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Aeropolitics, Airline Management, Bombardier, Commercial Airliners, Other Aviation Issues, UPDATES

UPDATE: The Canadian government is going to put $C 1.3 billion into ailing Bombardier and BAILOUT its CSeries commercial jet program, yet the company AND the Canadian government are NOT revealing past government aid to the manufacturer. In fact, according to latest article in the ‘Financial Post’ both parties suppress any information about Canadian taxpayers support for the company, which in a democracy like Canada’s is outrageous. This is another example of the “corporate welfare” and “crony capitalism” in Canada today, when government and BIG business are bed fellows and there is no public accountability and transparency on billions of dollars of taxpayers money going to aerospace companies. When did we become a “crony state” where taxpayers are not allowed to know where their tax money went to and for what ? They say it could prejudice the competitive position of the company ? are you kidding me ? Everyone knows what a miserable screw-up Bombardier is today thanks to ex-President/CEO and now Executive Chairman Pierre Beaudoin. They tried to sell the CSeries program to 3 OEM’s in October, 2015 surely they gave out financial information on the CSeries program ? and everyone can read public financial statements to see how bad the company’s financials are. Yet, the company is NOT a good Canadian citizen, it hides and parks hundreds of millions of dollars away from our Canada Revenue Agency (CRA), in overseas brass plate corporations so it does not have to pay Canadian taxes that it now so badly needs from us, and has asked 51 times since 1966 for government assistance, that is an average of once a year for the past 50 years, a ‘regular customer’ for state aid and yet Bombardier goes out of its way to unethically hide its money from Canadian taxes yet dares to ask for state aid regularly to help it grow ! shameful corporate hypocrisy at its worst. It discriminates in its employment hiring against English speakers (aka Quebecois nepotism coming from ex-President/CEO directly) and the government has done nothing yet to investigate it, as it is against the Canadian Human Rights Act to discriminate and the company needs to be punished for that. The company sends new work to Mexico and Morocco, as it lays-off thousands of workers in Canada and it wants more and more money from Canadian taxpayers while the Bombardier and Beaudoin family’s that control 54% of the voting shares with only 13% of equity (worth around $US 345 million), don’t want to give up control, thinking they are too BIG to fail ! Probably they are right, off course local Quebec government made no such request of course (wonder why ?), Ottawa is at least trying to change the 2 tier voting system to reduce majority control. If you want taxpayers money, then you have to make it transparent, it is simple. If you don’t want your competitors to know you are being state subsidized and probably running foul of World Trade Organization (WTO) rules, then don’t take taxpayers money and find it elsewhere. After the revelations of Quebec’s Charbonneau Commission into widespread corruption in Quebec, mainly between BIG business and local politicians, I believe that with billions of dollars of taxpayers money out there somewhere and no accountability for it, our RCMP (Royal Canadian Mounted Police) must investigate, as this is how corruption happens in “crony capitalism”, when government and BIG business do their own things behind the closed curtains free of public scrutiny and accountability, especially in Quebec, so let’s get in there and find the money trail before its gone ! Lastly, if the control stays with the existing 2 families, Ottawa must say NO to any further state aid (aka “corporate welfare”), the $C 1.3 billion investment into a new limited partnership that will hold the CSeries program, is scam on the taxpayers of Canada, as Bombardier very well knows that the demand in the 100 to 150 seat market is very low with 9 years of steady decline and only 53 deliveries in that segment in 2015 by 3 manufacturers. Bombardier only has to look at it’s own 104 seat CRJ-1000 program a total commercial FAILURE with only 68 orders and 43 deliveries in 5+ years (only 4 deliveries and a $243 million write down on the program in 2015), add to this the new ‘normal’ on pricing deals in this 100-150 seat segment is now at 50% to 70% off list price, and it all adds up to a market segment that is totally wrong for the likes of a lightweight competitors like Bombardier due to weak demand and low to non-existing profit margins on sales, against the duopoly of Airbus and Boeing determined to crush the CSeries early on. This explains why they wanted to sell it 1 month before Canadian Certification, why else would you sell a program after 8 years of work ? They know where it is all heading and secretly they don’t believe in the program as it has NO FUTURE given the dynamics of what is happening in the market segment today. Canadian taxpayers are being duped into a $C 2.0 billion “investment” that has ZERO chance of being returned, better to buy 91% of all outstanding ‘B’ shares, and have something to show for the $C 2.0 billion. Lastly, when the CSeries becomes and orphan, it will not be the first Canadian jet airliner to fail, I take a quick look at the 1949 built Avro Canada C102 Jetliner, and 3 other jet airliner programs that were very good for there time, but like the CSeries were in the wrong market segment at the wrong time and failed with less than 37 units produced before becoming “orphans” (aircraft who have ‘lost’ their manufacturer or were ‘abandoned’ by their manufacturer).

I have recently written about the hundreds of millions of dollars of Canadian tax payers money Canadair and de Havilland received from the Canadian government in the 1980’s, and that Bombardier now wants $C 1.3 billion from Ottawa to match the $C 1.3 billion it has received from Quebec.

For a company that violates the Canadian Human Rights Act by discriminating against Anglophones in its employment hiring (aka “Quebecois nepotism” since 1992 when Bombardier bought de Havilland), I thought how arrogant of the French Canadian company to come to the Canadian taxpayers again for financial aid for the 51st time in 50 years !

Now, with the recent March 11, 2016 article by Kristine Owram of the Financial Post, entitled “How Bombardier Inc. suppresses information about how much government funding it receives”, I think it is time to put an end to the “crony capitalism” our Government has in place to support Bombardier, through what can only be called a “corporate welfare” program.

It has been revealed that Bombardier suppresses very strongly any information about government funding received by the French Canadian company. Considering the fact that Ottawa is now seriously contemplating giving the company $C 1.3 billion for a 1/3 share in its struggling CSeries commercial jet program, and yet we Canadian taxpayers are not able to get accurate information on how much taxpayers money went to Bombardier and how much is owing to the taxpayers of Canada ?

The CSeries aircraft is a very good aircraft, the problem is the segment for which it was designed for (100 to 150 seats) has deteriorated over the past 9 years to only 53 deliveries last year, and in no way near the 350 aircraft per year that Bombardier “hoped” for, so that it could capture at least 50% of that, now the market is around 140 units per year between 4 OEM’s (Airbus, Boeing, Bombardier and Embraer) and the game is on, but a game no one will win, but a game Bombardier will lose at it is in the weakest position to handle low sales and low prices for too long, before it runs out of money.

The CSeries had a competitive advantage, but it was in the new PW1000G engines, and therefore that competitive advantage was easily bought and installed on existing airframes (A320/B737) and the competitive advantage was gone, and the market segment has deteriorated for years.

Then combined with Airbus and Boeing predatory pricing of up to 70% off list price to make sure Bombardier fails, the CSeries market cannot sustain the program with such low demand and prices without bringing Bombardier to bankruptcy at some point, and with the Chinese C919 and Russian MC-21 due in 2020, the market will just get more competitive, mainly on market share which means even lower pricing to come.


NOT acceptable in a democracy, we are not China, North Korea or Russia, all government aid using taxpayers money must be transparent, especially in Quebec the home of Canada’s most corrupt province where big business and politicians are bed fellows, and several major firms have been implicated in the Charbonneau Commission from SNC Lavalin, CIMA, Dessau, Genivar, Roche, etc. in raising government construction costs in Montreal by +25% only to be covered by taxpayers, etc.

The problem is that our Government is helping Bombardier hide the truth from us, the citizens and taxpayers of Canada, when have we become a “crony state” ? where billions of our taxpayers money can be hidden from us ? and you know that with sums like that tens of millions of dollars have been siphoned off by corrupt government and business leaders, off course there is no oversight when there is no proper accounting and publication of accounts.

Bombardier says the information must be withheld for competitive reasons ? what because you are maybe doing something illegal or foul of  WTO (World Trade Organization) competition, or state aid rules ? this lack of transparency is a scandal, and the RCMP should be called in to investigate the whole things, immediately.

The citizens of Canada have the right to know where their government move goes, and we don’t know how much Bombardier got or how much they returned, as most of taxpayer funding is repayable loans, which based on certain financial performance criteria.

But after the Charbonneau Commission found 2 sets of accounting books at various companies, I would not trust Bombardier books any more than the City of Montreal’s books, where several Mayors are being investigated for corruption and hopefully facing long prison terms.

How did we get to a point in Canada, where public money to private companies becomes “proprietary” information, not for public distribution ? Time for a change, but PM Trudeau comes from Montreal the hot bed of Canadian corruption and he won’t shake things up in Quebec, so who will ?

What happened to the NDP, as the vanguard for the average Joe in Canada, the one voice you can depend on to give average Canadians a voice in Government against BIG Business lobbyist and politicians too close to BIG business ?

How does Bombardier get away with receiving billions of dollars in state aid, and not having the information in their Annual Reports, such lack of transparency should trigger some sort of investigation as your individual investors are not receiving all required financial information that a public company must declare to all investors equally ?

We cannot become a country that allows certain companies to live off the “hog” of Canadian taxpayers and not provide proper information on what it gets and returns ?

We are talking about Bombardier, a company that is NOT a good Canadian citizen, hides millions in overseas brass plate companies from the CRA (Canadian Revenue Agency), discriminates in its hiring practices against Anglo speakers and sends thousands of jobs overseas to Mexico, Morocco, etc. but lay-off thousands Canadian workers at the same time, BUT now on its knees begging for a Canadian taxpayers bailout !

Yet the Bombardier and Beaudoin family’s that control 54% of the voting rights in Bombardier DO NOT want to diminish their control, even with only 13% of the equity/shares (worth +/- $C 350 million) and yet they expect $2.6 billion of Quebec and Ottawa money to save their business !

Shameful beahiour, they should be relinquishing control, BUT Quebec did not dare to ask while Ottawa wants it, well if they don’t relinquish, screw them, don’t give them any money, they think they are too BIG to fail, seen that one played out in the US 8 years ago, they are playing “chicken” with the governments, and I say SWIM or SINK !

I have been away 20 years, and I am ashamed of where this country has fallen to, and how we have become like the Americans, where BIG business runs the country, where BIG business can commit massive financial crimes, and no one goes to jail, just pay off large fines and where BIG business and politicians are bed fellows and democracy is relegated to a simple X on a ballot every 4 years between 2 parties, and they think they have democracy ?

There seems to be little mention of aid to Bombardier in the Financial Post findings, the government Access to Information Act allows them to refuse any disclosure that “could reasonably be expected to prejudice the competitive position of a third party”.

What kind of BS is that ? Bombardier tried to sell the CSeries in October, 2015 to Airbus, Boeing and Embraer, they must have gotten lots of information and financial numbers on the CSeries, so how can anything prejudice the company now ? this is how our Government lies to its people ?

In 2009, Industry Canada (now Innovation, Science and Economic Development Canada), put out bi-annually repayment status reports from 1996-2006 for Technology Partnership Canada (TPC) funding and it’s successor Strategic Aerospace and Defence Initiative (SADI). Up to last November 1, 2015 TPC disbursed $3.16 billion and collected $1.13 billion, while SADI disbursed $935 million and collected $35 million ?

So, $4.095 billion went out and only $1.165 came in ? so $2.93 billion is where ? should we not know where this money went and is ? that would take care of lots of children living in poverty no ? or help out other industries struggling today like the oil patch.

In 2005 a report on the value of TPC by consulting firm Hickling Arthurs Low, found current repayment estimates for the TPC program were 45% lower than they were at the time the contracts were signed ! a difference of almost $C 2.0 billion, now don’t that raise a RED FLAG ? off course, it smells of corruption somewhere.

Seems someone in government is playing and changing the repayment numbers as they go along and company’s are getting away with repaying less of their disbursements, which again means Canadian taxpayers are being screwed again and again, and where is the public scrutiny ? investigation or outcry ?, there is none in, like sheep we accept the notion government looks after our interests, they know best.

The Liberals are are heading for a big budget deficit this year, can we afford to prop up poorly run corporations when they don’t even want to change themselves ? and at the top sits the man who is at fault for the mess, he needs to go, but won’t go, but we should try and make him go so that CEO Alain Bellemare has a free hand to do what is needed without interference from Executive Chairman Pierre Beaudoin.

Some documents show Bombardier received 5 contributions, ranging from $35 million to $190 million between 1996 and 2009, plus $350 million we the taxpayers gave Bombardier for the launch of their CSeries airliner,plus $427 million from the Governments of the UK and Quebec, so they already got $C 777 million to launch the Cseries from Governments.

Now they got $C 1.3 billion commitment from Quebec and probably another $C 1.3 billion from Ottawa soon for that 1/3 share in the CSeries program that will be a disaster in the end anyway, and as I have always said, China’s COMAC will be interested to buy it.

We will get 1/3 of a program that in 7 years has only 243 orders, but really +/- 140 orders will happen in a market segment (100 to 150 seats) that has been in decline for 9 years, with only 53 aircraft delivered into that segment in 2015, and where the two biggest commercial aircraft manufacturers in the world (Airbus and Boeing) have a product in, and are prepared to make sure heaven or hell that Bombardier’s CSeries is terminated as soon as possible with predatory pricing (up to 70% off list prices), brand name, customer support and market share power.

Look at the dismal 104 seat CRJ-1000 program (photo BELOW) with 68 orders and 43 deliveries in 5+ years of production (only 4 deliveries in 2015 and $243 million write down of the program), it is in the 100 to 150 seat market, and it is a commercial fiasco with +/- 9 deliveries per year ? that should be there RED FLAG on the market, as this CRJ-1000 has a maximum of 104 seats, while the CS100 has 120 with 108 in dual class, so very similar in seating capacity. The writing is on the wall, the problem is that Bombardier is blinded by it’s own marketing myopia, and does not want to see, read or hear anything that goes against their “game changer”, very sad indeed.



Anyway, take some comfort that WHEN not IF the CSeries fails, it won’t be the first time a major commercial Canadian “game changer” failed. Back in 1949, the Avro Canada C102 Jetliner ( 2 photos BELOW) took to the air on August 10th, only 13 days after the de Havilland DH 106 Comet beat it to become the 1st commercial jet airliner to fly, but we were 2nd and that is something to be proud of.

avro-images (3)Avro_Canada_C-102_Jetliner

It was beauty for its time, fast at 805 km/hr and cruise at 676 km/hr with 32-40 passenger seats, and National Airlines wanted it and TWA wanted it, but it was a failure, as Avro focus was military aircraft and only 1 C102 prototype flew and that was it. The market was not yet ready for a jet, especially a regional jet sized one,poor timing and market acceptance, too early, market wanted something bigger.

This business is all about timing, and we see it with the CSeries the 100-150 seat once interesting, but peaked in 1991 and since 2007 has been in decline, now the CSeries has to deal with a segment that is much smaller and far more competitive.

There were other “orphans” that were good aircraft, but markets changed and some became to small for what airlines wanted, sounds like the CSeries no ?

  • VFW-Fokker 614 (44 seat regional jet), 1st flight 191, entry into service 1975 and end of production 1978 with only 19 built, and used by TAT, Air Alsace and Cimber. Regional jet was to early, later Fokker found success with F28 Fellowship.


  • Dassault Mercure 100 (162 seat airliner with 1,125 nm range), 1st flight 1971, entry into service 1974 and end of production 1975 with only 12 built for Air Inter (France). The stretched DC-9 was a competitor and CFM56 took too long to come around for use.


  • Convair 990 Coronado (149 seat airliner with 3,124 nm range), 1st flight 1961, entry into service 1962 and end of production 1963 after only 37 were built for American, Swissair, etc. The plane was fast at 540 kts, but with 4 engines uneconomical for it’s size.The aircraft was over taken by the DC-8 and B707 with more seats and range. Compares today with CS300 in size and range, and again overtaken by larger aircraft like the A320 and B737-800.


Thank you for reading my Blog, yes I am passionate about this industry. I have a sense of what works and what does not, as I have been involve din many programs and have seen too many airlines and programs fail due to poor planning, strategy and people in charge, in fact success always comes from having the right people, and where there is trouble, like Bombardier, you can bet that 90% of the problems there stem from having the wrong people in the wrong jobs for too long.



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 30+ 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 (50+ 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 in the business for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com I write a lot of Articles and Posts on LinkedIN: https://www.linkedin.com/in/tomas-chlumecky-3200a021/


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