​​DL will be basing them at NYC and LAX

minnyfly

You're confusing selling below average cost with selling below marginal cost. Huge difference. The first is normal, expected early in a production run, brings a marginal profit, and in the long-run leads to a profitable program. Every airline manufacturer deals with that book loss early in the production run. The latter is not normal and can only be sustained through direct subsidies.

The 73G deal wasn't dumping for two reasons. First is that it was a domestic market, so there's no dumping no matter what the price. Second, even at that low price, it likely made Boeing a marginal profit. And with 737NG program costs long written down - and it helping gap the production between the NG and MAX - it was likely profitable any way you slice it.

That "fundamentally inefficient" 737 airframe has been proven to be much more efficient that the modern CSeries and a virtual tie with the more modern A320 family. It's not a matter of how old the original design is.

spin88

I think most people have little idea the capacity of these planes, causing misunderstanding (e.g. thinking DL will use them like a RJ ex-ATL).

First, they are in two sizes c100 = 108 seats in a two class configuration (likely what DL will use), and a range of 3500 sm. The plane will have 2-3 seating and the Y seats will be 19" wide (wider than a 767/777 seat). The c300 seats 130, and has a range of 3800 sm.

To give some context, the 739ER has a range of 3400sm.

The c300 has lower operating costs, and lower fuel burn than either the A319neo or the 737max7.

Delta as you indicated is going to be using these planes on (1) high value (lots of business travel) markets ex-NYC - taking advantage of the planes comfort as a selling point (an internal memo said NYC-DFW is the first market)- and (2) for long thin markets where more frequent service on a more comfortable plane will be a competitive advantage and the efficiency will dramatically cut trip costs. Think LAX-PHL, LAX-BOS, JFK-PHX, JFK-PDX.

United has considerable demand for these types of planes, both in the c100 (108) and c300 (130) seat range. With a hub in SFO, there are a lot of competitor hubs and second tier cities that this plane would well service, and provide UA an advantage that it currently lacks (by allowing more flights and greater comfort and better fuel burn). Think SFO-MIA, SFO-PHL, SFO-PIT, SFO-ATL, SFO-RDU. This is also a plane that might help keep UA in the mix ex-LAX by allowing longer flights that UA can't run profitably at this time.

This all said, United's PMCO management was in very, very tight with Boeing, and with both this plane, and not ordering the A321, has stuck glue like to Boeing. Rather than taking a very good offer (which DL took for the c100/c300) UA went with a dirt cheap (likely under production cost, to keep the line open) offer from Boeing for 737-700. As many said at the time, that was a horrible deal, given how bad the fuel burn is on the 737-700, and Oscar/Kirby sensibly killed the deal.

Now, with a deep pockets owner, the c100/c300 program is set. Airlines can feel comfortable that they will not buying an aircraft whose mfg may not be around long term. I would expect more orders (in particular for the c300) and any airline wanting these planes now, will have to pay more.

EWR764

Two of Delta's lower-margin hubs... my guess is we'll see CS100 in more MD-88/90/737/A32X territory than RJ, or as a 717 replacement in a similar size category, but with better operating costs.

With 108 seats, I don't think we'll see the CS100 do much TCON flying. Simply not enough seats to generate sufficient revenue to justify the operating costs. This is especially true in a more competitive market like LAX-PHL or BOS, where DL won't likely extract a revenue premium.

fly18725

The CS-300 has a range of almost 1,000 sm less than what you quote. Although the range has been better than expected, it is a marginal, at best, transcon airplane.

http://careers.bombardier.com/

P.S. The CS-300 only burns less fuel on a per trip basis, not on a per seat basis. This is a relationship that is consistent between smaller:larger aircraft.

Your point would be valid if there was, a) unrestricted slot capacity or b) a requirement to downgauge to improve financial performance. United has neither in SFO or LAX. Larger aircraft with lower per-seat costs help United better utilize limited airport capacity and compete with lower-cost airlines.

By most accounts, which I admit are anecdotal, United did not receive as good an offer for the C-Series as Delta.

Further, if you have proof that Boeing sold 737-700s below production costs, please post it. Otherwise you are alleging wide reaching irregularities impropriety, including irregularities with Boeing's program accounting.

spin88

My figures match those from the MFGs see e.g. http://commercialaircraft.bombardier...abilities.html

And if you want a well respected source, check out: https://leehamnews.com/2015/06/16/cs...dier-revealed/

And note further as Leeham notes, BBD's figures are conservative.

If you have a source saying that the c300 only has a range of 2800sm as you claim, post it. No such source exists that I know of.

Mutliple reports have said Boeing was selling the planes for $22M (list is $80.6M) and Boeing also threw in further discounts into the swap from 788s to 773ERs and 789s to further grease the skids.

there is no irregularities, Boeing can sell at less than production cost to (1) block a sale to an important and loyal customer, and (2) keep the production line running, and that is what happened. MFGs will often sell at a loss as its cheaper than having a production line sit idle.

That said, there is a lot of pot calling the kettle black by Boeing, with its massive subsidies from States (see e.g. South Carolina giving them $900 in direct aid and tax breaks) and cost plus defense contracts.

At the end of the day, Boeing's games playing has resulted in airbus getting much stronger and likely will cost them substantial business on both the defense side and civilian site in Europe.

notquiteaff

spin88 said: "The c300 seats 130, and has a range of 3800 sm."

Bombardier says:

http://commercialaircraft.bombardier...abilities.html

CS100
3,100 NM / 3,567 SM / 5,741 km

CS300
3,300 NM / 3,798 SM / 6,112 km

ASSUMPTIONS
Dual-Class Seating
85% Annual Wind / Enroute Temperature ISA
Typical Mission Rules

(all bolding added).

So... Bombardier is offering incorrect numbers on their site?

mduell

At 0.78M LRC? If you don't mind adding 20 min to your trip time.

fly18725

I made a mistake in my conversion of sm to nm. My apologies: I don't copy-and-paste information from paid-for-click blogs.

I don't think you understand Boeing's accounting policies, nor do you refer to credible sources. Although significantly different, neither Airbus nor Boeing can sell aircraft below the marginal or actual cost of production (as the case may be) without recording a loss. For what its worth, Bombardier is bound by similar rules, which is why they recognized a loss on the Delta sale.

shimps1

Is 20 minutes for a TCON route going to make you book away from a plane? Or will <17" seats do it? I know which one I would pick.

spin88

Boeing cut deals elsewhere to bring the effective price yet lower. We don't know the accounting in any event, since the deal was cancelled by a new management team at United

Responding to this earlier statement, fuel burn information is very hard to find. There are lots of reports, saying that the c300 has a lower CASM, particularly as the flight gets longer. I've seen no reports from Swiss that the fuel burn is not as anticipated.

Best I have every found is the wiki site: https://en.wikipedia.org/wiki/Fuel_economy_in_aircraft

compairison is for 1000 sm (and again, I expect the c300 to do better as range lengthens) but they reports:

c300 (at 135 seats) - 1.85 L/100 km (127 mpg/seat)
a319neo (at 136 seats) - 1.93 L/100 km (122 mpg/seat)
b737max7 (at 140 seats) - 1.94 L/100 km (121 mpg/seat).

The 2 class configurations are listed as 140 for the neo, 138 for the max, and 130 for the c300 so this is close to, but not at "head-to-head"

But the real proof is that basically no one has ordered the 319neo or max7, and dispute major issues BBD (questions about BBD's viability, poor service reputation, fear of stranded fleets, no ability to package with other jets) has gotten more orders for the c300.

Expect the log jam to break on this plane shortly.

fly18725

Your statement makes no sense. Boeing's - and Airbus' - accounting is program specific. You can't hide losses at the program level by selling other airplanes at a profit.

If anything, I think the data you've posted confirms there is strong market preference for aircraft 150 seats and larger. The marginally higher trip costs are offset by the opportunity to sell additional seats and have lower per-seat costs allows network carriers to be competitive with their lower cost competition.

You're certainly welcome to think that the market is wrong.

drewguy

It's a shame the Us government won't let Delta (and United and American) say "thank you Canada for subsidizing cheap aircraft for our airlines and passengers".

Anyway, putting aside that, why can't Delta (or United) arrange for International Lease Finance Corp. to buy these planes through a Canada subsidiary and then lease them to it. Wouldn't that avoid the duties?