PARIS – While Boeing and Airbus belied expectations by winning 937 new orders and commitments at the 2017 Paris Air Show (PAS), the annual aviation extravaganza was less of a blockbuster for secondary manufacturers Embraer, Bombardier, ATR, and Mitsubishi amongst others.

Bombardier CSeries still lags

The headline for Bombardier is not necessarily any of its four orders for the Q400 turboprop, which were important and meaningful for the Toronto-based aircraft manufacturer.

Instead, Bombardier will once again exit the major summer air show having failed to win a substantial order for its next generation CSeries jet. Since winning blockbuster orders from home country carrier Air Canada and Delta Air Lines in early 2016 for 120 combined frames, Bombardier has not won a single order for the CSeries despite both variants (the 100-seat CS100 and 130-seat CS300) entering into service in 2016 with Swiss Global Air Lines and airBaltic respectively.

Bombardier’s CSeries backlog now numbers 346 airframes, so it is still relatively healthy. But if there are no additional orders within the next 6-8 months, it might be time for Bombardier to worry.

The market fundamentals for small mainline jets are not good – existing offerings are highly economical on a seat-mile basis when fuel prices are low and the regional routes served by the CSeries are not a priority for most of the world’s airlines.

Another big challenge for the CSeries is that it isn’t a great fit the world’s second or third largest domestic air travel markets. Both China and India have substantial infrastructure constraints at key hub airports (Beijing in China and Mumbai in India) as well as ATC constraints.

This means that despite having substantial domestic short haul requirements (normally the sweet spot for 100-150 seat jets), neither market is viable for the CSeries.

Beyond the CSeries, Bombardier did more than double its current backlog for the Q400 (~20 jets with <15 purchase options), adding another year’s worth of production to the Q400 line.

The backlog now lasts into early 2019 at the current production rate. Relative to current market conditions, PAS 2017 was a very good show for the Q400. In an era of low fuel prices, the Q400 is naturally going to be less economical than the ATR 72 while still suffering all of the customer perception disadvantages of turboprops.

Bombardier isn’t going to win many new blockbuster orders like the IndiGo ATR 72 purchase, but the Q400 has its niche and there are existing customers that need more. We now expect Bombardier to be able to drag out production into the early 2020s, which is more than we’re able to say for the CRJ program.

The new orders and commitments at PAS for Bombardier break down as follows

  • Philippine Airlines – 7x Q400
  • Ethiopian Airlines – 5x Q400
  • Cem Air – 2x Q400 (LOI)
  • SpiceJet – 25x Q400 (LOI)

Total Orders & Commitments (Firm)

  • Q400 – 39 (12)
  • TOTAL – 39 (12)

Embraer gets a bit of E2 momentum

Embraer did not have a blockbuster show for its CSeries rival E190/E195-E2 either, though by virtue of winning orders and commitments for 30 E190-E2 jets (from unrevealed customers) it now officially has more momentum than the CSeries (not a difficult standard to meet).

The E190-E2 is progressing rapidly towards entry into service (EIS) in the first half of 2018. But even more so than the CSeries, it has had its raison d’être diminished by low fuel prices (a simple re-engine generates most of its economics improvements from fuel burn reductions).

The present backlog including commitments now numbers just 263 jets, which is weaker than the figure for the CSeries at the equivalent time prior to EIS. And Embraer should be worried about the order from SkyWest Airlines for 100 E175-E2s, representing more than 40% of the firm order backlog.

The E175-E2 as currently designed is too heavy for current U.S. scope clauses (the same problem as the MRJ) and there is no momentum to increase the allowed weight of aircraft (if anything pilot contracts are getting more restrictive). We see significant risk to this portion of Embraer’s backlog.

  • Japan Airlines (J-Air) – 1x E190
  • KLM Cityhopper – 2x E190
  • Fuji Dream Airlines – 3x E175
  • Belavia – 1x E175, 1x E195
  • Unidentified Customer – 10x E190-E2
  • Unidentified Customer – 20x E190-E2 (LOI)

Total Orders & Commitments (Firm)

  • E175 – 4 (4)
  • E190 – 3 (3)
  • E195 – 1 (1)
  • E190-E2 – 30 (10)
  • TOTAL – 38 (18)

ATR launches STOL ATR 42

ATR had a quiet show by its normal standards, as the blockbuster order for the first half of 2017 came from Indian ultra-low cost carrier (ULCC), IndiGo, who bought 50 ATR 72 turboprops to serve India’s UDAN regional air travel connectivity scheme.

The big news points for ATR were first that it won orders from China, which is not an optimal market for turboprops for many of the same reasons as outlined above in the Bombardier section. Second, ATR launched an ATR 42 with short take-off and landing (STOL) capabilities.

This may seem like a minor upgrade but when the primary driver for ATR sales (high fuel prices) no longer exists, adding capabilities for hard to serve markets is a way of drumming up sales.

  • Tianju Investment Group – 10x ATR 42-600 (LOI)
  • Xuzhou Haunting – 3x ATR 42-600 (LOI)
  • Air Senegal – 2x ATR 72-600

Total Orders & Commitments (Firm)

  • ATR 42 – 13 (0)
  • ATR 72 – 2 (2)
  • TOTAL – 15 (2)

Not a peep from other manufacturers

Mitsubishi’s MRJ is going to need a substantial redesign to pull weight out of the airplane, so we expect even more delays. COMAC’s C919 is increasingly viewed as a generation behind the A320neo and 737 MAX, though Chinese airlines and lessors are buying it for political reasons (most recently China Everbright buying 30 in early June).

The Irkut MS-21 had its first flight in may and will start certification testing in the fall but hasn’t won a substantial order in ages. Sukhoi’s Superjet is nearing its 10th anniversary since rollout, and Sukhoi is apparently committed to expand the platform with a new 130-seat platform by 2023.

This development would also re-engine the existing 100-seat SSJ to create a re-engined family theoretically competitive with the CSeries.