The Canadian Government off course is standing by Bombardier on this, but as I have been on this issues since the Delta Air lines deal, I know through contacts and Boeing knows even better what the price to Delta Air Lines (DAL) was.
Now comes a lot of trouble, which was expected as the CSeries is 49.5% owned by the state (Quebec) through CSALP, and now Boeing is seeking an order to be issues against the CSeries being sold in the USA, that has to be a major worry in Montreal today.
For a year I was announcing a price of $22M, a cost of $29M per CS100 and a loss per unit of $7m or in total on the 75 aircraft, a loss of $525M.
Boeing’s, figures are a price of $19.6M, a cost of $33.2M per CS100 and a loss per unit of $13.6M or in total on the 75 aircraft a loss of $1.02B (yes billion), and the difference between price and cost is where Boeing comes up with a $13.4M anti dumping duty per aircraft on the CS100’s for Delta Air Lines.
How were they going to HIDE this massive loss ? “creative accounting” ? this “onerous contract provision” in 2016 was just $492 million, a smoke screen or cover up of what really the loss on the Delta and Air Canada deals was.
Air Canada surely got a deal very close to Delta Air Lines deal, as it was its February, 2016 announcement of a order that surely got Delta to buy, though Air Canada’s agreement came later as it had to work out the many “promises” (legal suit dropped, legislative changes, etc. basically political coercion) that Ottawa and Quebec made to the airline to get them to buy the CS300’s.
Look, we know Bombardier dumped the price BELOW cost, and they would not have been able if they did not get $2.5B from Quebec last year, as only 6 months earlier they were about to file for bankruptcy (late 2015) after Bombardier could NOT find a buyer for the CSeries program.
So, sorry, but Bombardier is GUILTY of anti-dumping, and “illegal state aid” as the CSeries program is a state program with Quebec owning 49.5%.
Look Bombardier went all out last year to sell the CSeries, to gain “traction”, and price is the name of the game today, as no one is buying the high fuel efficiency and low cash cost argument of Bombardier, as Airbus, Boeing and Embraer all have new fuel efficient engines with much lower maintenance costs.
The Delta Air Lines deal for 75 x CS100’s was made April 12, 2016 a full 19 months since the last new customer ordered a CSeries (Macquarie Air Finance 40 x CS300’s), so they were desperate for an order as at that time they had just 238 orders after 8 years of sales and marketing.
Then 10 weeks later, June 28, 2016 the Air Canada deal was signed for 45 x CS300’s, though it was announced on February 17, 2016 the day Bombardier’s 2015 financials were announced showing a Net Loss of $5.34 billion and the announcement 7,500 employees were being laid off, BUT “the icing on the cake” was the Air Canada agreement to buy the 45 x CS300, yee ha ? or boo ?
What is dumping ? when a company exports a product at a price lower than the price it normally charges in its home market. GATT (Article 6) allows countries to take action against dumping, and we all know President Trump is all about BIG announcements on how he is protecting American jobs !
Easy to prove ? what price was Canada’s Porter Airlines offered for the CS100 ? lets see what the price difference is between its offered CS100’s and Delta’s CS100’s ? that should say novels about something, no ?
The problem here is that all of Bombardier’s current 320 orders (not counting the infinity deferral of 40 x CS300’s for Republic Airways which will never need 130-160 seat aircraft as a US regional under CPA) are at a loss.
Lufthansa was the first customer (always has been for CRJ-200’s 700, 900’s a close tie due to the train business ?) back in 2009, and always received a SUPER discount for that, Air Baltic ordered in 2012, Korean Air Lines in 2011, so all early customers got big discounts and with sluggish sales, everyone was getting big discounts, as Bombardier could not, cannot and most likely will not sell a CSeries above its cost of production.
So I have have said for a year the loss on the Delta deal was around $525M and possibly another $315M on the Air Canada deal, or $840M for all 120 aircraft using my 2016 numbers.
Boeing’s number show a loss of $1.02B on the Delta deal which possibly could mean a loss of $612M on the Air Canada deal, or $1.63B for all aircraft, the real numbers only Bombardier knows, but info gets out from airlines, OEM’s eventually.
Anyway, the top 5 executives at Bombardier thought they deserved a 50% raise last month for a “Exceptional” 2016 ?? (Net LOSS of only $981M ? and Revenue down the 2nd year in a row, to $16.339B down $3.442B on 2015 or -17%, and they wanted a raise ? If Boeing’s number son the Delta deal or even my numbers are correct they should ALL be fired !
This one was real short, I am getting better no ? thank you.