This means that Airbus and The Boeing Company (NYSE:BA) customers can order different-sized aircraft that use the same technology, simplifying crew scheduling and maintenance, while allowing the airlines to match capacity to demand on various routes. Recently, the most popular models have tended to be the larger ones, as they offer lower unit costs. The models comparable in size to the two CSeries models have seen weak demand recently.
Time to move up
While Bombardier has constantly dismissed speculation that it will offer a stretched version of the CSeries soon, it looks like this may be the company’s best bet. CSeries jets may offer lower costs than directly competing models like the 737-700 and the A319, but airlines increasingly prefer the larger 737-800/900-ER and A320/A321 models anyway. As long as airlines are buying large narrowbodies from Boeing and Airbus, they will usually prefer to stay within the same family for small to medium size narrowbodies, due to the advantages of commonality.
By stretching the CSeries to compete directly with the 737-800 and A320, Bombardier, Inc. (TSE:BBD.B) could enter the highest-volume segment of the narrowbody market while also enhancing the appeal of the smaller CSeries models. Airlines that today are choosing The Boeing Company (NYSE:BA) and Airbus over Bombardier due to the benefits of commonality might find the CSeries more appealing if it would cover most or all of their narrowbody needs.
Foolish bottom line
Bombardier, Inc. (TSE:BBD.B) has stated that it expects to sell thousands of CSeries aircraft over the next 20 years. To do that, it probably needs to offer a larger version of the plane. Right now, Bombardier is stuck in the smallest and lowest-volume segments of the narrowbody market. Even if the CSeries objectively outperforms competing aircraft from The Boeing Company (NYSE:BA), Airbus, and Embraer SA (NYSE:ERJ), it suffers from the disadvantage that it is the only “all-new” design, which increases training costs and complexity.
By offering a larger CSeries, Bombardier would be able to cover more of the narrowbody market, gaining some of the benefits of commonality for itself. Airlines might be more willing to add an unfamiliar aircraft type to their fleets if it covered a larger proportion of their aircraft needs. If Bombardier wants to compete with The Boeing Company (NYSE:BA) and Airbus, it needs to go all the way!
The article This Revolutionary Plane Needs to Get Bigger to Compete originally appeared on Fool.com.
Fool contributor Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool recommends Embraer SA (NYSE:ERJ)-Empresa Brasileira.
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