Bombardier Inc. T.BBD.A

Sqeezing CSeries Might Be Tough

[jammerh]

Boeing and Airbus, can drop prices, but they would be sacrificing profitability in the process, and could conceivably be charged with illegal dumping under international law.

Cutting prices to the bone in order to squeeze out smaller competitors from gaining a foothold would be viewed by their international customers as highly irresponsible and little more than an effort to maintain their pervasive monopoly, or duopoly on commercial jet aircraft sales.

Keep in mind that airlines generally want greater competition among aircraft manufacturers. They want it because they know greater competition among jet suppliers creates an environment where they're more likely to see greater selection and better pricing. It's not unlike the idea that if you buy everything from Wal-Mart, then pretty soon, all you have is Wal-Mart, and then where do you think prices will go?

The greater number of suppliers you have for a product the wider your choice and the more competition you'll have to give you better pricing over the long haul. Yes, Boeing and Airbus, could challenge CSeries, by cutting prices to the bone, but it would be considered unethical and possibly illegal. And many airlines will still support CSeries because its more fuel efficient, easier to maintain, cleaner, much quieter, and will be available (note there's a long waiting list for aircraft in this size category).

Aerospace sees continued sales growth in 2011$70.12

WASHINGTON | Wed Dec 15, 2010 12:10pm EST

The aerospace industry is headed for continued sales growth in 2011, but warplanes are likely to play a smaller role than in recent years, the industry's main trade and lobbying group said on Wednesday.

Overall sales are expected to hit a new high of $216.5 billion this year, rising to nearly $220 billion next year, the Aerospace Industries Association said in its annual year-end review and forecast.

The industry has chalked up year-over-year growth since 2004. In 2009, total U.S. aerospace sales were $214.5 billion.

Commercial aircraft sales slipped this year, but this was more than offset by military aircraft sales, which continued a boom that has caused them to nearly double since 2000.

The industry's civil aerospace category includes commercial, business and general aviation aircraft as well as non-military helicopters, aircraft engines and related parts.

Civil sales dropped nearly six percent in 2010 to $48.2 billion. A rebound is expected in 2011, but its size will hinge on such things as the economy overall, jet fuel prices, aircraft financing availability and environmental regulations, the trade group said.

Military aircraft sales hit $64.5 billion this year, up eight percent from 2009, "but this breakneck pace is likely to ease considerably in the coming years" amid possible cuts in the Pentagon's budget as part of federal deficit reduction, the association said.

Rising imports and falling exports led to a five percent drop in the industry's trade balance, but the surplus of $53.3 billion is still the strongest of any manufacturing industry, Marion Blakey, the group's president and chief executive, said in comments prepared for an annual luncheon to present the forecast and review.

She said it would be dangerous to cut U.S. military spending, set to total more than $700 billion in the current fiscal year, as deeply as some deficit reduction hawks have urged.

"The United States' security relies on maintaining our defense technological advantage," Blakey said.

Among the biggest U.S. aerospace companies are top Pentagon suppliers including Lockheed Martin Corp (LMT.N), Boeing Co (BA.N), Northrop Grumman Corp (NOC.N), General Dynamics Corp (GD.N), BAE Systems Plc (BAES.L), Raytheon Co (RTN.N) and Harris Corp (HRS.N).