United Airlines will take 40 new 737-700 aircraft from Boeing into its fleet starting in 2017. This is the latest move from the carrier in its efforts to grow the average number of seats per flight and reduce dependency on 50-seat regional jets. It is an order which many analysts had been watching not for the impact on Boeing or even on United but for what it means to Bombardier Aircraft as it seeks to secure the future of the CSeries program. And the headlines this morning were not pretty in that context.
— Edward Russell (@e_russell) January 21, 2016
Speaking during the analyst earnings call today CFO Laderman may have resuscitated hope in Mirabel, suggesting that the company is not done shopping yet.
For this batch of orders we looked at all the variations – the A319 as well as the 737 and the 100-seat opportunities from both Embraer and Bombardier. We continue to look at aircraft and we will continue to look at those aircraft types going forward.
This is not quite as bullish a statement as that which Delta’s CEO Richard Anderson made earlier in the week during his company’s earnings call but it does suggest that all hope is not yet lost for the CSeries to show up in a United livery one day. The large and growing 737 fleet and the incoming Embraer orders – albeit the smaller size – do reduce the chances of a Bombardier win at United but the door is not completely closed yet.
Or United is simply dangling that option in front of Boeing to keep driving the price of new 737s down. Given that the company is also taking used 73Gs and A319s into the fleet in the coming years the air framers have a significant challenge in convincing the airlines to buy new at this point.
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Speaking of Anderson’s comment, many stories suggest that it means an order is imminent or likely. I’m less convinced that’s the case. Here’s the full quote from the call transcript:
They brought the CSeries to Atlanta right before Christmas and we met with Fred Cromer, the President of Bombardier, and it’s a pretty impressive airplane. The geared turbofan is really the first big innovation since the Boeing 787 revolutionized the composite structure for the body – the fuselage of the airplane. So we actually think that at the right price, it is quite a competitive airplane, particularly given the engine technology. So, we are taking a very serious look at it.
It came in response to a direct question and most interesting to me is the analogy Anderson uses, the 787’s composite fuselage structure. Both are, of course, significant changes to the technology of aviation. But Anderson has actively sought to avoid adding the 787 to Delta’s fleet. It is hard for me to take too seriously the idea that this comment is a significant nod to the CSeries given the carrier’s recent history of not pursuing such step-change technologies aggressively.
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