RE: Catalyst for Aerospace stocks - HotwellExcellent posts, thanks.
Yes, Bombardier and manufacturers seem to like announcing orders at airshows for some reason. My guess is they feel they get a little more media attention that way. I don't think a manufacturer would wait a long time to announce a larger order but if there's an airshow close they might be tempted to do it while the limelight shines on the stage.
So, Farnborough, being the biggest airshow around it would make a likely time.
On the other hand we aren't likely to see much in the way of big CSeries orders until lenders get back to doing their thing, and that might take a little time. There's still three years before CSeries starts deliveries. We'll see more large orders both before and after that date. So, there's no real hurry, although the announcement of another sizeable order would be enough to reach a point from which it can snowball.
Right now there's still a lot of uncertainty for airlines. Few are well off enough to risk placing large orders in that uncertainty. They all want new aircraft, but with their bottom lines so thin they really need financing to be able to order those cheaper-to-maintain and more fuel efficient machines.
But passenger traffic is gradually returning to normal. First we'll see some of the strongest airlines place orders. Lufthansa, and Republilc are each dominate their respective markets. The largest leasing company, is GE, but since GE didn't provide the engines, we won't likely see GEACS placing an order. On the other hand, since GEACS won't have this aircraft, that particular consideration might make CSeries even more appealing to competing aircraft leasing outfits such as the Irish leasing company which has alread placed an order.
Larger versions of CSeries will arrive later and it will be those aircraft which compete more directly with the 737 and A320s. Boeing and Airbus currently have orders for thousands of these. They're the most popular commercial aircraft of all time. So, this is a huge market.
With backlogs for the 150-seat aircraft so high, it currently takes a few years for even Boeing and Airbus to deliver. That puts them not much less further away than the larger CSeries which could arrive sometime in 2014. But as that date approaches, we soon reach a point where delilvery dates become much closer in time - making CSeries, in many ways, the more attractive alternative.
No doubt this is at least part of the reason Boeing and Airbus are raising production rates. They're trying to soak up as much market share as they can before that inflection point arrives. And the fact that they are concerned tells us that they are seeing indications that they need to take action.
Reengining their aircraft is an unappealing option. While it would add some much needed fuel-efficiency to their aging models, it still wouldn't take them to a point where they'd have a product as good as CSeries and they know it. But Airbus and Boeing aircraft will continue to take a large percentage of orders for a couple of reasons.
One is that the larger companies will lower their prices in an effort to remain competitive.
The other is that they still offer one advantage CSeries can't and that's commonality with their larger commercial aircraft. Commonality is an important consideration for some airlines becauses it enables them to keep training, parts, and maintenance costs to a minimum.
Leading low cost airlines like Southwest stick with a single fleet type - ie the 737 as an effective way to minimize costs. That, and an effective fuel hedging strategy has helped Southwest take significant market share from rivals.
CSeries can't offer commonality since Bombardier doesn't sell any larger commercial aircraft such as the 747, or 787. On the other hand, new software platforms from avionics companies like Rockwell Collins are coming out which work to minimize differences created by a lack of commonality.
The fact that Southwest is taking a serious look at CSeries is a positive. Of course, it's hard to imagine that airline dumping its current fleet, but neither can Southwest afford to be complacent since any new airline that does use more fuel-efficient aircraft could take the wind out of its sails.
Commonality is a bigger factor for some airlines than others. United for example, recently split a large order between Boeing and Airbus saying it felt each aircraft was particularly well suited to certain kinds of flying.
Few new airlines start up during a downturn, however, we can expect to see that change once the economy improves and financing becomes a little easier. And of course, new airlines would not have to be so concerned with issues of commonality.