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Bombardier, Business Aviation, Other Aviation Issues, Regional Aircraft, Regional Airlines

ABSTRACT: Bombardier announces its 4th round of lay-offs in 17 months, another 1,750 employees are let go on top of 5,200 laid-off already. The sacred “CASH COW” of Bombardier Aerospace, the high margin Ultra-Long Range Global brand is facing a softening in its market segment. The Bombardier Global brand (the $52M G5000 and $62M G6000) keeps Bombardier Aerospace alive, generating $4.5B (on 80 deliveries) in revenue in 2014 (43% of Aerospace revenue, 60% of Business Jet revenue with only 27% of deliveries). New competition from the Gulfstream’s G500/G600 and the Dassault Falcon 8X is threatening Global sales and margins at a time when Bombardier is bleeding cash certifying the CSeries and its new Globals ($75M G7000 and $71M G8000). Presently Bombardier Commercial has only 90 CRJ’s in backlog (18 months of production) and only 52 Q400’s in backlog (26 months of production), while the CSeries with $5.3B in deferred program costs and big price discounting by Airbus, Boeing and Embraer, will see every CSeries sold at a HUGE loss for many years to come. Now Bombardier is looking to sell its rail unit to raise cash, and in all seriousness all of this leaves the new Global 7000 and 8000 as the only hope for a brighter future at Bombardier Aerospace, and the possibility of a future Chinese acquisition of Bombardier Commercial (aka “Combardier”) is very real.

Once again Bombardier has acknowledged that things are not well with the world’s only plane and train manufacturer, and will lay-off another 1,750 employees on top of the 5,200 already announced since January 21, 2014. The big hit will be in Montreal (completions) with 1,000 employees, Toronto (assembly) with 480 employees and Belfast, Ireland with 280 employees to go.

NOTE:  PREVIOUS ARTICLES ON BOMBARDIER: 4.23.15, 3.19.15, 2.25.15, 2.18.15, 1.20.15, 7.21.14, 6.10.14

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may15-cs

The $5.3 billion CSeries program is the BIG PROBLEM, it has dragged Bombardier down to the point it had to raise $3.2B in new debt and equity to finish certifcation of the CSeries and the new Global G7000 and G8000 business jets. Meanwhile, the CRJ program has a backlog of only 18 months and the Q400 has 26 months of backlog. The CSeries will be a drain on Bombardier for many years to come, it is the “white elephant” that will drain Bombardier’s finances as deferred costs and required price discounts needed for new sales will make each CSeries sale a loss, like the Boeing B787 today where each aircraft is sold at a $34m loss, but Boeing can handle that loss, can Bombardier handle it ?

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This latest round of lay-offs at Bombardier Aerospace is the 4th and now adds up to 6,950 announced lay-offs in the past 17 months:

January 21, 2014 – 1,700 laid-off

July 23, 2014         – 1,800 laid-off

January 21, 2015  – 1,700 laid-off

May 14, 2015          – 1,750 laid-off

This is all a part of the restructuring going on at Bombardier, as it realizes the $5.3B CSeries is slowly killing it financially and has had to increase its cash position in the past 3 months by $3.2B in debt and new equity to cover the CSeries and the new Global 7000 and 8000 business jets, while dumping the Lear 85 program . This all a result of the CSeries problem and the trickle down affect it has had on all the other Bombardier programs, as the Global 7000/8000’s are delayed at least 1 year as most of the resources have been poured into the CSeries development and certification, and one wonders what the future holds for Bombardier.

Reality has settled in at Bombardier, which has realized the fact that on top of the poor CRJ and Q400 sales, the business jet market is getting soft, and most worrying is that it is now affecting the high end and high margin Global brand. The ultra-long range segment, which has done extremely well during the past few years while the light and medium segments have suffered. The numbers for first quarter deliveries for 2015 tell the story, as business jet deliveries were 13.6% lower than 1Q/2014 (133 vs 154).

This ultra-long range segment is dominated by Bombardier with its $52M Global 5000 and $62M Global 6000 and Gulfstream with its $67M G650 and $67M G650ER, and today Bombardier is moving ahead certifying the new $75M G7000 and $71M G8000 to one up the G650ER.

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may15-1

The $52 million Global 5000 is now facing a softer market and new competition from Gulfstream’s G500 and G600 and the Dassault Falcon 8X, so a weakening demand coupled to more competition means lower sales and when a sale is made, lower margin as price competition will now be intense.

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The most worrying things is that in 2014 book to bill ratio was 0.62 (6 orders for every 10 deliveries), and this has dropped to a very disturbing 0.42 in 1Q/2015 (1st Quarter 2015) (19 new orders to 45 deliveries), last year 1Q/2014 orders were 46 to 43 deliveries (book to bill ratio of 1.06), but from then on the orders started to dry up, and have continued to nose dive.

Bombardier is not alone in seeing decreasing orders, while it maintained slightly better delivery in 1Q/2015 over 1Q/2014 (45 vs 43) and roughly the same delivery value of $1.53B, while Gulfstream Aerospace delivered 32 jets (7 x G150/G280’s and 25 G450/550/650’s) valued at $1.711B, in 1Q/2015, which is less than 1Q/2014 when 39 aircraft were delivered (6 x G150/280’s and 33 x G450/550/650’s) for a value of $2.093B, so unit deliveries are 18% off and delivery value is also off by 18%, note the 7 aircraft reduction in high end G450/550/650’s.

Dassault also had lower 1Q/2015 deliveries vs 1Q/2014, with only 6 units (1 x 900LX, 5 x 2000LXS’s) worth $211.8M versus 9 deliveries in  1Q/2014 (1 x 900LX, 2 x 2000LXS, 3 x 2000LS, 3 x 7X’s) for a valueof $349M, note the absence of the high end Falcon 7X in this years 1Q deliveries. So Dassault has this year delivered 33% less units and 39% less in delivery value, this has to be a worrying trend for all OEM’s, especially Bombardier, as the Global brand is its “cash cow” that keeps Aerospace going.

As discussed in my previous articles on Bombardier, the Global brand is the backbone of Bombardier Aerospace which had $10.49B in revenue in 2014, of which $7.56B came from its business Aircraft (72% of total Aerospace revenues), the Globals brought in $4.5B in revenue (60% of business Aircraft revenue and 43% of Bombardier Aerospace revenue on only 27.5% of ALL Bombardier deliveries). There is no hiding the fact that the Global brand either makes or breaks Bombardier Aerospace over the next few years.

Business jet deliveries stood at 204 in 2014 (70.3% of all 290 Bombardier deliveries) and free cashflow for Aerospace was -$745M, mostly due to the write down of the Learjet 85 program , and the financial situation with the CSeries will not improve with certification or entry into service, as the $5.3B program will be at a loss for many years to come as deferred costs will have to be covered and I am sure the costs will increase before EIS (entry into service), yes the CSeries is a nightmare that may destroy the company, nothing one can do now but to make it work, sell as many as possible and ride it out hell or high water ! but it will be awfully tough.

One only has to look at the Boeing 787 Dreamliner, where deferred costs of $30.8B are being spread out over 1,300 aircraft which are expected to be delivered and built at predetermined cost and sold at predetermined price/margins, and as of 1Q/2015 the deferred cost per Quarter was $905M (slowly decreasing), so at 30 aircraft delivered the LOSS per B787 was $30M, and this is after 255 B787’s have been delivered. IF this is what Boeing has to deal with, the CSeries with only 243 orders (many questionable) after 6 years, is going to be in SERIOUS trouble as it is surely needs to discount heavily to compete with Boeing (B737Max), Airbus (320neo) and Embraer (E2), and the aircraft will sell at a LOSS for many years, and will need the Globals to cover those losses, yet this may be wishful thinking, as the market for ultra-long range business jets is now about to take its hurt with global economic and political changes as well as new competition fighting for the same customers.

The Global brand is today the “cash cow” for Bombardier Aerospace, and I have already said in previous articles that any sales slow-down in the Global sales will result in huge financial problems at Bombardier Aerospace, as it is well known to all analyst that CRJ and Q400 is barely covering fixed costs, and the CSeries is looking at years of losses, so it is up to the Globals to keep Aerospace is the black.

The latest ABACE 2015 (Asian Business Aviation Conference and Exhibition) in Shanghai produced very little in the way of new orders for any business jet OEM, Bombardier got only 1 order (a Global), as buyers are staying away as austerity measures introduced by president Xi Jinping have collapsed the business jet sales and charter market in China from a high off 55 aircraft per year to only 34 last year, and much less this year, it is all bad news right now in the business jet market globally.

In 2014, Bombardier increased production of the Globals from 62 in 2013 to 80 in 2014 (+29%) and now will reduce production to 55 in 2016 to match declining sales, as it faces a global demand decrease for the ultra-long range segment due to various factors from China’s anti-corruption drive, Russia’s declining Ruble and low global oil prices which has affected all oil producing countries.

It is not a good time for the ultra-long range segment, and add in new competition from the new $44M Gulfstream G500 and $55M G600 along with the new $58M Dassault Falcon 8X all looking to take down the Bombardier G5000/G6000’s. Already Bombardier customer Qatar Airways has signed an MOU for 20 Gulfstream G500’s and 650ER’s and Flexjet (operator of 150 Bombardier jets) and 245 Bombradier jets on order (?) has ordered 6 G500’s, 6 G650’s and 10 G450’s, a sign of trouble to come ?

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may15-8xMay15-G600

The new competitors to the Bombardier Global 5000 and 6000 (above right) the $58 million Dassault Falcon 8X (above left) and the $55 million Gulfstream G600m will greatly impact the sales of the Bombardier “cash cow” the Global brand. It is worth noting that both Dassault and Gulfstream delivered fewer ultra-long range jets in the first quarter of 2015 then in 1Q/2014, in fact 10 in total (3 x Falcon 7X’s and 7 x G450/550/650’s), so only 26 ultra-long range jets were delivered this 1st Quarter versus 36 in 1Q/2014, a reduction of 28%. IF there is a major slowdown in the end end business jets, it is not good for Bombardier, Gulfstream or Dassault, let’s see what the second quarter brings.

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In fact, surprisingly, Bombardier has not responded to the new Gulfstream aircraft since the NBAA show in October, 2014 one would have expected a “revamp” of the G5000/G6000’s like it has done with the Challenger 650 (a revamped 605) and the Challenger 350 (revamped 300) with small improvements in range, window sizes, interiors, avionics, nothing exciting, just a marketing exercise to make them look ‘new’.

A great deal can be seen from the 1st Quarter, 2015 business jet delivery results, where Bombardier delivered 45 business jets versus 43 in 1Q/2014. Deliveries were 9 Learjet 70/75’s (up from 6), 14 Challenger 300/350’s (no change), 5 Challenger 605’s (down from 6), 17 Global 5000/6000’s (no change) and $107M was earned in 1Q/2015 on revenues of $1.537B (6.9% margin). Backlog is still a healthy $23.4B, but dark clouds are coming in for the Global brand.

In contrast, the Commercial side delivered 22 aircraft worth $673M (average $30.6M per aircraft), delivered were 8 x Q400’s, 13 x CRJ-900’s and 1 x CRJ-1000, showing that the US Regional market is still ‘THE’ market for the CRJ’s while Canada was ‘THE’ market for Q400’s (WestJet Encore and AC/Chorus). The Commercial side lost $10m in 1Q/2015, and backlog is at $12.5B, mostly due to the 243 CSeries orders, as there are only 90 CRJ in the backlog (only 18 months of production) and only 52 Q400’s in backlog (at best 26 months of production) and that is it ! Yes, new CR-900 orders will come in as US regional airlines discard the 50 seat CRJ’s and EMB-145’s, but only till the E2-175 and the MRJ is ready, while the successful Q400 (541 orders so far)is already down to a few new orders a year (as the ATR-72-600 dominates the turboprop segment today), mostly WestJet and Chorus (Air Canada Express), but very few NEW orders, while the second market is now very active with new operators like Starbow (Ghana), Jambo (Kenya), Bangladesh Biman (Bangladesh) and Air Malawi (Malawi).

OMG ! is surely what CEO Alain Bellemare is saying to himself these days as he inherited a mess at Bombardier Aerospace, the previous leadership was out of control trying to develop and certify 4 new aircraft at once (CSeries, Learjet 85, Global 7000 and 8000) and knowing that it will require $7+B which Bombardier did not have, anyway no one takes on 4 new projects at once, what were they thinking ? its now a mess and Alain is doing what is needed in any corporate restructuring.

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may15-7000

The new $75 million Bombardier G7000 (above) and the $71 million G8000 are the ‘new’ hope for the Bombardier Global brand, the timing is NOT good, as new austerity measures in China are keeping buyers away from business jets, and Russia and other oil producing countries struggle with lower revenues. Also, economic inequality issues are rising throughout the world as 1% of the richest now control 50% of the global wealth, and calls are out there for new equality which will spill into politics where the people want to take back governments from corporate and rich hands throughout the world. Governments have become too close to big business and forgot that they are there for the majority of its citizens and not the privileged few, this will in time have big changes on politics throughout the world, and the $50m business jet market will feel it in time, as it does in China already.

The future of Bombardier lies in the G7000 and G8000’s, their success is needed to fund the commercial aircraft loses and if sales do not materialize as expected, Bombardier will be in big trouble, its future is in doubt today.

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He has brought in a new team, changed organizational structure, slowly cleaning up the mess, new strategy, re-position where you can, new finance, retrench and cut back where needed, replace people where needed and move forward on renewal, it is now up to EXECUTION, that is where it goes wrong most of the time. So CEO Alain Bellememare needs good people at so many different levels to pull of this restructuring and transformation at Bombardier, and as most people know that under the past leadership, too many people were promoted or just put in positions that they were not qualified or experienced enough for, and many company insiders believe part of the problem at Bombardier today is due to the francophone nepotism that has gone on since the 1990’s, now its time to put the right people into the right jobs, and forget where they come from or what their first language is.

As a former investment banker and several corporate turnarounds behind me, it is about diagnosing the patient, find the symptoms and causes of decline, and then prescribe the cure by changing strategy, people, products and finance.

No surprise that Bombardier has hired UBS and Citigroup to advise it on a potential sale or IPO (initial public offering) of its rail unit for a possible $4B to $5B price, the division made a EBIT of $429M in 2014, versus a loss of $995M at Aerospace, that is how desperate Bombardier is for more cash, realizing it will be a losing money in Aerospace for many years. I think that the possibility that China’s AVIC will acquire Bombardier Aerospace one day is very real, the Chinese need what Bombardier has in the way of customer support, marketing, sales and a MA700, Q400, ARJ-21, CS100, CS300, C919 is very possible, in fact the AVIC/Comac and Bombardier have been cooperating on making the CSeries and C919 with us much commonality as possible, so yes ‘Combardier’ is a a real possibility in the next 2-4 years.

No easy task right now for CEO Alain Bellemare and his new team, but they are doing what is needed as hard as it is, the previous management was incompetent and left a mess, no one dared to say the “the emperor has no clothes” and here it is, Bombardier’s survival is at stake, markets are changing and external issues are becoming a major issue where there is little any CEO can do but adapt to the new realities.

Best wishes to Bombardier, thanks for reading my blog again.

 

 

 

 

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About Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow

I am a Canadian and EU national with an MBA and 33+ years experience in aviation business development with 20 years overseas and work in 25+ countries. A former investment/merchant banker (mergers and acquisitions to corporate turnarounds). airline and OEM senior executive and past owner of 6 successful aviation companies in 3 countries (executive jet charter/management companies, aircraft sales, aircraft broker, airline/aerospace consulting to aircraft insurance). I have a very diverse aviation background with 75+ aviation companies (45+ airlines of all sizes, OEM's, airports, lessors, MRO to service providers) as consultant, executive management, business analyst and business development adviser. Excellent success track record in International Business Development. Most work with airlines is with new start-ups and restructuring of troubled carriers. I sold new business jets, turboprops and helicopters for Cessna, Raytheon, Gulfstream to Eurocopter as an ASR as well as undertaking sales and marketing of commercial aircraft for Boeing, de Havilland, Dornier, Saab and Beechcraft. Brokered everything from LET-410's to B747's and from piston PA31 to G550 business jets. I look beyond the headlines of the aviation news and analyze what the meaning and consequences of the new information really means. There is a story behind each headline that few go beyond. Picked the name Aviation Doctor, as much of my work has been with troubled companies or those that want and need to grow profitably. I fix problems be in the business, and help with restructuring for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com and I comment a lot on Google+, my Facebook and LinkedIN.

Discussion

16 thoughts on “ABSTRACT: Bombardier announces its 4th round of lay-offs in 17 months, another 1,750 employees are let go on top of 5,200 laid-off already. The sacred “CASH COW” of Bombardier Aerospace, the high margin Ultra-Long Range Global brand is facing a softening in its market segment. The Bombardier Global brand (the $52M G5000 and $62M G6000) keeps Bombardier Aerospace alive, generating $4.5B (on 80 deliveries) in revenue in 2014 (43% of Aerospace revenue, 60% of Business Jet revenue with only 27% of deliveries). New competition from the Gulfstream’s G500/G600 and the Dassault Falcon 8X is threatening Global sales and margins at a time when Bombardier is bleeding cash certifying the CSeries and its new Globals ($75M G7000 and $71M G8000). Presently Bombardier Commercial has only 90 CRJ’s in backlog (18 months of production) and only 52 Q400’s in backlog (26 months of production), while the CSeries with $5.3B in deferred program costs and big price discounting by Airbus, Boeing and Embraer, will see every CSeries sold at a HUGE loss for many years to come. Now Bombardier is looking to sell its rail unit to raise cash, and in all seriousness all of this leaves the new Global 7000 and 8000 as the only hope for a brighter future at Bombardier Aerospace, and the possibility of a future Chinese acquisition of Bombardier Commercial (aka “Combardier”) is very real.

  1. OPEC lead by the Saudi’s wants to re-establish dominance in oil, by pushing out the high cost offshore, shale and tar sands producers, and that may take 1-2-3-4 years ??? but low oil prices will be around for some time. Thanks.

    Like

    Posted by Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow | May 22, 2015, 11:28 pm
  2. I think Boeings assumptions on cost and pricing were a big issue in the 787 debacle. Many observers felt they presold MASSIVE numbers of 787s at insanely low prices to lock out Airbus, but when the program was delayed it created a 3 year bonanza for the A330. Ironically if Airbus had ignored Qatar and Emirates and NEOed the A330 as they had originally planned, they would have SLAUGHTERED 787. BBD cannot defer as many program costs the way Boeing has on the 787, and I think Cseries will become cash positive much earlier then 787. Airbus and Boeing can discount, but Boeing has the 787 albatross around its neck and Airbus has the A380 and A400 debacles to contend with. Both are already delivering razor thin margins. Will Airbus continue to heavily discount when they are sold out for 6-7 years? Boeing? Will they give away their cash cows when they have massive financial craters to back fill? Maybe they will, but it seems irrational. BBD does have the weaker Canadian dollar helping, perhaps that 20% discount will save it, and perhaps A and B will realize the Chinese are the real threat, forcing BBD into a position where it gets acquired by COMAC could be the most disastrous miscalculation made by Airbus and Boeing as it will introduce world class Chinese competition to the market a full 20 years earlier…with unlimited state money to compete.

    Like

    Posted by mark from toronto | May 21, 2015, 4:51 pm
    • Mark,

      Very good comment, with good points. Yes the dollar exchange will help a little, many costs though are $US, but it will help. As well, the Combardier idea is real, if I were Boeing or Airbus, I sure would not want it to happen either. Regards, Tomas.

      Like

      Posted by Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow | May 22, 2015, 4:40 pm
  3. I do enjoy the latitude of the commentary which I read and can only imagine freedom of the press act keeps you out of the weeds with the 8th floor

    But leading edge updates with Sr. Management taking one for the Gipper are missing over the last 4 weeks – all very interesting times ….la la al Là….la la la la la…..hey hey hey …. Good bye

    What’s up Doc ?

    Like

    Posted by 2fat2fly | May 19, 2015, 1:54 am
  4. Aviation Doctor, being a former Bombardier employee that caught up in this 5000+ layoff of people, I just want to say that I enjoy your blog and at the same time I can do nothing but laugh. I was there from 2012 to late 2014 on a work permit. I was hired in to be a continuous improvement specialist, but got moved to other positions because of my background and experience. From day one, I was on the inside bringing to light different issues, many of which you have covered here and many which you have not. I still to this day have copies of e-mails I sent to VP and the President himself asking to get into a position to evoke change, well I guess I did evoke change I got laid off! What is funny to me is that from all my connections I still had with other aviation companies, I tried to challenge/warn them from the inside that they needed to protect the Golden Goose because the G500/600 was coming, the 5X/8X and possible 10X was coming, but to no avail. I was treated as and outside from day one because I challenged the status quo! I will continue to follow your blog because my heart is in aviation, but I feel after my stint at Bombardier maybe it is not the right industry for me because I am too much of a straight shooter to make it in the good old boy network.

    Like

    Posted by John | May 18, 2015, 1:02 pm
    • John,

      Good comment, I am sorry for your loss of work at BBD, your email is very similar to many I have received over the past few years on what it is like at BBD from an insider, not good. Like you I love aviation, but I will not work for companies that treat their employees badly, I am good on my own and I like you I have always brought up issues, but the guys at the top do not want to hear it, they want to “pretend” all is well for their bosses. Straight shooters are not liked, like “whistle blowers” in the US these days, they are hunted down, and in some cases go to jail for telling the ugly truth. Best wishes in your new job. Tomas

      Like

      Posted by Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow | May 22, 2015, 4:33 pm
    • Bienvenue dans la Belle Province…

      Like

      Posted by YANNICK | May 22, 2015, 7:00 pm
  5. Do you really think Mr. Harper will stand by and watch BD sell off the Company to China in a election year
    Airbus…… Maybe?

    Like

    Posted by 2Fat2Fly | May 16, 2015, 11:08 pm
    • It’s owned by the family they can do w/e they want. Not government owned and it’s no anti trust issue unlike sale of rail unit

      Like

      Posted by tukwila | May 16, 2015, 11:53 pm
  6. I also believe in Combardier. The question is when ? And will Comac give them their money back at least.

    Like

    Posted by tukwila | May 16, 2015, 9:51 pm
    • Bombardier is not “owned” by any family – clearly you have Internet access so take your Tea and Twinkie and enlighten yourself with Wikipedia and type in TSE for example or NYSE and read the explanation of how that whole wonderful machine works – then do a search for the bombardier, btw its a acronym – Your first challenge

      You will learn about different types of shares and all that technology will bestow upon you a deeper understanding of what “the family owns” it translates into a dollar figure not ownership – lets guess approx $1.8b just for fun

      So yes – the Cdn Gov does have a say in any crown jewel being sold to non – canadian entities especially our pride and joy of Là Belle Province – and CANADA it’s not Wendy’s or Dollarama. Who’s market Cap BTW is double Bombardier’s Selling widget for a looney or toony ….

      ahhhh I am Canadian and know the Global platform is the best business jet in the world, the C Series is going to be a true NExt Gen plane too and then watch the Market reaction once the performance numbers are fact on the ramp and in the skies.

      The French, South Americans and American OEM’s contracts dept’s will be very busy inhaling cancellations forms blowing into their HQ’s while shuffling serial numbers and delivery positions ( aka 2008/2009 business norm) in the vacum of former customers migrating to the Great White North.

      That whole perspective could sound like (pardon the pun) a good investment opportunity

      Like

      Posted by 2fat2fly | May 19, 2015, 1:28 am
    • The family controls it with over 51% voting shares. Customers don’t doubt it’s a good plane. But they have no reason to buy it when they can get a plane for free from Airbus or Boeing. They’re literally giving it out for free. Sometime you have to lose money to stay in the game. Why did Facebook pay 1 Billion for WhatsApp which will never give them a dollar. Answer: Not losing Facebook users. Why does Saudia Arabia sell Oil for $55 when it can cut production and sell at $150 tomorrow.

      Like

      Posted by tukwila | May 19, 2015, 2:14 am
      • Airbus and Boeing price their aircraft to keep their duopoly, and to keep competitors out of their market, yes like Saudi Arabia with oil, those that have lower cost of production can afford to, so shale gas, Canada’s tar sands, offshore oil will suffer at low oil prices, many will fail, like Bombradier if it cannot get a good price for its CSeries and recover the $5.3B investment. That is business.

        Like

        Posted by Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow | May 19, 2015, 12:20 pm
  7. If bbd sells commercial division , you think they can at least recover their $5.6B c series investment? 737max/320neo orders in China are small. For china it might be a necessary buy, what else can they do? Wait many years till their turn comes slots wise in production? For bbd a necessary sell too… The program can never be a success. The battle has been lost. Boeing will sell for negative free, I.e for cash, to get 737s out the door. That’s what the rumours are here in renton.

    Like

    Posted by tukwila | May 16, 2015, 4:06 am
    • Yes, you are right, Boeing and Airbus will contest EVERY possible sale with Bombardier, they do not want them as a competitor, though as you know the B737Max7 and A319neo are only 2% of Max and neo sales, showing that the 100-149 seat market is NOT very interesting anymore, this is Bombardier’s biggest mistake, they took their old marketing studies and thought that it will be a good segment, reality is that airlines have moved out of the 100-149 seat market into the 150-200 seat market.

      Today it is all about seat mile costs, and you need to have high seat capacity for that, it is why airlines are putting in more and more seats into aircraft, AA recently went to 160 (up by 10) on its B737-800’s and the others are all doing it, new thinner seats make this possible.

      I do believe Bombardier Commercial will be bought by China’s AVIC, Combardier ??

      Thank you for your comments.

      Like

      Posted by Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow | May 16, 2015, 2:28 pm
    • Aviation Doc, what did you mean by global economic changes ? Where do you think price of oil is heading? Why is it artificially kept low?

      Like

      Posted by tukwila | May 20, 2015, 3:52 am
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