Resurrection Of CSeries Highlight Fluid Values For Larger Regional Jets

The potential revival of the Bombardier CSeries is likely to see variation in residual value calculations for not only the new model but also the expected B737NG and A320 family replacements. Based on refinements to the existing CSeries design, shelved at the beginning of the year, the new definition sees a...

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The potential revival of the Bombardier CSeries is likely to see variation in residual value calculations for not only the new model but also the expected B737NG and A320 family replacements.

Based on refinements to the existing CSeries design, shelved at the beginning of the year, the new definition sees a possible four percent improvement in fuel burn of the optimum 110 seater. Combined with a new engine from possibly CFM International or Pratt & Whitney Canada, the economics could be further improved. CFMI had earlier indicated a lack of enthusiasm for the program but has seemingly become more interested. Bombardier has been reviewing the possibility of stretching the CRJ900 still further but the long thin interior would likely fail to offer the perceived or real comfort levels sought by todays passengers.

The original service entry date of 2010 for the CSeries is still viewed as a possibility but in view of the uncertainty surrounding a launch decision, absence of commitments from operators, potential engine improvements and concern over the business case, a more realistic date may be 2012 or even later. New engines may offer the opportunity to improve operating costs by more than 15 percent already being sought. An all new engine offered by either CFMI or P&WC would pose a threat to existing regional jets powered by the CF34.

A delay would however, then coincide with the potential service entry of the replacements for the A320 and B737NG families. Boeing has already indicated that the B737NG replacement would encompass a small variant that would rival the CSeries 110 seater. Airbus also cannot ignore this segment of the market.

Yet the designs of Airbus and Boeing may involve the shortening of the baseline model. A stretch brings advantages in terms of operating efficiency but a shortening can see unnecessary structural weight and heavier engines. The absence of orders for the A318 and B737-600 are particularly notable and residual values of both models are being sorely tested as a result of very limited remarketing potential. The design of the CSeries seeks to meet the needs of the 110-130 seat market and is therefore at its optimum.

Nonetheless, should there be three models in the 110 seat market this would create considerable difficulties for residual values of one model. While the CSeries would have the benefit of offering existing CRJ200 and CRJ700/900 operators the opportunity to progress to a larger dedicated model, both Airbus and Boeing would be able to offer a smaller derivative of a larger family. The values of the Embraer 195 would also be impacted by the CSeries though the Brazilian product would have the advantage of a family of smaller variants.