{"id":47898,"date":"2017-10-17T09:21:10","date_gmt":"2017-10-17T09:21:10","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=47898"},"modified":"2017-10-17T09:21:10","modified_gmt":"2017-10-17T09:21:10","slug":"midnight-in-toulouse-how-cseries-deal-shook-status-quo","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/midnight-in-toulouse-how-cseries-deal-shook-status-quo.html","title":{"rendered":"Midnight in Toulouse How CSeries deal shook status quo"},"content":{"rendered":"

Midnight in Toulouse How CSeries deal shook status quo<\/span><\/strong><\/span><\/h2>\n

Midnight in Toulouse How CSeries deal shook status quo: The nocturnal gymnastics by Europe\u2019s largest aerospace group stunned the aircraft industry which had been riveted for weeks by a trade dispute between Boeing and Bombardier that threatened to hit the CSeries with large U.S. import fees.<\/span><\/p>\n

Now, the 110-130-seat jet will be built for U.S. airlines at Airbus\u2019s Alabama assembly plant, circumventing any import penalties in a move that apparently caught Boeing off guard.<\/span><\/p>\n

Analysts say that potentially turns the CSeries from an attack on U.S. jobs, as portrayed in Boeing\u2019s complaint, to a job creator in a key Republican state, though Boeing termed the move a \u201cquestionable deal\u201d between two of its subsidized competitors.<\/span><\/p>\n

The deal also signals the end of Airbus efforts to promote the A319, <\/span>its smallest jet which has not posted a sale in years.<\/span><\/p>\n

\u201cThe stunning Airbus-Bombardier partnership for the CSeries program guarantees the future of the new airplane, kills off the A319 and thrusts a big stick up Boeing\u2019s tailpipe,\u201d Leeham Co analyst Scott Hamilton wrote.<\/span><\/p>\n

Strategically, however, the move extends well beyond the noise of Boeing\u2019s spat with Bombardier and could trigger a riposte from other <\/span>planemakers, including Boeing itself.<\/span><\/p>\n

Commercial aerospace has four main powers dominated by Airbus and Boeing, which share the market above 150 seats.<\/span><\/p>\n

Brazil\u2019s Embraer and Canada\u2019s Bombardier compete between 100 and 150 seats as well as in the market for smaller regional jets.<\/span><\/p>\n

But China and Russia lead a field of new entrants vying to break into the $125 billion a year commercial market, along with smaller regional players such as Japan.<\/span><\/p>\n

BOEING-EMBRAER ALLIANCE?<\/span><\/p>\n

Tuesday\u2019s deal starts to rearrange the deck in a move that many have been expecting since former Airbus head Louis Gallois warned six years ago that the market was getting too crowded.<\/span><\/p>\n

In particular, it could drive Boeing closer to Embraer, with which it already cooperates. Embraer\u2019s E2 jet is one of the main potential losers from the CSeries deal.<\/span><\/p>\n

\u201cThe world has two top-tier <\/span>airframers, and two second-tier airframers,\u201d said Teal Group analyst Richard Aboulafia.<\/span><\/p>\n

\u201cAirbus and Bombardier are now allies. This greatly increases the likelihood of a stronger Boeing-Embraer alliance as a response.\u201d<\/span><\/p>\n

Such a move has long been contemplated in private.<\/span><\/p>\n

The CSeries benefits from a new type of efficient engine. Its launch in 2008 eventually prompted Airbus to put the same generation of <\/span>engine on its own A320 to protect its main profit source.<\/span><\/p>\n

That in turn forced Boeing to dump plans for an all-new single-aisle plane in 2011 and opt for a makeover of its best-selling 737 with similar engines, to be known as 737 MAX.<\/span><\/p>\n

But sitting in Boeing\u2019s filing cabinets are designs for an all-new jet that would have involved intense collaboration with Embraer, according to two people familiar with the project. A template for closer co-operation therefore already exists.<\/span><\/p>\n

Boeing and Embraer declined to comment.<\/span><\/p>\n

The two companies already work on projects including runway safety and alternative jet fuels. Their partnership has intensified in recent years to include Boeing\u2019s commitment to joint sales and support of Embraer\u2019s KC-390 military aircraft.<\/span><\/p>\n

The Airbus-Bombardier deal also marks a pause in strategic advances made by China, widely seen as the most serious future competitor to Airbus and Boeing.<\/span><\/p>\n

Debt-laden Bombardier had been in talks with China as it waited for Airbus to come around to the CSeries.<\/span><\/p>\n

\u201cChina has missed out on a huge opportunity to advance its aims by not getting the CSeries,\u201d an industry strategist said.<\/span><\/p>\n

PRODUCT STRATEGY<\/span><\/p>\n

The deal also has potentially far-reaching consequences for product strategy and technology at Airbus and Boeing.<\/span><\/p>\n

A person close to Bombardier said Airbus would aim to pressure the key Boeing 737 MAX 8 model by squeezing it from below with the CSeries and from above with the popular A321neo. Some critics say it could also develop a larger CSeries.<\/span><\/p>\n

But critics say airlines don\u2019t want such a patchwork of products. The deal clashes with one of the core philosophies in the Airbus brochure to date – a compatible family of aircraft where pilots and maintenance staff can be redeployed easily.<\/span><\/p>\n

Airbus will also get its hands on promising technology.<\/span><\/p>\n

Workers in Belfast, whose jobs have been at the center of a political storm over the Boeing-Bombardier dispute, are using innovative wing production techniques that may now be deployed by Airbus for future jets.<\/span><\/p>\n

That could increase tensions at the World Trade Organisation where Boeing has battled with Airbus for years over government loans. Bombardier received such UK funding in Belfast, meaning recent trade friction may shift to the larger stage at the WTO.<\/span><\/p>\n

Source:http:\/\/www.reuters.com\/article\/us-bombardier-airbus-strategy-analysis\/midnight-in-toulouse-how-cseries-deal-shook-status-quo-idUSKBN1CM0T6<\/span><\/p>\n

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