Bombardier, AVIC close to deal

 - February 27, 2008, 8:44 AM

Bombardier Aerospace expects to conclude negotiations soon with Chinese state aerospace conglomerate AVIC I on the terms of an agreement under which the Canadian company would help China develop the 105-seat ARJ21-900. For its part, Bombardier would get $400 million and a risk-sharing partner in the proposed
C Series airliner, due for industrial launch some time this year.

Bombardier Aerospace new commercial aircraft president Gary Scott told AIN in January that he expected to sign a firm contract with the Chinese “within a few months,” but that a launch decision on the Canadian company’s own C Series could happen any time during the year. Bombardier’s development schedules continue to show first delivery of the C Series in 2013, while AVIC I has set its sights on 2012 for service entry of the ARJ21-900. AVIC I plans to start test flying the first member of the ARJ21 family, the 85-seat ARJ21-700, as soon as late this month.

Although a memorandum of understanding signed between Bombardier and AVIC I during last year’s Paris Air Show centers on the ARJ21-900 and C Series, Scott said the final agreement would cover any number of projects associated with the 90- to 149-seat market segment. Apart from Bombardier’s engineering help, the MOU calls for the Canadian company to contribute $100 million in plant and equipment investment related to the ARJ21-900, while AVIC I unit Shanghai Aircraft Company (SAC) gains status as the Tier 1 supplier of the C Series’ aluminum lithium and composite fuselage.

Ordinarily, such collaboration between two companies whose respective products fall within the same capacity category would seem counterintuitive. Now developing a 100-seat airplane of its own called the CRJ1000, Bombardier might have tried to market its new airplane to some of the same regional airlines AVIC I will court with the ARJ21-900. Although Scott insisted that Bombardier doesn’t intend to cede the 100-seat market to AVIC, it appears the Canadians have decided the most practical way to compete with Embraer in the region involves a direct collaboration with the Chinese.

“In our discussions with AVIC we have rationalized the market segment,” said Scott. “Our CRJ is a four-abreast regional aircraft with good operating economics, and for airlines that are absolutely focused on operating economics it’s the best solution. The ARJ is also a regional aircraft, but it’s five abreast, and so where the cabin maybe becomes more of a factor in an airline’s decision, we would rather see a Chinese airline buy the ARJ than an Embraer. So we see this as a complement to our regional family. And of course the C Series is strictly a mainline aircraft and we don’t see any conflict there.”

Bombardier has sent what Scott described as a small cadre of engineers to work in Shanghai with engineers employed by AVIC I Commercial Aircraft (ACAC) on the ARJ21-900. Now in the so-called joint technical assessment phase, the program will move into the more advanced joint concept definition phase over the next few months, said Scott, at which point Bombardier would begin sending more people to join in engineering work. However, the exact timing depends on AVIC I, whose attention remains mostly on first flight of the ARJ21-700.

“They’re balancing their resources between the 700 and the 900,” said Scott. “So I believe if we stick to the schedule that we have talked about, we should be able to finalize this in the first half of this year.”

Although the ARJ21-900 will probably look similar to its smaller sibling, it will need some significant improvements to appeal to an export market broader than the relatively small constituency of developing countries where China has sold the MA-60 turboprop. Of course, an international support structure must accompany any serious effort to market a new airplane in the global marketplace as well.

“They have put together a good airplane in the 700, but it was their first airplane, and now they want to ensure that the next derivative is as good as if not better than anything that is in production today,” said Scott. “So to be really straightforward, they would want their ARJ21-900 to be every bit as good as an Embraer E190.”

In the interest of maintenance and training commonality, the design changes won’t likely involve dramatic differences in materials or a new engine, however. “It’s more a focus on making sure that the stretched version has the right aerodynamics, the right wing size, the right reliability, maintainability and serviceability attributes needed to compete well in the market,” said Scott.

Conversely, Bombardier has calculated that the market will demand far more from a new design in the segment it has targeted with the C Series. With the price of jet fuel almost tripling over the past three years, Bombardier’s goal of achieving a 15-percent cash operating cost benefit had become all the more daunting. In fact, without the 20-percent fuel burn advantage promised by Pratt & Whitney’s new Geared Turbofan (GTF) engine, Bombardier could not have met that original goal.

Studies over the past year aimed at further lightening the airframe and cutting maintenance burdens have called for an increase in composite content from 20 percent of the airplane to 47 percent. While Bombardier plans to use aluminum-lithium fuselage skins, composites placed in strategic, corrosion-prone areas will account for some 34 percent of the fuselage structure, said Scott. Meanwhile, composites would account for 80 percent of the wings and virtually all the material used in the empennage.

Bombardier considered an all-composite fuselage, a la Boeing 787, but another round of trade studies concluded that the high-frequency operating environment small narrowbodies typically inhabit might prove too harsh for a non-metallic design. Instead, it opted to limit the use of composites to parts such as the keel beam, floor beams and floor panels.

At the time of AIN’s interview with Scott in January, Bombardier did not yet know the identity of the supplier for the fuselage composites: “This is being decided as we speak,” said Scott, who added that, as a Tier 1 supplier, SAC will likely make some of them and outsource others. Plans call for Bombardier’s composites “center of excellence” at its Short Brothers plant in Belfast to fabricate all the composite parts for the wings and empennage.

Time on C Series’ Side
For a program that still hasn’t received board approval for launch, the C Series has matured beyond the level of development one might normally expect from a nascent program. Of course, a three-year service-entry delay, from 2010 to 2013, after Bombardier in January 2006 “redirected” most of the resources it had dedicated to the C Series to other pursuits gave a scaled-down team of 50 engineers the time it needed to extract the level of operating cost savings airlines expect. Perhaps more important, it gave Bombardier an engine option in the GTF that didn’t fit into a program schedule that called for first deliveries in 2010.

With the selection of the 23,000-pound-thrust engine guaranteed by Pratt & Whitney to meet Bombardier’s needs by 2013 and the prospect of a $400 million cash infusion by the Chinese, the program finally looks to have found firm footing, both technically and financially. Now it needs at least one, if not two, “high quality” customers for between 50 and 100 airplanes to gain launch approval from the board, said Scott.

“We have good momentum right now from the customer side, from our supplier partner side and from the investment side, so I guess as I’ve said before the stars are definitely aligning but it doesn’t guarantee [anything],” he said. “You know we’ve got to finish putting the business case together and obviously it’s all subject to board approval, but I am definitely optimistic.”