This category contains 27 posts

SUMMARY: While India’s aerospace industry is growing, most of it is on the military side while commercial aviation is far behind, yet HAL (Hindustan Aircraft Ltd) started with license production of the Hawker Siddley 748 turboprop airliner almost 40 years ago (89 built) and then in the mid-1980’s continued with the Dornier 228 (till now +125 built), and that is is ? Oh, lets not forget the never ending 29 year development of the NAL Saras, a 14 passenger pusher turboprop resurrected earlier this year again, for what ? its too small for India’s needs. The Indians know they need bigger aircraft, have the “plans” for the 80-90 seat Regional Transport Aircraft (RTA) turboprop and the 70-100 seat Indian Regional Jet (IRJ), but as of now its just talk and nice computer generated pictures. Of the top 7 major aerospace manufacturing nations, India is ranked 7th, yet was ahead of the Chinese 30 years ago, but it has not moved forward, while the Chinese now have the ARJ-21, C919 and soon MA-700 turboprop, all India has is the little 19 passenger Dornier 228, and that is it. What is India waiting for ? it has a huge market for aircraft between 19 to 100+ passenger turboprops and jets, it could have been a major competitor in that segment to Brazil, Canada and China, but its out of the game, too late now because too many new players in the market, Japan (MRJ-75/90), Turkey (TR/TRJ-628), Russians (SSJ100, MC-21) and Indonesia (N219), and other nations to come ?

 India’s commercial aircraft industry struggles to get “off the ground”, yet it has had years of experience and some success, but today it is sadly out of the game. Hindustan Aeronautics Ltd. (HAL) first licence production was in the early 1980’s to 1988 the 44 passenger British HS-748 turboprop, of which 380 were built, and … Continue reading

SUMMARY: A small airline in Thunder Bay, Ontario, North Star Air Ltd. has been bought for $C 31M ($US 23M) by Winnipeg based North West Company (NWC), a large Canadian grocery and retail company with +218 stores, many in remote and isolated communities across Canada’s North. The driver of this deal was to control its distribution by having its own cargo airline, and not being dependent on what is basically a air cargo monopoly by Calm Air in the Manitoba, Nunavut and Kivalliq regions, where NWC has many stores, and where the First Nations communities are totally dependent on aircraft for all their local needs for most of the year. The acquisition raises the problem of a lack of competition in many parts of the North, where communities and suppliers have all but one choice of airline in and out of many communities, which in many cases allows for high margin “monopoly” pricing. Canada has no Essential Air Service (EAS) like the USA, which subsidizes scheduled air services to 150 markets of which 44 are in remote parts of Alaska with single engine turboprops like the CE-208B to SF340’s and CRJ-200’s at a cost of $250M a year (President Trump looking to cut that). Canadian passengers and suppliers in the North have no choice but to pay the very high fares and freight rates demanded by air operators. Time for a new fresh look at affordable air access in the North ? if we are to develop the North as Ottawa says, then we cannot burden and punish the people there with high fares and freight rates, that make life their very expensive as everything in most communities goes by air, from groceries, lumber to even fuel for electric generators.

It has been pretty quite on the Canadian airline mergers and acquisition front since the late June, 2016 acquisition of Transwest Airlines (Prince Albert, Saskatchewan) by local rival West Wind Aviation (Saskatoon, Saskatchewan). That deal created another Provincial regional airline monopoly, just as EIC (Exchange Income Corporation) has in neighboring Manitoba, where it now owns … Continue reading

SUMMARY: The Chinese COMAC C919 airliner made its first flight today (May 5, 2017), and hopefully it will not be long before it is delivered to its first customer, China Eastern. The Comac ARJ-21-700 regional jet (evolved from the locally built MD-82’s and MD-90-30’s programs) took an incredibly long 2,769 days (93.3 months or 7.6 years) from its first flight to delivery to its first customer. This C919, is NO ARJ-21, this is an aircraft China can be proud of and one that can and will compete with Airbus, Boeing, Irkut and Bombardier when it gets its EASA Type Certificate which will take time, as the shadow certification of the ARJ-21 with the FAA did not materialize. Yes, there will be many issues with very poor sales & marketing, product support and after sales service, something Comac has no experience with and AVIC is horrible at. The ARJ-21 has no FAA certification and most likely never will, and will be relegated to flying for Chinese airlines and the very few “dubious” nations that do not require EASA or FAA certification for local registration and operations. The C919 has 99 orders, 227 options and 566 “commitments” so well over its stated break-even of 400 units. A proud day indeed, given the fiasco with the ARJ-21, now Comac will work with EASA to shadow certify the C919, but that will take a few years for sure, so no immediate concerns for the other 4 competing OEM’s. Lastly, this C919 is not the first Chinese indigenous jet airliner, back in 1970 the Chinese then under Chairman Mao Zedung, developed the Shanghai Y-10, a close similarity to the Boeing B720/B707, but it started way before President Richard Nixon’s famous trip to China in 1972 with Air Force One, a C-137 Stratoliner, a modified long range Boeing B707, referred to as SAM26000 (special air mission), in service from 1962 to 1999.

With the Comac C919 making its first flight, China finally has a commercial aircraft it can be proud off, and this aircraft will be able to compete with the Airbus A320neo, Bombardier’s CS300, Irkut MC-21, Boeing B737-7 and, B737-8 in time as it will require years to get its EASA certification, but Chinese airlines who … Continue reading

UPDATE: Bombardier, the Canadian Government and 49.5% owner of the CSeries program (through CSALP) the Quebec Government are together discounting Boeing’s claim that Bombardier is “price dumping” the struggling CSeries program on the US market (Delta Air Lines order for 75 x CS100’s in April, 2016). In short, “price dumping” means much lower prices on the export market than in a home market. Most likely its true that Bombardier is offering +60% discounts on the CSeries, which means selling below cost and at a loss. Having just 320 orders after 9 years, the company is desperate for orders, and purchase price is the #1 determinant these days by all airlines. Now, Boeing is seeking an order against the sale of the CSeries aircraft in the US market. That would be a severe blow to Bombardier and the CSeries as no commercial aircraft has gone on to be a success, without major sales in the US market (e.g. Viscounts, BAC 1-11, VC-10, Concorde, Saab 2000, Fokker F50, Fokker F-70, Dornier 328/328Jet, etc.), though the US market is not as dominant as it once was, it is still crucial for every commercial aircraft OEM. This is the stuff, President Trump loves, big announcements that he is saving the US workers jobs against foreign companies that don’t play by the rules, for Bombardier the timing could not be any worst. But they wanted “state aid” and with it comes the perception of “illegal state aid”, and Boeing is not the only one to complain against Bombardier, as Airbus and ATR have made moves to go to the WTO (World trade Organization) to investigate Canadian state aid to Bombardier. Now, most Canadians know that “state aid” or “corporate welfare” is going to the company from our pockets, this has been on going for 50+ years and sadly its all a “state secret” even though its public money going to a private company. Canadians have no idea how much taxpayers money was given or returned by Bombardier, for it is THE symbol of Quebec’s industrial capabilities, and always treated “special” here in Canada by most governments in power since the 1970’s. It was then that Quebec started to contemplate breaking away from Canada and becoming its own independent state, and that is why it has been given so much money and cheap deals on privatization of Canadair $120M in 1986 and de Havilland $100M in 1992 from which the whole Challenger, CRJ, Global,DHC-8 and Q400 aircraft products all came from.

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 … Continue reading

SUMMARY: Boeing has complained to the Trump Administration and the International Trade Commission about Bombardier’s “price dumping” in the 2016 Delta Air Lines (DAL) deal for 75 x CS100’s. Which according to Boeing was done at a price of $19.6M per unit (72% off list price), on an aircraft Boeing says costs $33.2M to produce, a loss of $13.6M per unit (yes, a -69% profit margin) and a total loss of $1.02B on the Delta deal. That is even lower than my highly criticized numbers from “industry experts” for the past 12 months , using a price of $22M (69% off list price), CS100 production cost of $29M and a loss of $7M per unit, a $525M total loss, now the loss on the DAL deal using Boeing numbers is 94% ($495M) higher than what I calculated a year ago. So much for Bombardier’s BS “onerous contract provision” of $492 in 2016 that everyone pointed to as the “loss”. Now Bombardier’s desperation for CSeries sales is out in the open. It “dumped” prices way below cost, in fact all 320 CSeries orders (in 9 years of dismal sales/marketing) are priced below cost and surely Air Canada’s 2016 deal (45 x CS300’s) was at a huge discount of +/-72% as well, and the total loss could be as high $612M on top of the DAL deal. So Bombardier sold 120 aircraft in 2016 on 2 BIG deals, that may end up being a loss of $1.63B and the greedy top 5 Executives at Bombardier wanted a 50% pay raise last month for a “Exceptional” 2016 ? BS, they should all be fired! As well, since last May’s deal with DAL, only ONE order for the CSeries has been booked, from Air Tanzania for just 2 x C300’s, yes 12 months and 3 big Air Shows (Farnborough, Dubai, Zhuhai) and just 2 aircraft orders and no one is worried ? seriously ? Meanwhile, Airbus has 5,056 orders for its new A320neo family and Boeing has 3,703 orders for its new B737Max family. Lots of talk about new sales at Bombardier (BA, Spirit, JetBlue, etc.), but since there are just 4 OEM’s, every airline will want to talk to each OEM when doing a deal to get the lowest cost. The problem is NOT the CSeries, its fantastic, but very low demand in the 100-150 passenger market, coupled to intense price competition by the duopoly makes life impossible for the CSeries. With all 320 CSeries sold below cost, why be in the business ? as the deliveries of these 320 aircraft will take Bombardier well into 2021, with a big loss every year of production, I see NO light at the end of the tunnel, other than an acquisition by COMAC (China) that needs Bombardier’s know how in support, training and sales/marketing ? and its the only commercial aircraft OEM that can be bought.

READ more on Bombardier, just click and see past Articles on the troubled OEM. https://www.linkedin.com/in/tomas-chlumecky-3200a021/ I have been saying for a long time that the move to make the CSeries a government owned program by spinning off the program into a new limited partnership (CSALP-CSeries Aircraft Limited Partnership), where the Province of Quebec has 49.5% … Continue reading

Surinam Airways must ‘think Big’, with a Big vision for the future beyond just Suriname, too many small national carriers think ‘small’ and never achieve their full potential, sticking to old tried ways without much success, yet look at the success of COPA (Panama), Norway Air Shuttle (Norway), Ethiopian Airlines (Ethiopia), Ryanair (Ireland) to Singapore Airlines (Singapore), think Big, plan Big, act Big and do Big things and you become Big in time, step by step. But if you think small, plan small, act small you will always remain small and insignificant and most likely, not profitable.

Surinam Airways must ‘think big’, says aviation expert Published on January 23, 2017 by Caribbean News Now by Ray Chickrie Email To Friend    Print Version  By Ray Chickrie PARAMARIBO, Suriname — In his assessment of Surinam Airways (SLM) (3 x B737-300’s and 1 x A340-300), aviation expert Tomas Chlumecky has called on the airline to “get out … Continue reading

PRESENTATION: Finding the elusive sustainable airline business model in the Caribbean, a large graveyard for regional airlines for decades. The region has a great deal of potential, but government taxes (up to 100% of net ticket price) play havoc with passenger demand, poor intra regional connectivity and government protection for state subsidized airlines (LIAT, Caribbean Airlines, Bahamasair, Cayman Airways) limits any real competition. Time for real Open Skies, allowing freedom to serve any route by appropriately licensed carrier, and governments to get out of the airline business, and stop taxing airline tickets to the point where tourist traffic is 1/3 of what it was 10 years ago, the whole idea is to get tourist to the islands and then tax them, rather than tax them to death on airline tickets as they then chose other destinations to travel to, its all backwards. LIAT flies 35% of its routes on money losing “social routes” with ATR-72/42’s, time to get small regionals with 15-19 passenger turboprops to compliment and even replace LIAT services on money losing routes, frees up ATR capacity for money making routes and reduces or eliminates loses on “social routes”. Time for a more intelligent approach on air transport and air connectivity in the region, where tourism is still struggling after 8 years, and it is tourism that drives the economies in the Caribbean.

I attended the Carib Avia’s 1st annual Caribbean Aviation Meetup between June 14-16, 2016 in Roseau the capital city of the beautiful Commonwealth of Dominica, and attached is the 2 hour presentation from the Conference. The Presentation covers airlines that have gone bust, regional aircraft, multi-government owned airlines, airline business models, regional airline valuations to … Continue reading

SUMMARY: Bombardier’s rise to become the 3rd largest Commercial Aircraft manufacturer in the world, was due to 4 acquisitions between 1986 and 1992 (1986-Canadair, 1989-Shorts Brothers, 1990-Learjet and 1992-de Havilland), with all but one using billions of Canadian and UK taxpayers money and lots of political help (aka cronyism) to make it happen. The story behind the acquisition headlines, with their give away low acquisition costs, billions in written off aircraft programs, state subsidies and hidden airports that were later sold at big profits, all kept from public eyes. Bombardier’s current product line is 30+ years old, with the 1980’s Challenger CL-600 business jet (now Challenger 650 still in production) from which a family of CRJ regional jet airliners came from, while the early 1980’s 37 passenger DHC-8 is still produced as the 90 passenger Q400. The CSeries is Bombardier first new commercial airliner since it entered the aerospace industry 30 years ago in 6 short years. Contrary to Bombardier’s PR BS, Bombardier is definitely NOT an innovator, just excellent at low risk, low development programs that just stretched existing aircraft, like 12 passenger Challenger CL-600 business jet into the 104 passenger CRJ1000 and the DHC-8-100 into the high density 90 passenger Q400. Attached to the bottom of this article is an paper entitled “The Rise and Fall of Bombardier” and how Bombardier REALLY become an Aerospace power house. The CSeries program is still suffering, Air Canada was enticed to buy by Quebec dropping a long disputed lawsuit against Air Canada and Ottawa offered changes to some legislation, only last weak Air Canada threatened to walk away from the deal as Ottawa had not moved on the legislative changes, and even stated the obvious that “there are other alternatives other than the CSeries”, proving it bought not because it was an aircraft it had to have or needed, but because it was politically coerced to make a deal in crony capitalist Quebec, where politicians and big business are all in bed together to screw Canadian taxpayers, and enrich a few. Meanwhile, the 75 x CS100 Delta Air Lines deal was good for an order WIN, yet the deal is expected to lose $525 million ($7 million per aircraft), and is nothing but a money LOSER deal. Is this the ONLY way Bombardier can sell the CSeries ? through political coercian or selling below cost ? if so then the game will be over soon for the program. But why is the stock up from February’s $0.77 a share ? business deliveries will be off by 25% this year, the Q400 is down to 42 orders in backlog and dying while the CRJ line has 86 in backlog (with 23 x CRJ1000 questionable) and dying as well, high end Global business jet demand is down, while the CSeries even with the Delta and Air Canada deals has only 330 orders (with +25% of existing orders HIGHLY questionable) after 8 years of sales effort ? and with all existing orders currently at a loss, loses are expected well into 2021. Bombardier the world’s only plane and train manufacturer can’t deliver trains on time ! so NO reason to be optimistic, other than the fact Bombardier looks set to DUMP the Cseries program on naive Canadian taxpayers for $2.0 billion for a 2/3 ownership, and raise another $1.0 billion in new stock offering for the new partnership called CSeries Aircraft Limited Partnership (CSALP). Bombardier failed to find a buyer last fall for the CSeries, but now thanks to crony capitalism in Canada, Canadian taxpayers have been suckered into owning the program that NO other aerospace company wanted 9 months ago. Bombardier will get the program off its books and collect $3.0 billion in new capital after writing off $3.2 billion in the CSeries program in 2015. Now the program will be a Canadian government program, and will draw fire from the WTO and the US for state aid, illegal and prohibited subsidies and price dumping, the saga is just beginning and no light at the end of the tunnel for the CSeries.

To my regular readers, I apologize for not writing in the past 6 weeks, been busy with several airline projects in the developing world, but I am back and still not seeing anything positive about the CSeries. Let’s see if Farnborough International Airshow (June 11-17) has anything new from Bombardier, other than the announcement of … Continue reading

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 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 … Continue reading

UPDATE: Bombardier could not sell/dump the CSeries program to Airbus, Boeing or Embraer last year, but it has found a buyer (aka sucker) in the Province of Quebec and most likely the Canadian Federal Government. The two Governments will together invest (aka “throwing taxpayers money out the window”) $C 2.0 billion for what the Prime Minister naively calls a “superlative” (unrivaled/marvelous) aircraft ? that for all it’s acclaim of “game changing” greatness has only 243 orders since 2009 of which 100+ are “dubious” orders from questionable customers that will most likely not happen. If the CSeries is so “great”, why are airlines not buying it ? yet buying the new Embraer E2’s at a much faster rate ? The CSeries is positioned in the 100-150 seat market segment, which has been in a steady decline for the past 9 years now, and had only 53 deliveries last year by 3 OEM’s. This latest call for government assistance is the 51st request by Bombardier since 1966 which can only be called “corporate welfare” or “crony capitalism”, yet Bombardier is still 54% controlled by 2 families with only 13% of the shares, and no interest to put in more money into their own struggling company or willing to lose majority control, yet one of their own, Executive Chairman Pierre Beaudoin, mismanaged the company so badly and wiped away billions of dollars of investors money as the stock value plummeted and billions in corporate net losses accumulated since taking the helm in June, 2008. But thanks to Canadian taxpayers the company and it’s owners will be saved for a little longer as the CSeries will be put into a new limited partnership with its own CEO/President, which will shelter Bombardier financials from the eventual collapse of the program, a great set up for Bombardier, and a major rip off for Canadian taxpayers, again. A better solution would be to take the $2 billion and buy shares in Bombardier directly, which today would get you 1.739 billion ‘B’ shares or 91% of all outstanding ‘B’ shares, at least taxpayers would have a majority ownership in the total Bombardier business which is better than owning the eventual “orphaned” CSeries program, and have nothing to show for it in the end. The current 100 to 150 seat market’s low demand and low pricing (United got $23 million per B737-700 recently) cannot profitably sustain all the players, from Bombardier’s new CS100/300 the Boeing B737-Max7, Airbus A319neo and the Embraer E190/195-E2’s, so who will be the loser ? The Canadian taxpayer off course ! The Bombardier forecast of 7,000 units over 20 years is total BS, garbage in, garbage out as in the last 10 years, only 1,879 deliveries were made in this segment (188 per year average) by 3 OEM’s, now there are 4 OEM’s in this segment with price discounts off list price +50% being the new normal, as Airbus and Boeing are determined to crush Bombardier’s entry into their ‘turf’. Bombardier’s 104 seat CRJ-1000 should be a RED Flag on this market segment, 6 years into the program and only 70 orders (now less with some cancellations) and only 45 deliveries and a very low backlog, with a $243 million write off last year in anticipation that it’s days are soon over. There is a disaster in the making, as very LOW DEMAND combined with very LOW PRICES equals very low or non existing PROFIT MARGINS for Bombardier, which it cannot afford as it will be totally dependent on the CSeries in a few years as its own CRJ and Q400 line are both in the declining stage of their life cycle. I am convinced Bombardier knows the program is a dead end, and that is why they tried to sell it in October, 2015 only 1 month before Canadian Type Certification, does that makes sense anyway ? Now what airline wants to buy an aircraft which has a 25 year life from an OEM that only 5 months was looking to dump it on anyone ?

I expect the Canadian government to give into Quebec’s pressures and provide Bombardier with a bail out of $1.0 billion for a 1/3 share in the CSeries program, joining Quebec which has already committed to invest $1.0 billion into the program , that many experts, including myself believe will fail miserably. This money will be … Continue reading

UPDATE: VLM Airlines says NYET to the once planned 14 x Russian Sukhoi SSJ-100’s SuperJet’s, due to potential certification and geopolitical risks, which I have been talking about for some time. It took a new CEO Hamish Davidson to see things clearly, the SSJ-100 program is in BIG trouble, 102 manufactured and 35+ “white tails” sitting and waiting in the cold for a buyer or lessee, basically any airline with a pulse and in desperate need of 80-90 seat regional jets. The aircraft are going to Russian airlines off course and then to very financially weak and desperate airlines outside of Russia like Thailand’s Kan Air, which recently was one of 4 airlines in Thailand identified by it’s CAA as having safety concerns due to high debt loads. While another SSJ-100 customer, Bek Air (Kazakstan) sues it’s CAA because it does not want to undertake a compulsory IOSA (IATA Operational Safety Audit) ? Other than InterJet (Mexico) the foreign customers of the SSJ-100 have been very weak airlines most have gone bankrupt operating the SSJ100 or just waiting for the SSJ100 to arrive, not sure which is worst, either way, financial condition of the operating carrier is obviously not a major criteria at SuperJet International. The list of failed Sukhoi “customers” is pretty long for a 5 year old program, from Armavia (Armenia), Moskovia (Russia), Air Armenia, Sky Aviation (Indonesia), Lao Central Airlines (Laos) Kartika Airlines (Indonesia), while Blue Panorama (Italy) just cancelled it’s order. Airline executives should not take big risks with their airlines, the SSJ100 has many risks, political, economical, customer perception to operational. Finally, Russia’s Prime Minister Medvedev “wonders whether it is 2016 or 1962 ?” as the “New Cold War” is on according to him, meanwhile many Europeans wonder if it is not 1938-1941 all over again with 3 internationally recognized independent countries (Georgia, Moldova and Ukraine) now having had part of their territory annexed by force in the past 20 years by Russia, who is next ? Estonia ? Latvia ? Lithuania ? it is time for tougher economic sanctions on Russia that include Sukhoi and it’s commercial aircraft program, the SSJ-100, wake up Europe, because it is 1938 all over again, will history repeat itself ?

In a smart move, Begium’s VLM Airlines is backing away from its planned acquisition of 14 x Sukhoi SSJ-100-95LR Superjets (4 lease options + 10 purchase rights), due to certification concerns and geopolitical issues between the West and Russia. This is what I have been talking about in my previous articles on the SSJ-100, the … Continue reading

UPDATE: Bombardier’s 5th round of layoffs in 26 months to affect 7,000 employees, as the company posts a $5.34 billion loss after ‘special items’ like writing off part of the CSeries, Learjet 85 and the CRJ-1000 programs. Recent article in Maclean’s (8.2.2016) confirms that “Quebecois nepotism” is for real at Bombardier and it originates at the top, ex-President/CEO Pierre Beaudoin wanted only French Canadians to be hired (aka discrimination), this is the man most responsible for the current disaster at Bombardier today and who won’t go away. No Canadian company deserves Federal aid if it systematically and deliberately discriminates against any Canadian employees, simple as that. Boeing has won the 2nd round at United against the CS300, this time 25 x B737-700’s were ordered on top of last month’s for 40 x B737-700’s as it is clear that any Bombardier CS300 deals where the duopoly competes head to head with Bombardier, a win will be extremely difficult and when it happens to win one, you can bet it will be extremely costly for Bombardier (e.g. reported 60% off for latest Air Canada order), so where is the light at the end of the tunnel ? There is none, that is why they tried to sell the program in October to Airbus and Embraer, so why would any airline buy the CSeries knowing Bombardier wanted to dump it ? The 100 to 150 seat market had only 53 deliveries in 2015 ! so where is this huge 7,000 aircraft market over the next 20 years (350 units per year) market ? Airbus, Boeing and Embraer have not seen it in years, and dropped their A318 and B737-600 because it was NOT there, and even thought about dropping the A319neo and B737Max7, until Bombardier said it wants to enter the 160+ seat market with its CS500, now all bets are off. Bombardier just has to look at it’s own 100+ seat CRJ-1000, to see the that the segment is dry, for after 45 deliveries (only 25 in backlog) and now it is being slowly written off as few orders are foreseen and existing orders are cancelled, surely a RED FLAG on the 100-150 seat market segment ? No, Bombardier is determined heaven or hell to ignore all signs that go counter to it’s marketing myopia/fantasy. Oh well, their Waterloo will come, juts a matter of WHEN not IF. I will show you what happened to the 100-150 seat market in this article. Bombardier delivers 76 (44 x CRJ’s and 29 x Q400’s and the last 3 x CL415’s), and only 38 orders (25 x CRJ’s and 13 Q400’s) for a sad book to bill of only 0.50 (Embraer delivered 101 commercial jets and took in 223 firm orders, for a book to bill ratio of 2.21), while firm order backlog at Bombardier is an extremely low 79 x CRJ’s and 39 x Q400’s, at best 22 months. Business aircraft deliveries stood at 199, but new orders were 119 but cancellations were a whopping 143 ! (74 x Learjet 85’s and 69 x ??? models), for a net negative order book of 24 aircraft (can’t even do a book to bill ratio) ! has to be worrying. Air Canada’s Letter of Intent (not an order) for 45 x CS300’s plus 30 options, is not a “win” for CSeries really as Airbus, Boeing and Embraer did not compete (even though AC has 69 x B737Max8/9’s on order + 48 options/rights), in fact it was a single sourced order as Quebec drops 4 year lawsuit against Air Canada, and hence the LOI at a reported 60% off ($92.2 million) from the $82 million list price, can’t make money on the CSeries at $32.8 million a piece ! and now every airline will want 60% off ! It is obvious the Air Canada deal was a quick LOI to put some positive spin on the 2105 financials. Smells like coercion or just the “old boys” network in Montreal at play ? Just like Russia’s Aeroflot buying 50+ Sukhoi SSJ-100’s because it has to, Air Canada buys CS300’s because it indirectly has to, the market knows what is going on as do investors (Air Canada stock already low, dropped from $8.41 before the order to $7.15 today a -15% drop in a week). A new 90 seat Q400 ? yes, at a crunching 28″ pitch, great for Asians, useless in North America and Europe. Bombardier “penny stock” climbs to $1.18 today after being as low as $0.77 on February 8th, it ‘hopes’ the Federal Government will give it $1.0 billion like the local Quebec government did 4 months ago. Yet should it get any money from Canadian taxpayers, it discriminates against some Canadian workers, hides $500 million in 2014 in a “brass plate” company in dubious Luxembourg so that it can pay less Canadian taxes, announces 5 rounds of layoffs since January 21, 2014 totaling 13,950 workers, yet more work goes to Mexico and Morocco, and the families that control the company put nothing in ? and expects Government bail-outs of their firm ? while the man responsible for the mess is still Chairman of the Board ? why not help the western oil industry or the +25 % of Toronto’s and Montreal’s children, that today live below the poverty line instead ? Sounds good to me, rather help the children then the Beaudoin’s, Bombardier’s and the investors who still hang around “hoping” things will change.

Bombardier announces it’s 5th round of layoffs in 26 months, this time it is 7,000 over 2 years on top of the previous 4 rounds (21.1.14 -1,700, 23.7.14 -1,800, 21.1.15 -1,700, 11.5.15 -1,750) of 6,950 announced layoffs (total now is 13,950 in just 26 months), as it announces a mind blowing $US 5.34 billion net loss … Continue reading

UPDATE: The national airline of Slovenia, Adria Airways has been sold for a mere $US 1.2 million, the buyer is an unknown German/Luxembourg company, 4K Invest that has a nice web page but absolutely no information about the company, it’s executives or past deals. It’s one of many recent “funny” deals going on in Europe’s airline industry. We had a Sukhoi “agent” invest into airBaltic looking to sell SSJ-100 regional jets, we have Ireland’s City Jet buying up to 25 x SSJ-100’s the first in Western Europe and very risky for any airline these days, and yet as quickly as the ink was dry on the Sukhoi deal, the owner of City Jet, Germany based Intro Aviation (aka “turnaround specialist”) is negotiating to sell the airline and bail out before any SSJ-100 operations begins ? does that seem odd ? To go through all the “trouble” of putting in a new Russian airliner that no one has bought in Western Europe. They praise the SSJ “game changer” as if they found the holy grail, and then sell the airline once a SSJ deal is done ? It shows that they do NOT have confidence in the long term success of the SSJ’s and City Jet. Who is the new buyer ? well apparently they are new to the airline business but not aviation. I wonder if they realize what they are getting into ? or is it the Russians coming through the back door ? it is all possible these days. Intro Aviation once was known for turning around troubled airlines, now it has lost it’s touch as on top of City Jet’s loses it could not turn around it’s own InterSky (Austria) DHC8/ATR-72 operation either, and tried to sell it in September, but no takers, so it shut it down in November due to a debt of EUR 5.0 million ?, while it also sold money losing VLM Airline in 2014 in a MBO (management buy out) and surprise and behold, it wanted to buy/lease 12 x SSJ0100’s right away (makes one wonder who funded the MBO ?) , seems SSJ’s orders follow the company. Intro Aviation was also one of the 3 German companies in the running to buy Adria Airways, which is a perfect target for SSJ-100 sales as it operates 7 x CRJ700/900’s today, and surely had it won, SSJ’s would be flying in Adria Airways livery in 2016, and maybe still will given that so little was paid and so little is known about K4 Invest. Russia’s President recently declared NATO as major security threat, and therefore Western European airlines should NOT be buying Russian airliners or leasing them, as they are built by the Russian military complex, Sukhoi is a big Russian arms manufacturer and is currently on the EU/US economic sanctions list, time to put the SS-100 SuperJet on that list as well. We cannot support the Russian arms industry and Europeans should not buying, leasing or flying on Russian airliners (basically that was the Latvian Government’s addition to airBaltic’s shareholders agreement in November, to stop a “undesirable” new investor form making a SSJ-100 deal going forward).When Putin thinks we are the enemy and talks of the possibility of using tactical nuclear weapons in a limited engagement we have no choice but to say NYET to Russian aircraft. “Beware of false prophets, who come to you in the sheep’s clothing, but inwardly are ravenous wolves” (Matthew 7:15), as the Russians are doing everything and anything possible to sell the poor selling SSJ100 (40+/- current sitting “white tails”) to the West, if it fails, then the Irkut MC-21 will fail as well, and for Airbus, Boeing, Comac and Bombardier and the West, that is a good thing.

The Slovenian Government approved a capital injection plan of $US 3.3 million for national flag carrier, Adria Airways and simultaneously sold the airline to German investment group, 4K Invest (www.4k.ag), which is to inject only $1.1 million for the 91.58% owned by the government and pay Adria Airways another $US 100,000 ? The Slovenian Government … Continue reading

SUMMARY: The Latvian airline, airBaltic was recently a target of Russian ‘agents’ to sell it 5 x Sukhoi SSJ-100 SuperJets, though it has 13 x CS300 on order and 7 options. The Russians are desperate to open the Western market for the SSJ-100 even as they deliver only the 100th unit produced after 49 months of production (only 17 produced this year versus a planned 45 and only less than 60 in service ? yes that is right, 40 x SSJ-100’s sitting in Russia with no where to go ! it’s a fire sale now). President Putin is putting $US 2.0+ billion into the program to open the Western market for the SSJ-100 to be followed by the Irkut MC-21 narrowbody.The SSJ program is crucial to Russia’s “hopes” of becoming a major commercial aircraft producer. But right now Sukhoi is part of the Russian military industrial complex now under international sanctions, as is it’s parent company United Aircraft Corporation (UAC) and a therefore all risky suppliers. To sell the aircraft, the Russians have resorted to their well known Russian business practices and desperate measures. Recent scandals at the highest levels in Latvia and at airBaltic show how secretive and underhanded they are to make things happen. In this case a new “undesirable” and a “potential security risk” (according to Latvia’s ex-Transport Minister), German investor with very close ties to Russia’s aerospace industry and Russian ‘elites’ comes out of nowhere with $US 57 million and puts money into a desperate national airline (opposed by Latvia’s then Transport Minister who was fired for his opposition), gets 20% equity and a whole lot more. He gets the airline to change its Business Plan to include 5 x SSJ-100’s, and somehow gets exclusive rights to provide aircraft to the airline ? who agreed to that ? Thank god that whole “scheme” was torpedoed by the Latvian Prime Minister right away with the urging of his Minister for Defense. A special NO purchase/lease or utilization of Russian aircraft special clause was inserted into the Shareholders Agreement plus 20 controversial points were removed ? Where did CEO Martin Gauss stand on all of this is a big question. But this shows how Russians plan to sell the Sukhoi, use money from who knows where to invest in private small airlines, fund management buyouts, pay off executives, buy airlines from privatization, etc. Slovenia’s Bad Asset Management Company is now privatizing it’s national airline Adria Airways, with Intro Aviation in the running, a word of caution here is needed as the real Intro Aviation interest may have more to do with placing SSJ-100’s then anything else (Adria Airways has 6 x CRJ900’s and 3 x A319’s). In fact, Ireland based CityJet’s (owned by Intro Aviation and now lessee to 25 x SSJ-100’s ) Chief Executive calls the SSJ-100 a real “game changer”, seriously ? it’s a 9 year old design that faces obsolescence in the next 2-3 years as the new generation Embraer E175-E2, Mitsubishi MRJ90 and the Bombardier CS100 enter service. Some in the industry are greatly exaggerating the SSJ-100 capabilities. The fact is that till now, the only western customer was Interjet of Mexico, otherwise the rest of the customers are just Russian/CIS operators (not counting the failed operators in Indonesia, Laos and Armenia) who have no choice in Russia, but the SSJ-100. So why buy anything MADE IN RUSSIA ? does anyone buy anything Made in Russia today ? Any executive worth his salary knows that in business you must always minimize business risk where possible, when you buy a SSJ-100 you greatly increase your political risk. Tensions between NATO and Russia are heating up again after the annexation of Crimea and the provocations in Ukraine, and you put your company’s future at risk of bankruptcy if you operate SSJ-100’s. One only has to look at the fact that the vast majority of western airliners in Russia today (inc. national carrier Aeroflot) are on VP-B (Bermuda) or EI (Ireland) registration, as RU (Russian) registration is too “risky” for lessors, financiers, banks and aircraft investors. If relations with Russia deteriorate further in the future, a SSJ-100 operator will have to shut down, as new sanctions and any subsequent public and corporate boycotts/petitions against the your airline’s use of the SSJ will ground you, do not take political risk likely today. That is the world of economic sanctions, just ask the Cubans and Iranians how tough it is to keep old cars and planes operational in such an environment, so be smart, saving some money up front on a 20 year commitment to an aircraft does NOT mean that you have a great deal in the end.

In a major press announcement on December 2, 2015 in Latvia, the Prime Minister Laimdota Straujuma came out to say the government supports the inclusion of a cause in the Agreement of Shareholders that prohibits “ airBaltic and its affiliated companies are prohibited from purchasing, renting or otherwise utilizing equipment produced by the military industrial … Continue reading

UPDATE: What is the future for Porter Airlines without Bombardier CS100 jets out of CYTZ ? and Quebec’s new ownership of the Bombardier CSeries, will Ontario jobs go to Quebec ? Last week the Canadian Federal Government ruled that it will not change the ban on jet operation at Toronto’s Billy Bishop Toronto Island Airport (CYTZ), which leaves Porter Airlines in “limbo” about its future, as it has been in a “holding pattern” for 4 years now with 26 x Q400’s waiting to see what happens around it as Chorus (Air Canada’s CPA partner) and WestJet’s Encore, both Q400 operators grew their fleets and and are expanding their operations network in Eastern Canada. Is their a sustainable business model for Porter Airlines today ? The CSeries order was a ruze to get investors excited about another IPO for Porter Airlines, since the failed attempt in 2010, but it was always a questionable strategic move and now without the jets, and little growth in the past 4 years, an IPO now will NOT generate much interest from investors in an airline that has been stagnate and basically hit a “wall” in growth potential. I am sure the investors who forked out C$ 750 million for the CYTZ passenger terminal this past January in the “hope” the political decision will go in favor of lifting the jet band, are greatly disappointed as “hope” for a bright future at CYTZ is now greatly diminished, like the value of the terminal building and Porter’s debt thanks to the extremely generous price for the terminal (in the 2010 IPO documents it was valued at around $58 million ?). Meanwhile Chorus Aviation (Jazz) has a newly created position of VP for Strategic Investments and Mergers/Acquisitions, most likely looking to duplicate the Voyageur Airways acquisition to have low cost operators around Canada, and maybe Porter Airlines ? or go international though their PLUNA adventure in Uruguay was a disaster a few years back. Will Bombardier pull another Cartierville Airport (CYCV) deal (part of Canadair and then sold for a hefty profit, now a golf course and housing development) and sell Downsview Airport (CYZD) to developers and move everything to Quebec while pocketing $C 1.0+ billion from real estate developers ? with at best 25 months of Q400 and only 15 months of CRJ production in the backlog, be sure that all options are on the table at Bombardier today, as the Q400 and CRJ brands are in their final inning (less then 140 in backlog, and few new orders, in fact so far in 2015 only 7 new CRJ-900’s have been ordered vs 140+ Embraer regional jets), and lots of Q400 and surely CRJ work will soon go to Mexico before they stop the production line.

Porter Airlines, which just celebrated its 9th anniversary on October 22nd, has just receives the bad news from the new Liberal Government in Ottawa, that they will NOT re-open the tri-partite agreements between the City of Toronto, Toronto Port Authority and the Federal Government, which required unanimous consent to lift the current ban on jets … Continue reading

UPDATE: The end of Estonian Air, and airBaltic’s new capital and it’s “undesirable” and contentious new investor and Russia’s SSJ-100 SuperJet desperate and murky measures to sell into the Western European market: As predicted along time ago, Estonian Air will shut down its operation tomorrow November 8, 2015 after today’s EU Commission order to the Estonian Government to recover the Euro 85 million ($US 92 million) in “illegal” state aid given to the state owned airline the past 5 years. This is the 2nd airline this year (Cyprus Airways back in January was forced into liquidation) that had to close down after the EU ruled that the airlines received state aid beyond the “one time, last time” guidelines for restructuring aid. Estonian Air was a cash burning operation since 2010, going through Euro 87.6 million ($US 95 million) in 5 years, with a current fleet of just 3 x CRJ-900’s and 2 x CRJ-700’s, an inept underachiever for 5 years that even according to the EU Commission, did NOT have a credible restructuring plan that ensured it will not be going back to the trough of public taxpayers money to keep flying. The airline had NO sustainable business plan, other than “white label” flying (ACMI operations) for third party airlines, which are not a long term sustainable business. Realistically, Estonia with only 1.3 million people is a small country and aviation market (only 44nm from Helsinki, a big northern hub) and Europe’s 51 independent countries cannot ALL have their own national airlines, it is just not economically viable, and state aid is NOT an option, it distorts competition against private airlines. Malev’s closure in 2012 showed that when the home airline does close down, new airlines and routes are picked very quickly by other airlines. BUT the stubborn Estonians already have Plan B in place for weeks, the same day Estonian Air shuts down, Nordic Aviation starts up and ready to use Euro 40.7 million of taxpayers money and Adria Airways AOC and throw it all away again a few years down the road, as some people will just never learn from their mistakes ! Meanwhile next door in Latvia, the state owned airline, airBaltic is about to get a Euro 80 million ($US 87 million) state cash injection to shore up its negative Euro -75 million ($US -82 million) shareholder equity so it can borrow money to finance $US 1.3 billion for the 12 ordered and 7 optioned Bombardier CS300’s, again the EU Commission will have to investigate as this is state aid to bolster a national airline, and it does affect competition. Also again there is some ‘funny’ stuff going within the airline and government has a dubious new German investor (Ralf-Dieter Montag-Girmes), very close to the Russians and their aircraft industry, buys 20% of airBaltic for Euro 52 million (US$ 57 million) valuing the little airline at a ridiculous $US 285 million, and he has been called the “least bad option” and a “undesirable” investor with “potential security risks” by the recently fired Latvian Transport Minister, Mr. Matiss. The Russians are quietly targeting airlines like airBaltic, VLM, City Jet, Greenland Express, Adria Airways, etc. for the Sukhoi SSJ-100 SuperJets by buying into these airlines through intermediaries, investing in them or management buyouts or going to bed with their existing owners or investors as billions of dollars are going into the SSJ-100 program and its ultimate success lies in breaking into the western commercial aircraft market, and it must open the door for the Irkut MC-21 narrowbody airliner due in 5 years time as well. Russia it is ready to do ALL it can, huge lease and price reductions to bribes or buying “influence” in small European airlines to place its SSJ-100’s, which has had 7 airlines go bankrupt while 8 customers which ordered 77 SSJ-100’s with 29 options have not been heard from in a long time, its all murky with the Russians, just beware !

I have repeatedly said that Estonian Air will become the next European airline forced to shut down its operation because the airline repeatedly benefited from illegal state aid for its existence. (READ BLOG of JUNE 17, 2015) Well today, November 7, 2015 the European Commission ordered Estonia to recover the state aid given to Estonian Air … Continue reading

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