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UPDATE: Delta Air Lines (DAL) deal for 75 x Bombardier CS100’s and 50 options, is reportedly and as expected, been priced at around 75% OFF the list price to $18.6 million per aircraft, making the 75 aircraft deal not worth the reported $5.6 billion, but only $1.4 billion, and by my estimate a loss of $780 million ($10.8 million per aircraft) on the order, a great deal for DAL but not for Bombardier’s bottom line. Yes, DAL’s Chairman Richard Anderson took full advantage of Bombardier’s desperation for a new Tier 1 airline order (majority of current orders until now have been Tier 2 and 3, small regional/national mediocre customers), and drove a home great deal for DAL and its shareholders, while Bombardier gets a prestigious order after 19 months of nothing and another loss making order (285 aircraft so far all heavily discounted), at a time it wants more and more taxpayers money even as Bombardier plans to start a new Iranian airline in Qeshm ? Now the 285 ‘firm’ orders (excluding 45 x CS300 LOI from Air Canada and including the soon to be cancelled order for 40 x CS300’s to Republic Airways now in Chapter 11 bankruptcy), almost fill Bombardier’s planned 255 (min.) to 315 (max.) delivery positions to the end of 2020, basically all money losing orders some going back to 2009. WHEN will Bombardier’s CSeries make money ? No point in being in any business if there is no long term profitable and sustainable business model. They say break-even by 2020 but that does not add up, even after the $3.3 billion write down on the $5.3 billion program last year (surely over $6.3 billion now and climbing) they must using some accounting “magic” tricks, as the program is still in a very poor financial, sales and production shape today. The Federal government has not committed to the $1.0 billion, 1/3 ownership of the program that none of the top 3 aerospace competitors wanted 7 months ago, and EIS (entry into service) is 12 weeks away with no FAA and EASA certification yet ? The prognosis is not good for the CSeries, even though the aircraft is fabulous but the 100-150 seat market is dubious at best and this market segment has already destroyed the A318 (after 81 deliveries) and the B737-600 (after 69 deliveries) with the CRJ-1000 (44 deliveries in 6 years and $243 million write down last year) soon to follow and is the CSeries right behind it ? By 2020 the duopoly is over, as China’s Comac C919 and Russia’s Irkut MC-21 enter the $150+ seat single aisle market, and Bombardier would be the 5th wheel in a highly contested market, where only the strong will survive and that ain’t Bombardier by any stretch of the imagination ! Coupled to decreasing Business Jet orders and the whole dated product line now under attack by new competitive aircraft , as LearJet 70/75 are dying and company has no future after the cancellation of the LearJet 85, “cash cow” Global 5000/6000 are fading as is the 36+ year old Challenger 650/605/504/601/600 line and the new Global G7000 is going to join the CSeries as the only 2 products for the future, each with its own set of major challenges to success.

READ: Blog article on DAL deal, April 28, 2016 Well the Delta Air Lines (DAL) deal for 75 x CS100’s and 50 options is done, and brings the current order book to 325 ‘firm’ orders, though the 40 aircraft order by Republic Airways (USA) from February, 2010 is out, as that airline is in Chapter … Continue reading

SUMMARY: Delta Air Lines (DAL) has ordered 75 x Bombardier CS100’s and optioned another 50, in a surprise and risky move by the airline. A surprise as it was expected to first replace the 116 x MD-88’s that have 149 passenger seats and the aircraft are 25.5 years old with CS300’s (130-160 seats), but the CS100 (108-130 seat) order means it is more intended to replace the 90 x B717-200s (110 seat) which are 14.4 years old. Risky, because this is a program that was for sale in October, 2015 ( 7 months ago) after a 8 year and $5.3 billion investment, and had only 250 firm orders till today (160 “real” orders) after 8 years of sales and marketing, and now that is up to 325 orders (+ 45 for Air Canada still LOI), but still a very small, and nothing to brag about. A $US 500 million “special charge” (very common these days in Bombardier accounting) will show up in Bombardier’s 2Q/2016 financials to cover the losses on 1st quarter 2016 CSeries sales to DAL (75 x CS100’s), Air Canada (45 x CS300’s) and airBaltic (7 x CS300’s), or $US 3.93 million per aircraft, as that will be the LOSS for those 127 aircraft sold and more losses will come from the 250 ‘firm’ orders it has today ! to sell 370 aircraft below cost takes Bombardier to the end of 2021 production capacity, when will it make money ? Bombardier claims the CSeries will break-even by 2020 ! how ? state subsidies for more “special charges” ? The company is still trying to spin off the CSeries program into a separate limited partnership with the governments of Quebec and Canada for $C 2.6 billion of taxpayers money for a 2/3 share of the new company, so that Bombardier can ‘clean’ up its accounting books and spread the risk, but there is no progress yet as the 2 controlling families do not want to give up majority control. The competition said NO to the CSeries but now Canadian taxpayers are being ‘suckered into investing in a program the commercial industries 3 leading manufacturers said NO to ! Then there still is the fact that even with 12 weeks to go to entry into service (EIS) with Swiss, the CS100 has no FAA or EASA Type Certificate ? certification cannot be left for the last minute, any delay in EIS/delivery will not be good for the CSeries as all eyes are on its EIS and production ramp-up this year, and Canadian Type Certification does not automatically mean an easy ride through FAA and EASA Certification, something to keep an eye on for sure. The DAL order is a major WIN for the CSeries order book which has not had a new order since September, 2014 and yet it is surely a LOSS for the financial books, as DAL surely got a “sweetheart deal” from a desperate Bombardier, which probably did not have to compete with either Airbus and Boeing for the smaller CS100 order, and only had to face Embraer’s E195/190-E2 program, but still I am sure +/-50% off the list price of $US 74 million per aircraft was negotiated way down (not a $5.6 billion but more closer to $2.8 billion deal) by DAL Chairman/CEO Richard Anderson, an excellent hard ball negotiator and airline executive, who in July, 2015 cancelled a big $US 4.0 billion aircraft deal for 40 x B737-900’s and 20 x E190’s, when his pilots rejected a tentative agreement ! With now 325 ‘firm’ orders (235 “real” orders), the production of the CSeries to the end of 2010 should be full, as Bombardier said it would have produced between 255 and 315 aircraft by the end of 2020. The problem is that some orders go back to 2009/2010 and surely most if not all current orders are money losing deals, with early big discounts (especially long time Bombardier customer Lufthansa), so when will Bombardier make money on the CSeries ? The answer maybe never ! as the market segment for 100-150 seat aircraft has been in decline for 9 years now (only 53 deliveries in 2015 by 4 OEM’s), from its peak in 1991 with 330 deliveries. The segment killed the A319 (81 deliveries), killed the B737-600 (69 deliveries) and presently killing the Bombardier CRJ-1000 with 46 deliveries after +6 years and a $243 million write down in 2015 due to “low demand”, off course ! Yet Bombardier keeps dreaming and believing in its forecast of 7,000 aircraft in the segment over 20 years (350 a year on average, a rate never yet achieved), they are just blind to the reality of the market. A market segment with low demand and low to negative margins is a recipe for disaster, and with Airbus and Boeing out to kill the CSeries for entering their market segment (130+ seats), pricing will be very low, so even when the CSeries does WIN an order, it will LOSE financially, and it is 100% concentrated in the worst market segment at the worst possible time, as airlines are up-gauging fast, and the Airbus and Boeing 150-240 seat single aisle market (A320/321neo and B737Max8/9) today outsells the 100-150 seat market by a ratio of 67:1 ! (7,223 orders vs 110), says a lot about where the market is and more importantly where the market is not ! Boeing starts on its “new” B737Max7.5 to counter the CS300 and to move out of the 100-150 seat market, a shrunk version of the Max8 with 150 seats in 2 class configuration, the battle is on, by 2020 there will be 5 manufacturers in the single aisle market, not everyone will win.

READ: Blog article on Delta Air Lines and Bombardier CSeries of January 21, 2016 plus many articles on the CSeries in past articles It is official, after months of rumors, Delta Air Lines (DAL) has ordered 75 CS100’s from Bombardier with 50 options, the deal could be valued at $US 5.6 billion ($US 74.6 million … Continue reading

UPDATE: Sukhoi’s SSJ100 is soon to enter service with Ireland’s CityJet, as that airline is sold by Intro Aviation to it’s pro-Russian CEO Pat Byrne and his “investors” . The airline will be leasing 21 of the aircraft and supporting the Russian Military Industrial Complex, as Sukhoi and its parent United Aircraft Corporation are under EU/US economic sanctions. At a time when the “Cold War” is back on in Europe it is repulsive for many Europeans as maybe the Irish don’t care or know what is happening in Eastern Europe and the Baltics between NATO and Russia, but most people who are in the know are nauseated by Russia’s never changing anti-western propaganda, the same narrative of the 1950’s to the 1980’s, just different faces, we are the western “imperialists”, the west is bad and Russia is good propaganda, and do you want to fly on a Russian airliner ? Say NYET to CityJet and its Russian jets and any other airline that wants to support Russia’s military by wet leasing the aircraft from CityJet. The program is a joke, this month its 5 years for the SS100 program, 102 delivered and only 66 as of these are in service today, and 36 sitting around waiting for a ‘home’, NOT GOOD, they are new aircraft, they need to fly not sit. The Russians need the SSJ100 to be a western success, to open doors to their 165+ passenger single aisle Irkut MC-21 which is due in 4 years. The “political risk” associated with operating the SSJ100 is huge given today’s political situation, and why any airline executive would risk the entire future of his airline on ‘political events’ is beyond my comprehension, it must be about money, as it cannot be about a long term sustainable business model with a “game changer”, which it surely is not, in fact it is outdated today as Embraer E2’s , MRJ’s and CS100’s are greatly superior in economics and passenger comfort. BUT the money is huge today for anyone wanting a Sukhoi ! as Russia is desperate, as the planned 45 units for production in 2015 became only 17 due to “low demand”.

Russia’s United Aircraft Corporation (UAC) subsidiary, Sukhoi Civil Aircraft (SCAC) is celebrating its its 5th anniversary for the Sukhoi SuperJet 100, and it sure has not been a smooth ride for the Russians. After 5 years (as of April, 2016) there are only 66 aircraft in out of 102 produced, leaving 36 aircraft in storage … Continue reading

UPDATE: The Czech Republic’s remaining 2 aircraft manufacturers are each facing an uncertain future for different reasons. Evektor struggles to finance its EV-55 Outback as its Malaysian investment partners have proven to be unreliable and “dubious” in their plans for the company and its EV-55 Outback program, while Aircraft Industrie’s (ex-LET Kunovice) new L-410NG is in certification, but Russian owners are already building an assembly plant in Yekaterinburg, while Russian owner is also talking about a Chinese assembly line in China after a recent order for 20 x L-410 UVP-E20’s with GE H80 engines, 3 assembly lines each doing what 10-12 units a year ? Russia is looking to be free of western supplies, as more economic sanctions are a real possibility but “Russianisation” of its own and western aircraft will not be easy or go down well with western customers should they wish to export them one day. Both the EV-55 Outback and L-410NG are partially funded by the Czech Ministry of Industry and Trade, and Czech Government needs to make sure both programs stay in the Czech Republic and not be moved to Russia, China or Malaysia, as that would be a major blow for the Czech Republic’s Kunovice region, the center of the Czech aircraft manufacturing industry today. A quick look at the 19 passenger regional un-pressurized market (+ 4,389 aircraft delivered since 1963), which today has 4 of the original 10 aircraft programs in production with 2 more programs to be resurrected in the next 3 years. While the totally new Chinese AVIC Y-12F is now FAA certified and it is impressive indeed. Finally, a look at original factory prices versus used prices today which in the case of the DHC-6-300 Twin Otter are 100% to 140% higher than when they rolled out from the factory 35+ years ago, jet airliners cannot touch the resale value retention of some of the 19 passenger regional turboprops, why ?

READ: Latest Articles on Evektor and its EV-55 Outback program problems (April 11, 2016) plus articles on 2015 General Aviation Market turboprop deliveries (February 16, 2016) and the 19 seat regional turboprop market. READ: Article on Eastern European commercial aircraft industry, June 2, 2015 and on the Chinese Y-12E and new Y-12F, November 27, 2014. … Continue reading

UPDATE: Evektor EV-55 Outback, the 10-14 seat twin PT6A powered un-pressurized utility aircraft is in trouble, Malaysian investor Aspirasi Pertiwi stopped planned its funding, 2 out of 3 Czech shareholders face possible criminal charges in “shareholder’s war”, available cash is very low and certification is way behind schedule. The Czech Republic has 2 new turboprop programs, the Aircraft Industries L-410NG and the Evektor -EV-55 Outback, both were ordered by China last week with 20 x L-410’s for Xinjian General Aviation and a possible Chinese assembly line and MOU for 300 x EV-55 Outbacks from Evektor Asia Pacific, a dubious sales representative for Evektor connected to the Malaysians. The Tecnam P2012 a 11 seat piston twin is ready for first flight as Air Cape readies to confirm its 100 unit MOU, while Evektor’s future is not so bright. The BIG lesson is don’t just jump at any investor, find a strategic investor that can assist beyond just money.

READ: past article on EV-55 Outback program, January 16, 2016 READ: past article on 2015 General Aviation turboprop market, February 16, 2016 On March 30, 2015 China’s President Xi Jinping concluded his visit to the Czech Republic, and left with 30 deals signed worth $4.0 billion, which includes 20 x L-410NG regional 19 seat turboprops … Continue reading