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UPDATE: Today (October 29, 2015) Bombardier will announce a $US 4.2 billion BAILOUT from the Government of Quebec, a LIFELINE for the struggling company that is so screwed up thanks to the leadership of its previous CEO Pierre Beaudion and family, yet the family stays in control of the company through special shares ? and they want more tax payers money again ? let them find the money ! or give up control of the the company, as ALL investors want a change in the Board and less control by the family. Anyway, I am sure the WTO (World Trade Organization) will be investigating this sate aid package, as Embraer and Mitsubishi should be concerned about its implications on free trade. The CSeries program received $US 700m in launch aid 10 years ago from the UK, Canadian and Quebec government, and now they want more while they “transfer” the CSeries into a new partnership 50.5% owned by Bombardier and 49.5% by the Province of Quebec ? The CSeries is in a tail spin, close to certification, its attempted sale to Airbus and its rejection has raised serious doubts in the minds of customers, prospects, financiers, investors, suppliers, employees. At this time you would have to be a fool to order the aircraft as the future is very volatile. Today, we will also get the cancellation of the Learjet 85, which was “paused” last year and everyone knew that it was done for good, expect the Learjet company to be sold soon. The company stopped manufacturing the specialized CL-415 water bomber last week after 36 years in production (90 x CL-415’s and 125 x CL-215’s were produced), as the last of 2 x CL-415’s priced at $US 36.85m each were delivered to the Government of Newfoundland and Labrador a few weeks ago, a sad ending to great aircraft. Industry experts expect Bombardier will lose $US 32m per aircraft for the first 50 units, so 2016 and 2017 will see continued cash burn even as deliveries should be underway, welcome to the BIG league of aviation, where only the strong survive (Airbus, Boeing, Embraer) and the weak disappear (e.g. McDonnel Douglas, Convair, Lockheed, Dassault, Fokker, BAe, BAC, etc.). I expect $US 3.5 billion loss over the first 250 units (as it will have to discount up to 45% of list price to around $US 45m for the CS300 to make any sale, and the program will NOT make any money for many years to come, if ever), even with the $US 3.2 billion Bombardier is writing off today (which by the way is 90% of its market capitalization today), the program is not out of the woods by a long shot, many hurdles still to come. When Boeing struggles to make the B787 profitable at some point in the future, don’t think the CSeries is home free, it is still a major disaster waiting to happen, NO new orders in 14 months ? and still with only 140 “realistic” orders and a market that is getting flooded by up to 125 single aisle B737Max and A320neo airliners per month in the coming 2 years, with heavy price discounting. The program was ill-conceived, ill-managed by a poor senior management team that ignored the market trends in the 100-149 seat market. Now, the “cash cow” of Bombardier Aerospace, the Global brand (G5000/6000’s) is suffering with low orders and reduced production as Gulfstream keeps moving forward, having just posted great 3Q/2015 numbers, 39 orders, 43 deliveries and a book to bill ratio of 0.9 putting Bombardier business jet sales numbers to shame. With the Q400 and CRJ lines dying a slow death, what is left at Bombardier Aerospace to be optimistic about ? the G7000 ? In the meantime, Toronto Transit Commission (TTC) this week voted to sue Bombardier Transportation for its failure to deliver on time its 204 new streetcars from a $US 1.0 billion order placed in 2009, seems their is trouble in trains and planes and can it get any worst ? Oh yes it can, expects some major announcement about major structural changes at the company, but don’t expect any new CSeries orders anytime soon, this is not the right atmosphere for anyone to commit to a Bombardier product.

Today Bombardier (TSX:BBD.B) is to reveal its 3 Quarter results, it has been dreading this day for sometime as the results are not good, especially cashflow. It has been trying to find a new source of capital before this day, today it will announce a BAILOUT from the Government of Quebec and write down $US … Continue reading

UPDATE: Latvia’s 98% government owned airline, airBaltic will review an offer from a unknown “Chinese” investor for 49% of the airline on October 20th (only 5 weeks after China’s CEFC buys 10% of Czech Republic’s Travel Service increasing to 49% shortly and with it gains 34% of Czech Airlines, which is also 44% owned by Korean Air), the Chinese are coming to invest in European aviation, a “white knight”, though NOT on par with Etihad, but better than nothing, surely 51 European countries CANNOT all have a national airline), but for some “lucky” European airlines (Hainan Airlines owns 48% of Aigle Azur and looking to buy minority in Air Europa soon, while HCNA owns 35% of Cargolux after Qatar Airways bailed out) it has worked. This comes at a crucial time for tiny airBaltic, which is sadly the launch customer for Bombardier’s CSeries, with the first aircraft due September, 2016 (11 months away), yet the barely profitable airline does not have the money or ability to finance the pre-delivery payments ? With a negative shareholder equity value after losing Euro 190 million since 2010 the airline needs the cash investment to be able to pay for and put into service the 13 + 7 optioned CS300’s worth $US1.45 billion at list (realistically $US 900+/- million at best). This is very sad, this tiny airline (25 aircraft) should never have been selected to be a launch customer for a new commercial airliner, too small, barely profitable, operating old B737’s, no equity, no ability to finance anything and far away in the Baltics with heavy competition from low cost carriers (LCC) and even a EU airline supported by state have taken their toll on local carriers, with many having gone bust or are just hanging on (e.g. Estonian Air which is most likely about to be declared bankrupt when the EU comes out and rules on a EUR 40.7 million state “loan” as illegal, and like Malev, Cyprus Airways, Olympic Airways, it will have to be declared bankrupt, sad but they were cheating other airlines of free competition). A long term sustainable business model seems elusive in the Baltic region, though airBaltic just may have the space and investment to make it happen, in time. It sadly shows the lack of quality in Bombardier’s CSeries order book which desperately also lacks quantity (“firm’ 243, “realistic ” 140), and I am seeing another major screw up, like the Sukhoi SSJ-100 launch customer Armavia of Armenia ? (Not Russia’s flag carrier Aeroflot but Armavia ?), which quickly went bust but there were few takers in Russia for the aircraft when it came out, only until Moscow ‘ordered’ its airlines to use them. Well again, Bombardier has to “hope” for another good outcome next week, otherwise its CS300 launch customer is going to be a problem, the last thing Bombardier needs now is another problem ! Lastly, airBaltic also wants assurances that Bombardier will still be supplying and building the CSeries aircraft in five years time ! after the Airbus ‘fiasco’ now everyone is nervous about the program from existing customers, prospects, employees to investors, and in this environment of “mistrust” how can you realistically sell more aircraft ?

The direction of CS300 launch customer airBaltic ( 8 x B737-300, 5 x B737-500 and 12 x Q400’s) will be decided on October 20th when the Latvian government (98% owner of the airline) review a bid for 49% of the airline from a possible Chinese buyer and there was also interest from a German investor … Continue reading

SUMMARY: Today the Dutch Safety Board came out with its investigation of the MH17 crash that killed 298 on board, mostly Dutch nationals and yes it was a SA-11 BUK that brought it down, most likely by Russian supported separatists in Eastern Ukraine. At the same time, German owned (Intro Aviation) and Irish based regional airline City Jet announces it will be the first ‘western’ European airline to operate the Russian Sukhoi SSJ-100 Superjet with a lease for 15 plus another 10 options starting next year. Very insensitive timing and a decision code sharing partners Air France and especially Dutch KLM will strongly object to. Normally no one buys anything “Made in Russia” ! they have no products of value to the west, so why buy or lease their SSJ-100 with all the risks attached to its operation ? when the E190/195 (E1/E2), CRJ-900/1000, MRJ, CS100 are far more competitive products, without the political, social, economic, public relations, customer perception and support risks, a business wants to minimize risk, with this aircraft an operator will increase business risk, as its a long 20 year commitment for an aircraft, so much can go wrong with your supplier in that time period. When EU/US/NATO-Russia relations are as bad as they are now, why does any airline think that European nationals will want to fly on a Russian airliner ? they won’t ! I hope that the citizens of Europe will and should boycott any airline operating the SSJ-100 the ‘only’ Russian airliner with any western appeal due to the fact it is now Putin’s baby, a show case with billions of Rubles being spent on it to sell it to the west through Russian state support for low prices, low lease rates and residual guarantees as Russia “hopes” it will ‘open’ doors for the eventual Irkut MC-21 narrow body airliner in the future. Air France and KLM should find a new regional partner, because their brand cannot be on a Russian airliner, that would be a PR disaster and they will loose customers doing so. In fact NO major western airline should accept the SSJ-100 on any ACMI deal either, this ‘white tail’ flying is big business and City Jet is now going to fly CRJ900’s for SAS, and Swedes should have lots of questions for City Jet as well. Has anyone noticed that the ‘Cold War’ is on again ? EU/US economic sanctions are in place on Russian individuals and companies (inc. United Aircraft Corporation) ? Russia for sure had a hand in the downing of MH17 ? Russia annexed its 4th territory (Crimea) last year ? Russia is talking and planning the possibility of ‘tactical nuclear’ warfare ? Wake up Europe, say Nyet/NO to Russia and to City Jet and any other EU airline operating the Russian SSJ-100. IF Russians want to fly on Russian airliners that is fine, they have to, but Europeans don’t have to, we have much better choices with Embraer, MRJ and Bombardier. Hopefully new economic sanctions over the MH17 downing will be aimed at the Russian civilian aerospace industry, then any operator of Russian aircraft will rightfully have huge problems. But right now we need Air France and especially Dutch KLM along with SAS to openly say something to City Jet about its poor aircraft choice, or many of their customers will take their business elsewhere, Europeans need to send a message to Russia. EU consumers have a choice NOT to fly on a Russian airliner, no need for it, and no need to support an aggressive expansionist Russia.

Irish regional airline City Jet has announced it will lease 15 Sukhoi Superjet airlines (SSJ-100) and has options on a further 10 to replace its 18 Avro RJ85 in 2016 and 2017 to become the first ‘western’ European airline to do so, hopefully its code share partners AF-KLM and SAS will have something to say … Continue reading

UPDATE: Well, things are really BAD with Bombardier and the CSeries program, as in desperation the company has offered to sell it to Airbus and Embraer for for next to nothing, a desperate plea and MAYDAY signal for help in selling the CS100/300 ! the program is in MAJOR trouble, worst than anyone thought possible. The fact that Airbus and Embraer said NO to the program and confirming there are serious production problems with the aircraft has to be scary for customers, airlines, investors, employees and any would be ‘white knight’. Its worst then I imagined, and when industry ‘guru’ Richard Aboulafia of Teal Group says “Bombardier should pull the plug” and “that this is the beginning of the end for the very troubled program”, as I have always advocated it is time to start talking to Comac (China) about “Combardier” or pull the plug on the program. Comac is very interested in Bombardier, the two OEM’s already cooperate on commonality between the CSeries and the C919, and they need each other, one needs money the other needs industry know how and experience, and Bombardier is the only commercial jet airliner manufacturer in the world one can buy today. Bombardier (TSX:BBD.B) rose last week on news that United Airlines may buy a fleet of 100+ seat airliners if its pilots agree to a 2 year contract extension, its a ‘game’, Delta’s CEO Richard Anderson tried the same thing this July with a 60 aircraft/$US 4.0 billion order/ ‘carrot’ with his pilots, they rejected his deal, and he cancelled the order, relax we are very far away from any major US airline order. Bombardier investors are hard-up for any good news, stock is very volatile right now and I am looking for it to break the $1.00 mark before Christmas. Latest launch of the Q400 “combi” is troubling to me, up to 50 passengers in the front and 9,000 lbs of cargo in the back through a small 1.72m x 0.71m door ?, its a weight and balance operational nightmare on a 32.81 meter long “teeter totter” (aka seesaw), good luck with that ! Bombardier needs money, lots of it by mid-2016, look for it to sell Learjet for sure, and then a part of Aerostructures and Engineering Services, part of Transportation, “pause” the new G8000 program and bring in the Quebec government through Caisse (2nd largest pension fund in Canada) and Quebec’s public pension manager, poor pensioners in Quebec ! These are truly dark days for Bombardier, the next 10 weeks will determine its future one way or another.

The last time I wrote about Bombardier was September 15, 2015 and I was thinking at the time, it cannot get worst, but here I am 24 days later and I am seriously worried about the viability of Bombardier’s viability as a going concern, as the bad news just keeps getting worst, the fact Bombardier … Continue reading