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Bombardier, Business Aviation, General Aviation, Other Aviation Issues, Regional Airlines, UPDATES

UPDATE: An insider’s opinion on what went wrong at Bombardier. With the TSX:BBD.B stock at $1.19 (Dec 11, 2015), a drop of 75.2% from year ago today and a 13.7% drop from only a month ago, it is obvious that the investment community is not buying the 5 year transformation plan presented at the company’s Investor Day in New York on November 24th. The plan calls for revenue growth to $25 billion by 2020, with Business Aircraft to hit $9.1 billion with the G7000 alone ? as the G8000 is no longer mentioned by Bombardier and the Challenger 650 is fading while the Learjets are dying. Meanwhile Commercial Aircraft plans to hit $5.8 billion in revenue (with only CS100/300’s as the CRJ and Q400 sales have little life left and by 2020 they surely will not be in production). While Transportation (trains) goes to $9.4 billion and Aerostructure grows to $0.7 billion (70% from Bombardier). Already plans are in place to out source Q400 and CRJ work to Mexico and Morocco as those brands fade into history, as current backlog of Q400’s at 73 units (36 months of production) and CRJ line with 75+/- backlog (15 months of production), the company is now looking for it’s workers for labor concessions in Belfast and Toronto. The company plans to deliver anywhere between 255 and 315 CSeries by the end of 2020, when production should be 90-120 units annually, so it is estimating a net average unit (CS100 and CS300) price of between $64 million at 90 units or $48 million at 120 units, either way it won’t reach $5.8 billion (at BEST $4.8 billion) when the price will be at best $42 million for the CS 300 and $36 million for the CS100 due to heavy price discounting competition from Airbus, Boeing and by 2020 new entrants like Comac and Irkut on their respective narrowbody aircraft. As for business jets, hitting $9.1B that is a far stretch as well, The Challenger 650 (a 35+ year old Canadair CL-600) will not be competitive by then, the Learjet line is dying as I write this, while the current Global G5000/6000 (current “cash cow” for Aerospace) is finding it hard to compete today and accordingly production is being reduced to 50 and much lower, and by before 2018 the G5000/6000 will struggle for any orders, and will be done as the new Gulfstream G500/600/650ER and Dassault 8X take over that segment. The ultra long range segment above $75 million (Global 7000 is priced at $75 million) has delivered 161 Boeing 737 Business Jets (BBJ’s) in 17 years, Airbus has delivered 116 A320/319 Airbus Corporate Jets (ACJ’s) in that time, or 277 narrowbody business jets (or just 16.3 aircraft per year on average), show me where is this market for business jets over $75 million ? governments and a few billionaires, but realistically a small market that Bombardier once again over estimated, and will pay the price for entering into. The competition here is VIP versions of commercial airliners offering great prices and much more comfort with huge cabins, the $75 million G7000 has a cabin of 2,657 ft3 and will fly up to 7,900nm the $87 million (big discounts available as low as $50 million), while the new ACJ A319neo has a cabin of 5,843 ft3 (2.2 x larger than G7000) with a range of 6,500 nm, and it will be tough going for sure.The future of Bombardier Aerospace is down to the CSeries and G7000 programs, in highly questionable markets segments that are most likely not going to support the company’s ambitions of mass production and large sales goals, they rolled the nice and they just may end up losing the company in the end.

I will start with my usual lack of progress report on Bombardier and where it is heading, and then further below is the unedited opinion of a Bombardier insider on what the heck has been going on at the very troubled OEM. I can report on what I see for the point of view of financial performance, products, product development, competition and market developments, but only the people inside of Bombardier know what the corporate culture is like and what they are thinking.

Bombardier is fighting for its future in 2016, a future still up in the air, even though they received lots of money they still have certification, entry into service and production to deal with, and problems can come up in any one of those areas very easily. The company wants money from the Canadian Government, yet will not change the fact that 2 families control 54% of the voting rights with 14% of the equity. Let those that control the company put their money where their mouth is and put their own money into Bombardier first, and till then I say NO Federal Government to Bombardier, why should tax payers bail out a company where those that run it have billions in their accounts and investment portfolios ?

Especially after the latest Child Poverty Report that +20% of Canada’s children are living in poverty, with Toronto being the “Child Poverty Capital of Canada” with 28.6% of children living in poverty and Montreal is 2nd with 25%, we need to help our children before we help the Bombardier or Beaudoin families ! we have lost our priorities in Government under the former PM Harper regime, now we need to look after the bottom 30% of Canadians and not the top 0.1% of Canadians.

The 2 families that control Bombardier got the company in this mess, and truthfully the Board should be changed, fired really. The departure of Transportation Division President Lutz Bertling last week raises red flags about what is going on inside the company, as little is changing and the investment community knows it as we see the continued slide of the company’s shares as investors are not convinced the company will get out of its current mess, and it is heading below $1.00 as predicted, as nothing they have done in the past year has changed investors opinion, and therefore a continued slide of its shares will continue till “something” very positive happens.

Market capitalization of its common shares TSX:BBD.B ($1.19 a share) is now only $2.3 billion, while TSX:BBD.A ($1.30 a share) common shares are market caped at $408 million, so in total market cap of $2.7 billion, the company is now worthless than its 3Q/2015 loss and write downs and almost as it raised in new capital the last 2 months. Look at the National Post stock price slide for the past few years, investors have lost billions ! and billions have been written off on the Lear 85 and CSeries programs, this business has been destroying enterprise value and shareholder value for years, and I do not see a bright future for Aerospace at all.

The company will need another $2.0+ billion for the CSeries, and with a small order book and a market segment that is nowhere what they thought it was, the company is up shits creek with this program, and possibly even the G7000 program.

fp1212_bombardier_timeline-gs-c2

The most ridiculous comment comes from Commercial President Fred Cromer, “we are being selective about the airlines we are talking to“, your kidding me ? this is coming from a company that has 243 orders after 7 years, +/-140 “real” orders, no order in 15 months, has customers like failed state carrier Iraqi Airways, start-up Odyssey Airlines, CPA (capacity purchase agreement/ACMI operator) Republic Airways, barely profitable airBaltic of Latvia, etc.

At this point they have to be desperate for any airline  with a pulse and some money ! The market just does not have confidence in the product/market (100-149 seats), and lessors are shying away or the few that have committed have to be worried. Now, even the business jet side does not look good past 2019, so much for the 5 year Transformation program, and watch the stock go below $1.00 soon, and 2016 will be the year for the CSeries to show if it has a future with Bombardier, otherwise sell it to the Chinese (Comac) or shut it down.

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cseries-gwxz-bombardier-bombardier-cseries-cs100-bd-500-1a10_PlanespottersNet_623307may15-7000

The future of Bombardier Commercial Aircraft rests with the $72 million per unit CS100 (Above left) and the $82 million stretched CS300, both with only 243 firm orders, but only about 140 “real” orders from a market that is highly competitive, price sensitive and becoming very competitive with 5 OEM’s in the 100-149 seat market within the next 4 years (Airbus, Boeing, Bombardier, Comac, Embraer and Irkut).

In such a competitive field, the Bombardier CSeries will not be price competitive against Airbus and Boeing and up against massive state subsidies for Comac and Irkut, don’t see a rosy picture here at all. Forget their slogan “driven by innovation and market leadership” that was true maybe 10 years ago, not today.

As for the Q400 and CRJ brands, while the 5 year Transformation Plan assumes their continued production, the reality on the ground is that right now new CRJ orders are all but dead, as Embraer this year up something like +140 E175/E190/E195 E1 and E2 orders vs 7 CRJ700/900/1000 orders and ATR dominates the 70-80 seat turboprop market with its ATR-72-600 vs the Q400 which juts cannot compete on economics, even with huge discounting against the ATR-72-600.

So, I do not expect Commercial Aircraft to be producing Q400’s and CRJ’s in 2020, in fact at current backlogs, the CRJ line without any major order will shut down by the end of 2015, and the Q400 has 3 years of backlog and possibly another year of new orders, so end of 2019 we should see the end of the Q400 line.

As for the Global G7000 (Above right), well at $75 million it will compete with VIP conversions of Airbus A320 and Boeing B737 brands, which have pricing power, double and triple the cabin space and competitive range numbers.

Once again Bombardier entered a highly competitive market, and in this case a reasonably small market that till now has averaged only 16.3 new aircraft per year, and by 2020 the Chinese will surely offer Chinese clients a C919 VIP version and Irkut will offer and Putin will insist that Russia’s oligarchs buy VIP versions of SSJ-100 and by 2020 the MC-21, so there goes 2 big markets, and where is the market for the G7000 ?

ACJ319neo_PW_AIB_V07

The ACJ A319neo (ABOVE picture) has a price of around $89 million, though it will go for $75 million (price of G7000), flies up to 6,400 nm (11,700 km) with 8 VIP passengers, and has a huge 5,843 ft3 cabin 2.2x the size of the G7000 while also offering a 3 sectional floor plan, so with this plus the ACJ 320neo, Boeing’s B737Max7/Max8 available, why buy the G7000 ? it does offer 1,500 nm increase in range (23% more), but in a cabin that is 54% smaller ? long range (10+ hours) flying is all about comfort, and more space equals more comfort.

Even if they deliver at BEST 40 units per year with no discounting they will get to a revenue of $3.0 billion, that is no where near the planned $9.1 billion planned for 2020, so where will the short fall of $6.1 billion come from ?

Surely NOT from the Challenger 650’s, not from Global G5000/6000’s which are both being challenged by newer models and by 2019 they will be un-competitive, the Learjet line today  is struggling and only deep discounting keeps it going, in short there is nothing by 2020 on the business jet side, aside from another “revamp” of the Challenger 350, but 5 years from now, it too will be out of favor and in the declining stage of its product life cycle.

Reaching the 2020 Business Aircraft revenue of $9.1 billion is only a DREAM, unless they deliver 108 x G7000’s at $75m a piece and 40 x Challenger 350’s at $26m a piece (NOT possible of course), as by 2020 they will have nothing else to sell that the market wants or needs by then, as other new products over Bombardier’s existing product line, as best $4.5 billion, half of what they are “hoping” for.

They forget that Gulfstream, Dassault and now Textron are going after their old and tired products (Challenger 650 is 35+ years old, the G5000/Global Express is 18 years old, G6000/XRS is 12 years old, the Learjet line is 40+ years old), which they have kept going with “revamps”, new avionics, new engines, bigger windows, but the aircraft cannot compete with the new offering in the works.

This Business Aircraft market is in BIG trouble, as Bombardier faces new competition from Textron’s Hemisphere aimed at Challenger 650 market, Gulfstream’s G500/600 and Dassault’s 8X are aimed at the Bombardier’s G5000/6000’s marketm and the G7000 is going after the ACJ A320/BBJ B737 market and the company will see a totally new competitive landscape in 2020 then today, again too much focus on CSeries and G7000.

challnger 300may15-1baltic-1

Learjet_75-lear75challenger 605-11CRJ900_NextGen_SAS(1)

These Bombardier brands will NOT be competitive by 2020, and 5 out of the 6 will not be around (only the Challenger 350 may still be competitive by 2020 with another “revamp”) to help the company’s revenue growth, from the Challenger 350 (Above left), G5000 (Above center), Q400 (Above right), Learjet 75 (Bottom left), Challenger 650 (Bottom center) and CRJ900 (Bottom right).

They are all being challenged by newer products, by more aggressive companies that smell blood at Bombardier, as it is pre-occupied with its own survival as it will still spend $2 billion on the CSeries at least next year and into 2017, and up to $1 billion into the G7000 program (by the way, no talk of G8000 these days at Bombardier), and the best Bombardier can do is the “revamp” some of its products to prolong their life, but with no new model below the G7000, the Business Aircraft Division will struggle to compete by 2019 for sure.

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A REPRINT FROM AN AVIATION DOCTOR’S BLOG COMMENT early December, 2015 (by consent):

Also read Blog of July 24, 2014 for Bombardier insider comments at the end of that article interesting insights.

The latest action by the Quebec government to commit $1.5 billion to the rescue of Bombardier Aerospace, in exchange of a 49.5% ownership of the company must be classified as the prime example among business investors of what not to do. And, as if this was not enough, Bombardier Aerospace has the nerve to approach the Canadian government this time, and ask for an additional $1.0 billion. On what grounds has the Quebec government invested such amounts to Bombardier Aerospace? And, on what grounds is the Canadian government about to commit the same mistake? Bombardier’s stock price was around $35 during Bob Brown’s days at its helm, but has deteriorated to about $1.40 nowadays.

Have both governments understood the reasons behind Bombardier’s stock price drop? Have they realised that this drop is not only due to the failure of the C-Series program (a primary contributor) but also to the incompetence of Bombardier Aerospace management to run an aerospace company? Have they realised that the enforcement of “innovative” management practices and procedures, imposed gradually to the company ever since it was acquired by Bombardier Inc. around 1990 have eroded its capabilities to the extend that nowadays as an aircraft designer and manufacturer, is worth almost nothing (stock price was around $30 in May 1995, reducing to about $20 in May 2001, a drop of about 30% within 6 years and reaching close to penny-stock status in December 2014, which constitutes a drop of almost 90% within the following 13 years)?

I shall not comment on the arguments of the previous contributors to this domain, which are totally correct in demonstrating that the C-Series program will fail to be a successful program for Bombardier. One point that did not strongly come out from these comments though, is the contribution to the C-Series failure of the management practices applied during its development and Bombardier Aerospace senior management persistence to apply a management model that has already shown its weakness. Since 2000, the only commercial aircraft program (as opposed to business aircraft program) in Bombardier, was the CRJ. With in this context, I would not consider the CRJ program (and that includes all derivatives made from CRJ-700 to CRJ-1000) to be a successful one and this is why:
• The CRJ production line is about to close, having produced a total of about 800 a/c against the Embraer
EMB-170/175/190/195 series, which has produced about 1400+ aircraft and is still going on, despite the fact
that the Embraer aircraft became available in the market almost 3 years after the first CRJ-700 entered
service.
• Bombardier decided to commit the CRJ platform, to the development of aircraft for the regional market.
Regional airline customers tend to plan an aircraft fleet consisting of increasing aircraft capacity (70/90
/100/110 seats) but based on the same aircraft platform.

Yet Bombardier started by offering the CRJ aircraft
platform although they had proof that such a platform could not be easily stretched and maintain efficiency at
the same time (the failure of the Douglas MD series in the commercial market, a platform that started from the
DC-10, was already evident at the time this decision was taken by Bombardier senior management).

If Bombardier’s strategic planning group was competent enough, they would have identified that for the CRJ
platform, the CRJ-700 was about the limit of efficient stretching. And, obviously, they would have never based
their regional aircraft series on such a platform.

Since 2001 the helm of Bombardier Aerospace was held by P. Tellier, P. Beaudoin and A. Bellemare, in that order. All, except perhaps A. Bellemare, had no significant experience in the aerospace industry and made mistakes (especially P. Beaudoin), which can only be explained by their inexperience, incompetence or both and which mistakes drove Bombardier Aerospace to the state it is today. More significant than that is the fact, that a) they were never able to assess the implications of their mistakes (a fact compatible with their inexperience and incompetence) and b) they kept managing Bombardier repeating the same mistakes until the present days.

P. Beaudoin, and to a much lesser extent P. Tellier approached aircraft development through the philosophy of starting on an aircraft project idea whithout much thinking at the early stages, but evolve the design over time until the product was finalized. This is known in the industry as a trial-and-error approach. Such an approach is reactive in nature, as opposed to proactive and lends itself nicely in environments were inexperience and/or incompetence prevail and need be camouflaged. It is inherently expensive and does lend itself to delays, depriving the manufacturer accurate product delivery estimates. (Bombardier Aerospace never delivered a early specimens of a product on time so far).

But it also has its advantages. Since iterations in development are the building blocks of trial-and-error management techniques, such techniques can be supported by less skilful people, affording the company savings from hiring highly skilled individuals. Skilled individuals can act in a proactive way and minimize iterations. Ultimately, the economics of this design philosophy tend to favour the development of “cheap” engineering products but are definitely not adapted to the development of high-technology complex engineering products like an aircraft.

A “cheap” product like a Ski-Doo, can be developed and offered at a competitive price in the market using the application of trial-and-error management techniques. But not an aircraft. Since 2000/2001, Bombardier tried to impose Ski-Doo development management techniques to aircraft design and development. Of course, with the disastrous results we all know today.

The success of an aircraft program depends almost entirely to product requirements management from the early stages of the program. In layman’s terms, this means “understand the product and market it is targeting right from the strategic design phase”. The “understanding” consists of a) market analysis and market trends to a depth of at least five to six years to identify if the product will meet market requirements when it will be introduced, b) risk assessment based on technologies being incorporated on the new product and market trends, c) credibility of company ability to deliver the product (and that means the state of product definition during the strategic/preliminary phase when information about the development of the new product is “leaked” in the market), d) product breakdown structure and definition of packages, e) package engineering specification, f) product development timeline, g) identification of potential suppliers for the various packages and g) plan for controlling supplier progress. And this requires the right experience and competence from the teams mandated to complete the necessary tasks.

Is Bombardier capable of successfully carrying out these tasks? Probably not. The partial success of the CRJ program and the “abandonment” of the regional jet market to Embraer, shows that their strategic planning methods and the people mandated to apply them are not up to the standards required for market domination.

They started thinking of a platform replacement for a regional jet (BRJ-X) towards the 1999. Then they cancelled it. When they started considering the C-Series aircraft they went through a sequence of announcements first confirming the existence of the C-Series program, then its cancellation, then its development again. This sequence was maintained until finally the program was officially launched in 2008.

All this did confirm their credibility in the market place, in that they understood the product and timeline they would be offering. The risk on the new program has also not properly been assessed, as it is indicated by the fact that they decided to introduce three high risk new technologies to the new design (engine, extensive use of composites on primary structures and a fly-by-wire flight control system), having not sufficient experience in any one of them. It did not come as a surprise that the introduction of two of these novel technologies were responsible for the long delays in the C-Series program. Let alone the cost overruns.

And let us not consider supplier control, which was non-existent, letting the supplier impose its pace to the program development schedule. And, let us not forget the following demonstration of Bombardier management incompetence. Bombardier launched and worked almost simultaneously on three programs, the C-Series, the Learjet 85 and the Global Express 7000-8000. Among these, the C-Series is running full speed ahead towards failure, the Learjet 85 was cancelled (wonder why) and the Global Express 7000-8000 is being delayed in “preference of supporting the C-Series entry into service”. Is this the real reason, or the aircraft has slipped its development schedule anyway?

Yet the question remains. Doesn’t Bombardier have the ability to form a competent management team and cure all these problems. Of course it does. Competent, very good people do coexist in Bombardier together with incompetent ones. Therefore why these competent people are not given the right roles and responsibilities, so that these problems are eliminated? The answer to this question is again rooted to the Ski-Doo management philosophy imposed since years to Bombardier.

The incompetence and/or inexperience of Bombardier senior management in aerospace, also does not allow them to understand the roles and responsibilities of management personnel required to fill positions at lower management level. It is therefore impossible to create a correct management structure, even if the people who would successfully fill these positions exist in the company. In fact, if someone within Bombardier, in the spirit of good constructive discussion, identifies problems with the way the company is being managed that do not agree with senior management directives, he is immediately demoded.

He will be either a victim of the “next Bombardier restructuring” or he will be intimidated by placement to an obscure post condemned to execute his hierarchical supervisor’s instructions without question. The advancement of an individual in Bombardier Aerospace depends on whom the individual knows and not on his ability.

In conclusion the Bombardier Aerospace environment consists of:
• An incompetent and/or inexperienced senior management, having adopted a management system that is far
from being suitable for an aerospace firm.
• Incompetent middle management.
• Inexperienced junior management (mostly fresh out of university) and no mentors for them (how a person at a
higher level can be a mentor if he himself needs mentoring?).
• A team of very good and competent people residing at the employee level and waiting for either the next
company “restructuring” deciding on their fate, or waiting patiently for the years to go by so that they may
retire.
• A team of equally good and competent technical people (but very few at higher levels of management) who
ensure compliance to certification authorities (Transport Canada, FAA, EASA etc.) requirements. At least one
is certain that whatever product flies out of Bombardier, flies safely.

Against this environment and the future of the only unsuccessful (refer to the other articles on the C-Series in this blog) future revenue generator (C-Series aircraft), the Quebec government invested about $1,5 billion of taxpayers money, in an investment that guaranties no return. An it did so, as a minority holder of 49.5% of the company. Can the Quebec government explain the reasons behind this totally stupid investment decision?

Against this environment the Federal government is considering to do the same. I hope they have already decided not to do so under the terms and conditions the Quebec government did.

The Prime Minister of Canada and the Premier of Quebec, must not go about just providing liquidity to Laurent Beaudoin, with the excuse of securing employment and saving the prestigious aerospace industry in Quebec. If they really want to secure employment and viability of the aerospace industry in Canada they must:
• Either provide funds in exchange of controlling rights in Bombardier Aerospace. Once gaining these rights,
they must place a CEO with mandate to immediately introduce activities related in establishing a management
system and structure that is compatible with an aerospace company.
• Or they let Bombardier Aerospace go bankrupt, force Laurent Beaudoin to sell, therefore give controlling
rights away, and then proceed to buy the company, which would have been reduced to a “penny stock” one,
and subsequently act, as mentioned in the first bullet.

In closing and to be fair, I would like to mention that A. Bellemare, recently appointed as Bombardier Aerospace CEO, may have the intention to actually completely change Ski-Doo management philosophy from the company and convert it to a model appropriate to an aerospace company. Such action may still save Bombardier Aerospace, but not the C-Series. So let one give him the benefit of doubt, he will be different than his predecessors. However, since he took over in February 2015, he hasn’t done much in this direction. A matter of priorities? Perhaps.

Thanks again, I threw in my comments into the Update and headlines below the photos, the rest is an insiders view of Bombardier, till next time, cheers. All comments welcome as usual.

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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

One thought on “UPDATE: An insider’s opinion on what went wrong at Bombardier. With the TSX:BBD.B stock at $1.19 (Dec 11, 2015), a drop of 75.2% from year ago today and a 13.7% drop from only a month ago, it is obvious that the investment community is not buying the 5 year transformation plan presented at the company’s Investor Day in New York on November 24th. The plan calls for revenue growth to $25 billion by 2020, with Business Aircraft to hit $9.1 billion with the G7000 alone ? as the G8000 is no longer mentioned by Bombardier and the Challenger 650 is fading while the Learjets are dying. Meanwhile Commercial Aircraft plans to hit $5.8 billion in revenue (with only CS100/300’s as the CRJ and Q400 sales have little life left and by 2020 they surely will not be in production). While Transportation (trains) goes to $9.4 billion and Aerostructure grows to $0.7 billion (70% from Bombardier). Already plans are in place to out source Q400 and CRJ work to Mexico and Morocco as those brands fade into history, as current backlog of Q400’s at 73 units (36 months of production) and CRJ line with 75+/- backlog (15 months of production), the company is now looking for it’s workers for labor concessions in Belfast and Toronto. The company plans to deliver anywhere between 255 and 315 CSeries by the end of 2020, when production should be 90-120 units annually, so it is estimating a net average unit (CS100 and CS300) price of between $64 million at 90 units or $48 million at 120 units, either way it won’t reach $5.8 billion (at BEST $4.8 billion) when the price will be at best $42 million for the CS 300 and $36 million for the CS100 due to heavy price discounting competition from Airbus, Boeing and by 2020 new entrants like Comac and Irkut on their respective narrowbody aircraft. As for business jets, hitting $9.1B that is a far stretch as well, The Challenger 650 (a 35+ year old Canadair CL-600) will not be competitive by then, the Learjet line is dying as I write this, while the current Global G5000/6000 (current “cash cow” for Aerospace) is finding it hard to compete today and accordingly production is being reduced to 50 and much lower, and by before 2018 the G5000/6000 will struggle for any orders, and will be done as the new Gulfstream G500/600/650ER and Dassault 8X take over that segment. The ultra long range segment above $75 million (Global 7000 is priced at $75 million) has delivered 161 Boeing 737 Business Jets (BBJ’s) in 17 years, Airbus has delivered 116 A320/319 Airbus Corporate Jets (ACJ’s) in that time, or 277 narrowbody business jets (or just 16.3 aircraft per year on average), show me where is this market for business jets over $75 million ? governments and a few billionaires, but realistically a small market that Bombardier once again over estimated, and will pay the price for entering into. The competition here is VIP versions of commercial airliners offering great prices and much more comfort with huge cabins, the $75 million G7000 has a cabin of 2,657 ft3 and will fly up to 7,900nm the $87 million (big discounts available as low as $50 million), while the new ACJ A319neo has a cabin of 5,843 ft3 (2.2 x larger than G7000) with a range of 6,500 nm, and it will be tough going for sure.The future of Bombardier Aerospace is down to the CSeries and G7000 programs, in highly questionable markets segments that are most likely not going to support the company’s ambitions of mass production and large sales goals, they rolled the nice and they just may end up losing the company in the end.

  1. They have two ways out:

    Sell Bbd commercial to China or someone else for a loss, use cash proceeds to double down on business aviation unit

    Triple down on the c series by selling both business aviation unit and rail, use cash proceeds to develop cs500/800/1000. These models will actually sell. Compete directly with b737max and a320neo

    Like

    Posted by Tukwila | December 13, 2015, 7:49 am
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