Airbus’s top salesman John Leahy is unmoved by recent Bombardier CSeries sales successes and remains sceptical that the twinjet is becoming a genuine rival. He does not believe Bombardier has the financial wherewithal to sustain the sort of long-term, loss-making sales strategy usually required to become established as a major mainline jet player.
“At this point I don’t [see the CSeries as a threat]. They have a nice airplane but they don’t have a family of aircraft yet,” says Leahy, who is Airbus’s chief operating officer for customers.
“Everybody knows they booked a $500 million loss they claim is for ‘recent orders’ – I think everybody assumes it’s virtually all Delta. How do you build a business case for that?”
Delta’s April deal for the Pratt & Whitney PW1500G-powered CSeries covered firm orders for 75 aircraft and an additional 50 options. Earlier this year, Air Canada signed for up to 75 aircraft.
“Rumours in the industry have the [CSeries] pricing level in the low 20s [million dollars]. If they want to sell the airplane in the low 20s then they probably could. But I don’t see how you could do that though,” says Leahy.
“They’ve proven that they can give away the airplane. I’m not sure that giving away your airplane is a business case. They’ve not proven that they can sell the airplane profitably.”
The Airbus executive says that it is widely believed within the industry that Bombardier “gave away the store” to secure the Delta order, so it will struggle to secure realistic pricing from other customers. “That’s going to become the pricing level,” he says.
Leahy, who has worked for Airbus for more than three decades, acknowledges that in the past the European manufacturer had to be innovative with its sales strategies as it sought to challenge the establishment. But this requires huge financial clout to be sustained long enough for success.
“I know what Bombardier is trying to do. I don’t think that works,” he says. “Airbus in the old days had a long-term perspective. It was a GIE [corporate structure]. Whether Airbus lost money or not, at least the partners tended to make money. And even if they didn’t make money, they were in for the long haul.”
He says such a strategy could cost a company annual losses of several billion dollars for 20 years to establish itself as a major player. “If you were to ask me who were going to be the major players other than Airbus or Boeing 20 years from now, I’d have the Chinese at the head of that list. But I’m not sure I’d have Bombardier on that list,” says Leahy.
Source: Cirium Dashboard
