A220's path to profitability: Airbus marks five-year anniversary of Bombardier C Series takeover

On the brink of the five-year anniversary since Airbus took command of the C Series program from Bombardier, reflections of its journey and the challenges that punctuated its transition are surfacing. Airbus assumed control over the program, initially launched by Bombardier in 2008, as an attempt to challenge the commercial jetliner duopoly held by Airbus and Boeing. The Montreal-based manufacturer had high hopes for the C Series, a fuel-efficient aircraft noted for its quietness. However, the venture pulled Bombardier into a vortex of debt amounting to billions, at a time when the company was already hemorrhaging cash due to a multitude of delayed train orders and flawed designs in a doomed business jet program.

Bombardier's sales were sluggish to lift-off, leading to the decision to surrender the C Series and the associated Mirabel facility to Airbus. Subsequently, Bombardier pulled the plug on commercial aviation and train manufacturing, refocusing its efforts on private jets.

Rob Dewar, a veteran Canadian engineer who had spent over thirty years with Bombardier and a pivotal player in the C Series' launch, currently holds the position of Senior Vice President of Customer Satisfaction at Airbus Canada. Dewar affirmed that Bombardier's limited resources and costly setbacks made the company's deal with Airbus an absolute necessity. He stated, "Bombardier, though a great company, found itself in a precarious financial position, which posed a challenge for the program. Customers were speculating on its survival. Regrettably, Bombardier had numerous over-budget and delayed programs, which resulted in an unsustainable cash flow situation."

Dewar argues that a partnership with a larger commercial entity made more sense. Airbus was the clear choice in this regard, an outcome that has pleased Dewar and his team. The high costs associated with new product development and the subsequent financial drain caused by such ventures have served as a stark reminder that commercial aviation is a high-stakes industry.

Despite being on the path to profitability, Airbus does not project the A220 program, formerly known as the C Series, to break even until 2025. However, there have been noticeable strides in the commercial realm, with firm orders more than doubling since the C Series was inducted into the Airbus family. As of May, orders stood at a commendable 785. The recent Paris Air Show saw Australia's Qantas exercising options to buy nine additional A220 units, pushing the backlog of future orders for the plane to 520.

Airbus currently operates two A220 production facilities, one in Mirabel and the other in Mobile, Alabama. The company is in the process of ramping up hiring at Mirabel, aiming to onboard approximately 700 employees by year-end. Over the next two decades, Airbus predicts about 7,000 units will be delivered in the A220's market segment, spanning aircraft with 100 to 150 seats. The company estimates it controls up to 60% of sales in this category, outperforming competitors such as Embraer's E2 and Boeing's 737-700.

Demand for the A220, particularly its largest variant, has been robust. Dewar mentioned he met with over 15 potential customers during the Paris event, expressing his pleasure with the commercial success the A220 has enjoyed thus far.

Despite speculations regarding Airbus venturing into a larger variant of the A220, Dewar downplayed the immediate possibility. Analysts believe that a stretch version, possibly named the A220-500, could accommodate around 170 passengers, similar to Airbus's best-selling single-aisle plane, the A320. Dewar assured that the current wings of the aircraft are robust enough to support a larger, heavier airframe, confirming the inherent potential in the platform. However, any decision to proceed will have to align with the market needs and Airbus's single-aisle product portfolio.

Airbus could possibly offer engine options beyond Pratt & Whitney's geared turbofan PW1500G, for the stretch version. However, recent issues with the engine led to Deutsche Lufthansa's Swiss temporarily grounding a third of its A220 fleet. Dewar reaffirmed that Airbus is working with Pratt & Whitney to resolve these issues, and only substantial changes like the introduction of a stretch version could potentially trigger consideration for multiple engine options.