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Business Aviation

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Summary: The 1st half, 2017 General Aviation turboprop delivery figures are out, with 230 deliveries (down 1.3%), (261 engines, all PT6’s, except 10 x GE H80’s) total sales of $703.8M (-13%), and once again the Agricultural Market leads in deliveries with 86 deliveries worth $108.8M. BIG winners are Air Tractor (agricultural aircraft,) with deliveries up 47% to 69, Piper (M500/600) +138% to 19, and Daher (TBM 910/930) +28% to 23. The BIG loser is Textron Aviation, down by 28 aircraft (-34%) from 81 aircraft to 53 aircraft) with a reduction of deliveries by 10 x Caravans and 18 x King Airs versus 1H/2016, the reduction in deliveries is valued at $132.8M, what is going on with the Caravan and King Air sales ? Is there a demand drop ? if so why ? Another loser is Piaggio with NO delivery of its Avanti EVO in 2017 yet (only 1 in 2016) a “walking dead” program for a long time, while Pacific Aerospace is not far off as it has delivered just 1 PAC750 XStol in 2017 (3 in 2016) ? no sign of Big Chinese order ? no surprise, and how long can you keep going with such low production rates ? Meanwhile new competing turboprop products are coming from EPIC, Mahindra, Quest and Textron, only the strong will survive.

The 1st Half 2017 GAMA numbers are out and I have looked at the turboprop deliveries and sales for these first 6 months of 2017 against the first six months of 2016. The 1st half 2017 deliveries are 230 vs 233 in 2016 (-1.3%) and total sales are $703.8 million down $105.8 million (-13%) on … Continue reading

UPDATE: OMG ! Bombardier Inc. released its 1st Half 2017 Results, not good as expected. Total revenue $7.668B (down 6.7% on 1H/2016). BCA (Bombardier Commercial Aircraft), just 35 deliveries down from 47 in 1H/2016 (down 25.5%) and revenue down 14.4% on 1H/2016 with average discounting of 31% off list prices. Meanwhile, Q400 down to 31 orders in backlog (14 months of production), production down 21% (just 2.16 per month) on 2016, 13 deliveries and 13 orders, book to bill 1.0. CRJ line down to 47 orders in backlog (14 questionable CRJ-1000’s with just 54 deliveries in 7 years), production down 35% (just 2.5 per month) on 2016, 15 deliveries and just 10 new orders, so book to bill just 0.67. CSeries, NO new order in 2017, only 2 x CS300’s ordered in the past 15 months, yes an absolute sales & marketing ‘disaster’ from the “dream team”, but 7 were delivered (1.16 per month) yay ! whopee ! Only 65 business jet deliveries (down from 73 in 1H/2016) while revenue down 13.8% on 1H/2016. Now, all eyes are on US Commerce Department decision September 25th in regard to imposing countervailing duties on the CSeries of up to 79% for basically ‘illegal state aid’ to Bombardier by Ottawa and Quebec, and another 79% duty for anti-dumping, basically selling the CSeries a whole lot cheaper in the USA, to Delta Air Lines, then back at home to say Porter Airlines. An unfavorable ruling will shut the struggling CSeries program (320 orders in 9+ years, with +20% ‘questionable’ still) out of the all important US market, as if the program needed more problems ? Light at the end of the tunnel for BCA ? China, either Comac acquisition or lots of CSeries orders from there, or both, as orders in China for CSeries, Q400 and maybe CRJ will come easier if under Comac, its the only possible ‘white knight’ for struggling BCA, like it or not.

READ: more on Bombardier or other topics by clicking categories on the right. Well today Bombardier Inc. released its 1st half 2017 results, and and its not good, as revenue is down 6.7% to $7.668B on 2016, this company is NOT going to be a $25.0B a year company in 2020 as planned in its … Continue reading

SUMMARY: Textron Aviation culls its smallest Citation, the $3.35M CE-510 Mustang after 11 years and 472 deliveries. In 2016, Gulfstream dropped its smallest product, the $15.7M G150 (an improved G100, originally the IAI Astra SPx, never a big seller with just +120 deliveries in total) and the $43.1M Gulfstream G450 (ex-GIV) which will be replaced by the new $44.6M G500. The Very Light jet segment has struggled since 2009 when deliveries hit 236 to a low of just 62 in 2013 and 89 last year by 4 OEM’s. With The Mustang gone, the entry level jet for Textron is now the $4.5M CE-525 M2 to take on the $4.16M Embraer Phenom 100E and the $5.0M HondaJet HA-420, which is now in full production mode after years of certification delays, and a surprising 15 deliveries in 1st Quarter 2017, where deliveries by the top 3 OEM’s of Very Light jets was up to 28 from last years 9, a 211% increase on 1Q/2016, and a sign of new life for a struggling segment ?

The latest news from Textron Aviation, that the company is terminating the smallest member of the Citation line, the $3.35M CE-510 Mustang (PHOTO below), which has had 472 deliveries by the end of 2016, since starting the line in 2006. The Very Light jet market ($3.0M to $5.5M aircraft) has been in decline from 2009 … Continue reading

UPDATE: Bombardier Inc. ex-President & CEO, and as of today also ex-Executive Chairman, Pierre Beaudoin is out at least ! and so are 1st Quarter, 2017 financials. In the first 3 months of 2017, Bombardier’s revenue is down to $3.6B (-7.7% on 1Q/2016) continues its revenue slide (down $3.77B or -18.7% since 2014). Aircraft deliveries for 1Q/17 are down to just 44 aircraft (15 Commercial and 29 Business) , Q400 deliveries were 6 with just 26 orders in backlog (13 months), CRJ deliveries were 8 with just 54 orders in backlog (20 months), and only 1 CS300 delivered. Bombardier delivered 29 business jets, more skewed to light jets as the top end market is struggling these days, not good news for the new Global G7000. Meanwhile, only 2 x CS300’s orders in the past 11 months ? the program has a serious problem selling the aircraft, and two, selling above cost at some point is important, no ? Now, Boeing wants US Commerce Dept. to place a $13.4M “price dumping” tariff on the CSeries deal with Delta Air Lines and ban the aircraft from further US sales, meanwhile ATR and Embraer are complaining to the WTO of Canadian “illegal state aid” to Bombardier, criminal bribery investigation under way in Sweden and yet the top 5 executives wanted a 50% increase for an “Exceptional 2016” seriously ? One wonders what “planet” these executives live on ? and where is this “magical” 7,000 deliveries in 20 years in the 100 to 150 passenger market ? This CSeries program is still with just 320 orders (no 40 for Republic, just PR deferral till the end of time) after 9 years ? maybe they got the market positioning all wrong ? What happened to the “game changer” ? and the “dream team” ? that was suppose to sell lots of CSeries ? Those Top 5 executives need to go, 1 down 4 to go ? Lastly, Porter Airlines (Canada) placed a conditional order for 12 x CS100’s and 18 options in April, 2013, show the price offered to Porter and we will all know if they are “price dumping” in the US market or not, easy no ? Behind all the denials they know they are “price dumping” its sadly the only way they know how to sell the CSeries, yup all 340 orders below cost !

READ more on Bombardier on this Blog, just click Bombardier under Categories on the right side of menu.   The 1st Quarter results are out for Bombardier, but the most important news is that Executive Chairman, Pierre Beaudoin is stepping down after numerous problems and Revenue declines. The man I refer to as the “Destroyer” … Continue reading

SUMMARY: The 2016 General Aviation turboprop deliveries and sales numbers are out from GAMA, and the turboprops were the only segment to record an increase in deliveries (+3.4%), as piston (-4.9%) and especially business jets (-7.9%) are down on 2015 numbers. With 576 turboprop aircraft delivered (and 675 engines, all PT6’s except 10 GE H80 engines) with a sales value of $US 2.057 billion (+8.6%), 2016 was a good year for 3 of the 4 segments (Agricultural, Single engine utility, Single engine pressurized) with Twin turboprop deliveries slightly down (-9.1%). In terms of units, the best segment was the Single engine pressurized with 179 deliveries led by Pilatus with 91 deliveries of its PC-12NG, but new competition is coming soon from Textron’s Denali and EPIC 1000. By sales, the best segment was the Twin Turboprop market, which is dominated by Textron’s King Air (C90/250/350) line with $793 million in sales. While not in GAMA figures, the 5 OEM’s still in the 19 passenger turboprop market, delivered +/- 35 aircraft worth $US 255 million. Lastly, the Agricultural aircraft market is still doing well, with 151 deliveries worth $198 million from crop spraying, fire fighting to actual counter insurgency (COIN) fighting, showing how versatile the turboprops really are today and why we see GE now challenging the P&W PT6 domination of the market for over 50 years.

READ: 2015 GA turboprop results, February 17, 2016 blog. https://www.linkedin.com/in/tomas-chlumecky-3200a021/recent-activity/ Another year has passed and time to do my annual turboprop review. The 2016 GAMA shipment and billing numbers were not good for the industry, with overall billings down from $US 24.1 billion in 2015 to $US 20.7 billion, down 14.1% while unit deliveries were … Continue reading

SUMMARY: Lots of talk about Bombardier’s Turnaround, 14,500 layoff announcements this year, or 21,450 in the past 3 years. The Global G7000 flew for the first time and Bombardier expects big things from it to boost Bombardier’s bottom line along with the struggling CSeries, which today still has only 320 orders (NO 40 x CS300’s for Republic Airways, just PR not wanting to reduce the meager order book) and still +/- 86 “questionable” orders (representing 26% of the current 320 orders). Lots of effort in reducing labor costs, yet no one is noticing that the top line (revenue) at Aerospace is a coming disaster, and unsustainable with an old product line (1970’s Learjets and Canadair CL-600/Challenger 650, plus the Global G5000/6000) that is facing new and better competition. The CRJ line has no more than 48 orders in backlog, only 18 orders this year (50% from Canada) good for 12 months of production (February, 2018) with no new orders. The Q400 is down to around 34 orders in backlog and only 25 orders this year (50% also from Canada), good for 14 months (March, 2018) with no new orders. The 2020 Turnaround Plan calls for Aerospace to generate $15 billion in revenue (60% of total revenue planned of $25 billion), with just 2 products ? The Plan requires $5 billion from Commercial aircraft, which by 2020 means only the CSeries (CS100/CS300) is left, and that will require at least 140 deliveries at the current highly competitive low prices to hit the “target”, really ? (2020 production is planned at 90-120 aircraft today). Meanwhile, Business jets are to generate $10 billion by 2020, and that will fall on the $75 million Global G7000 (NO Learjets, Challenger 650 and Global G5000/6000’s by 2020) and that means 133+ G7000 deliveries to hit their “target” ? seriously ? has anyone looked at single aisle ACJ and BBJ sales for the past 15 years ? (+/- 15 a year at best). Canada is providing “state aid” (aka taxpayers money) to Bombardier again ($2.5 billion in 2016 from Quebec), in fact of the $3.39 billion of cash on hand as of Sept 30, 2016, $2.5 billion (71% of cash on hand) came from the Government of Quebec, soon another $1.0 billion will most likely come from Ottawa (PM is from Quebec, and they always “help” Bombardier), and then Quebec and Ottawa will be 66.7% owners of the CSeries program (CSALP – CSeries Aircraft Limited Partnership, a separate company, spun off from Bombardier ??). How did we the Canadian taxpayers become “owners” again of a commercial aircraft program that NO commercial aircraft OEM wanted in 2015 when it was for sale for “a song” ? Especially after we the Canadian taxpayers “SOLD” Bombardier, our government owned Canadair in 1986 (for $120 million) and government owned de Havilland in 1992 (for $100 million) with the rights to the Challenger business jet, later stretched into the CRJ line, and the DHC-8 turboprop airliner later stretched into the DHC-8-Q400 line. Meanwhile, Embraer is going to the WTO again to complain about Bombardier’s “illegal state aid”, while Boeing may go to President-elect Donald Trump and get import tariffs applied on the CSeries and then ? Oh, it is going to be an interesting 2017 for sure, stay tuned to the never ending Bombardier/Quebec/Ottawa “gong show”, as they find new ways to screw Canadian taxpayers to keep Bombardier alive at any cost.

Bombardier has now delivered its first CS100 to Swiss and CS300 to airBaltic and talks confidently of a turnaround next year and a bright future in 2020 as per its 5 year Transformation Plan, that should see company become a $US 25 billion a year company by the end of 2020, with Aerospace to provide … Continue reading

UPDATE: Hold on to your wallets Canada ! Bombardier is seeking more money again for a another new aerospace project ! with the so-called “game changer” CSeries an absolute sales disaster with only 318 orders after +8 years of sales ? and right after announcing its 6th wave of layoffs (another 7,500 are to go by 2018) since January, 2014 (34 months ago) for a total of 21,450 jobs gone ! Meanwhile Bombardier’s CEO admits company nearly went bankrupt in 2015, and it now has $3.4 billion in cash, $2.5 billion (74%) came from the Government of Quebec this year (aka bailout money), without Quebec they would have only $900 million in cash today and be close to bankruptcy. Embraer and Boeing are taking the “illegal state aid” case to the WTO. With President-elect Trump coming in, he’s ready to “defend” US corporations from illegal and unfair state aid backed competitors, and don’t be surprised if he tears up NAFTA and hits the CSeries with new tariffs, a perfect scenario for his PR. Everything in decline at Bombardier Aerospace today, the CSeries has only 318 orders (of which 2 have been delivered), what happened to the existing Commercial Aircraft Market Forecast that claims 7,000 deliveries over 20 years (350 per year) ? all BS, in fact Ascend Consultancy forecasts only 1,340 CSeries deliveries over 20 years (67 per year), down 81% on Bombardier’s “fantasy” forecast. No one has noticed, but with only 34 x Q400 orders in backlog and only 60 CRJ’s in backlog, both programs will run out of orders at current production rates of 2.5 per month and 4.2 per month respectively by January, 2018, and with only 13 options for the Q400 and 18 for the CRJ, 2018 looks like the year the Downsview plant gets closed down and everything gets moved to Quebec, another Cartierville Airport deal in the works ? Business jets deliveries are down 25%, and the old Learjets and the 40 year old Challenger 650 (4th variation of Canadair CL-600, which also gave birth to the CRJ line) are down as well, along with the Global G5000/6000’s, NONE of the current products will be around by 2020, except the CSeries (maybe), the new G7000, and possibly still the Challenger 350, but it won’t be a $15 billion a year business, at best $5.5 billion, and I still believe Combardier is coming (China’s COMAC buying Bombardier Aerospace).

OMG, please NO more money for Bombardier’s projects ! Look the company is in deep trouble, just open your eyes and stop listening to the financial “experts” and Bombardier’s BS PR about being “on track” for recovery ? seriously its a disaster and read on to find out why. The recent 7,500 announced layoffs which … Continue reading

SUMMARY: Piaggio Aerospace is set on dropping its poor selling canard configured fast beauty, the Avanti Evo business turboprop aircraft and concentrate on its military derivatives the MPA (maritime patrol version) and the UAV (unmanned aerial vehicle) version, the P.1HH Hammerhead and leave the current global fleet of 219 Avanti aircraft and their current operators and owners with an “orphaned” product which now has a highly questionable future, and watch their residual values plummet . This cannot be a surprise to anyone, especially Mubadala Development the Abu Dhabi (UAE) based 100% owner of Piaggio Aerospace which for 10 years has just watched the program struggle but did little to change that. With only 12 Avanti’s delivered between 2012 and 2015, and only 1 delivery so far in 2016, the program is now a sadly a “joke” and dead in the water, too few sales now to be cost effective to produce, and now any buyer for the aircraft would be very foolish to do so. The now, Textron Aviation (formerly Beechcraft and Raytheon) King Air 350 line has outsold the Avanti 3.2 : 1 for the past 14 years (not even including the King Air 200/250’s), even though the new EVO offers 402 kts cruise and much lower noise levels, customers are just not buying the beautiful canard configure Avanti. I have said it many times, that good aircraft do not always sell well, no matter what OEM thinks of its product, sales tell the real story no matter what anyone thinks, something Bombardier needs to be reminded of with its struggling CSeries today. Now, “radical” General Aviation designs have never done well, they are innovative, sometimes offer great performance and technology, but buyers have stayed away from them, and I quickly look at some of those that have failed, from the Beechcraft Model 2000 Starship, Embraer/FMA CBA-123 Vector, LearAvia Lear Fan 2100 to the OMAC Laser 300, wonderful aircraft, impressive performance and technology, but of those only the Starship went into production, and then only 53 were built. The Piaggio Avanti is the most successful “radical” design aircraft, and yet a the King Air 350 which is a 1970’s designed and stretched aircraft, out sold the Avanti by a wide margin. Welcome to the world of General Aviation aircraft sales, where some of the “best” aircraft fail and disappear (e.g. Piper Cheyenne 400LS, Aero Commander Jetprop 980/1000) while some “mediocre” aircraft become a hit and never go away (e.g. Beechcraft King Air C90 line).

Piaggio Aerospace, 100% owned by Abu Dhabi based Mubadala Development Co. since September 15, 2015 (35% of Piaagio Aero since April, 2006), is re-positioning the company as a key supplier of defense and special mission aircraft. This just came out last month in a Industrial Plan, that calls for selling off “non-core” civilian maintenance and … Continue reading

SUMMARY: Learjet, the Bombardier business jet brand it bought (a rare Bombardier deal with NO government aid or subsidies) in 1990 for $US 75 million and took on its $US 38 million debt, is soon to be sold as Bombardier struggles with light mid-size jet sales, having only delivered 6 Learjets in the 1st 6 months of 2016. The failure of the Learjet 85 and its subsequent $2.5 billion write down, sealed the fate of Learjet, which has no chance of future sales growth and is losing value year by year with an “old” product line that struggles against the Textron XLS+ and Embraer Legacy 450 in a very “soft” demand environment, where big price discounting is the weapon of choice, especially by Embraer. After 54 years, the sun will set soon on the Learjet brand that Bill Lear started in 1962 using the Swiss P-16 fighter plane as his “inspiration” for the fast Learjet 23, and his LearStar 600 mid-size business jet concept was sold to Canadair in the late 1970’s, which ultimately became the CL-600 Challenger, the grand daddy of the current line of all CRJ regional jets (+1,836 delivered) and the current and 4th version of the 1970’s Challenger (+1,040 delivered), the CL-650 . The buyer may be Textron Aviation, Bombardier’s competitor with its new Latitude, Longitude and eventually Hemisphere lines, as the current 2,300+ Learjets out there (many for sale) still will need continued technical and maintenance support, now worth around $+300 million a year, and could possibly fetch a maximum $375 million price tag, cash that Bombardier desperately needs to reduce its $6.8 billion debt obligations between 2018-2023, so after selling its flight training to CAE in 2015, and its CL-215/415 water bomber rights to Viking Air in June of this year (no price has been published), and now it looks like the Learjet line is next. BUT it will not be the end of Bombardier’s business aviation problems, a tired and old product line (Learjets, CL-650, Global G5000/6000’s) face new products from competitors (Embraer Legacy 500, Falcon 8X, Textron Longitude and Hemisphere, Gulfstream G500/600) all smelling blood at troubled Bombardier.

CHECK OUT August 16, 2016 article on General Aviation delivery summary for 1st half of 2016.   The Learjet product line is about to end anytime soon, as Bombardier looks to sell the brand, which it bought in 1990 for $US 75 million and took on $US 38 million debt, in fact the ONLY aerospace … Continue reading

SUMMARY: General Aviation aircraft deliveries for the 1st half of 2016 are down overall, with few winners, twin turboprops (King Air’s) are down 9%, single engine turboprops are down 3.1% while business jets are down 4.2%. Bombardier deliveries are down 20.6%, with Learjets off by 57% as that brand is about to be sold, while once “cash cow” Global 5000/6000’s deliveries are down by 24.3%, adding to the misery at Bombardier these days. The Piaggio Aerospace P.180 Avanti EVO has 1 delivery after only 8 deliveries since 2013, and the program is set to be cancelled by its owner Mubadala Development (UAE), putting an end to the struggling program (continuing with the military UAV Hammerhead version) which peaked in 2008 with 30 deliveries, but could never really compete with the King Air 350/25/200 line. Pacific Aerospace (New Zealand) cannot get its single engine turboprop PAC 750XStol moving and so far only 3 deliveries this year, (4 in total for 2015) even though it is a great aircraft but poor marketing and sales are killing it slowly, and with only 18 deliveries since 2013, it cannot survive much longer on such low production rates (while closest competitor Quest Kodiak 100 will see 39 deliveries this year). Like many GA companies, Pacific Aerospace is setting up an assembly line for its PAC750XStol in China in the “HOPE” things will change for the struggling company, but they won’t, China is a “black hole” for GA aircraft projects. Piper Aircraft has delivered only 8 x MA500’s this year as customers wait for the “new” M600 whose wing was failing on static load tests, and not offering the quantum leap in performance Piper needed (+14 kts, +484 nm in range, Garmin 3000 avionics with the same engine, airfield performance, cabin and limit of FL280 for an extra $US 840,000 ?) to stay competitive in the turboprop market, while a tired old product line is making the current owner (Government of Brunei) rethink its ownership. Lastly, Pilatus Aircraft is having a great year with the PC-12NG with already 38 deliveries this year versus 18 same time last year, BUT times are changing and this market dominance will end soon, as Textron Aviation introduces its PC-12NG competitor, the new $US 4.5 million Denali, a 10 seat, 285 kts cruise and 1,600 nm range single engine turboprop, powered by a new generation GE engine of 1,240 shp, 20% more fuel efficient than comparable PT6 engine. Looks like Pilatus is getting its pay back for entering the jet market with its PC-24, and you can bet the days of 70 to 100 annual deliveries of PC-12NG’s will soon be over as its “monopoly” on that segment will finally be challenged.

The General Aviation aircraft shipments for the 1st half of 2016 are out and show a disturbing situation across most segments versus 2015 numbers, as manufacturers are adjusting supply to the lower demand in most market segments. READ: BLOG OF FEBRUARY 16, 2016 ON – GENERAL AVIATION AIRCRAFT DELIVERIES IN 2015  Single engine turboprop deliveries … Continue reading

SUMMARY: Bombardier 1st Half results are out, and it is not good for Aerospace. With only 318 firm CSeries orders today and up to 95 “questionable”, the program suffers from poor sales but even worst, negative margins due to deals below cost, this cannot continue for very long. Yes, 2016 is a tough year for aircraft orders at Airbus and Boeing, and a “price war” is on ! and any big deal will require +65% off list price, which means every new order brings more loses for Bombardier. Meanwhile, CRJ line has only 66 orders in backlog (9 x CRJ-700, 36 x CRJ-900 and 21 x CRJ-1000) good for 25 months of production at the current 2.7 aircraft per month rate, while the Q400 is down to 48 in backlog (40 + 8 recent orders), good to May, 2018 at the current 2.3 aircraft per month. Big discounting under way on the Q400 and CRJ is evident in financials to boost sales, while Business Aircraft orders are slowing down, and production already 20% below last year will be reduced again soon to balance supply and demand. Nothing very promising at Bombardier Aerospace, the company struggles and the 5 year Transformation to 2020 does not look promising at all, market dynamics are creating havoc for Bombardier, but all of that had to have been anticipated when they decided to enter the BIG league and take on Airbus and Boeing, maybe not such a great idea after all ?

LOTS OF ARTICLES IN AVIATION DOCTOR ON BOMBARDIER, TAKE A LOOK. Bombardier (TSX:BBD.B) has released its 1st Half 2016 financials and its time to analyze what is going on at Bombardier so far this year in regard to its struggling Commercial and Business aircraft business. The first 6 months of this year, has seen Bombardier’s … Continue reading

SUMMARY: The Bombardier G7000 is the next crisis at Bombardier, the ultra long range market for VIP aircraft above $75 million has averaged only 18 Airbus ACJ and Boeing BBJ VIP aircraft per year since the late 1990’s, so where is the market for the G7000 ? This is another crisis coming at Bombardier that has not been talked about, but competing again against Airbus and Boeing in a very small market (like the CSeries) is another recipe for even more troubles at Bombardier, when you get +100% more aircraft (volume in ft3 and cabin floor in ft2), therefore more comfort and very comparable range (if needed) with the A319ceo/neo and BBJ/BBJMax7 offering. Myopia has blinded the company’s ability to have real foresight and intellectual insight into where they are going with the G7000 and off course the CSeries and the Canadian taxpayers are suppose to bailout this Canadian tax avoiding, job discriminating and mismanaged corporation ? The 39 x Q400 orders and a few options means the line is good till July, 2019 at BEST while the 79 x CRJ orders and few options mean that line is done by May, 2018 at BEST. While the CSeries will struggle, the remaining Commercial Aircraft products are dying a slow death and no way will the 5 year Transformation Plan get to $14.9 billion in Aerospace revenue. While the ‘cash cow’ Global 5000/6000 production rates are cut further from their high of 80 in 2014 (once 43% of Aerospace revenue), there is little left in existing Commercial and Business aircraft products to sustain the company’s revenue ambitions past 2020. The G7000 is heading in the same direction as the CSeries, into a small market segment dominated by the duopoly of Airbus and Boeing, where margins are very low to nil, low demand and low margins combined will create an eventual financial meltdown. Bombardier just got it all wrong, and you cannot change the market, it is what it is. Lastly, Canadian taxpayers will soon have “invested” $C 2.0 billion to own 2/3 of the CSeries program that is destined for failure, a program that Airbus, Boeing and Embraer did not want to buy, but our “corporate welfare” program will ensure that Bombardier cleans up it’s financials by dumping the program into a separate limited corporation that we Canadians will be stuck with, hell or high water. While Canada’s government runs up a huge $C 30+ billion budget deficit and will surely cut back on many programs for Canadians, yet support Bombardier at all cost, as we sadly already have +25% of our children in Toronto and Montreal living below the poverty line. But off course saving Quebec (which had 7 high profile politicians arrested just last week as its massive corruption culture is further exposed to the world) based Bombardier (where the Liberals have 40 seats and the Prime Minister’s home province) is more important politically than looking after down and out Canadians.

I have covered Bombardier’s problems with the CSeries a great deal over the past 3 years, and anyone who has read the articles should by now know that I have been accurate with my predictions of low sales, becoming a ‘penny’ stock, President/CEO Pierre Beaudoin’s move up but unfortunately not out to predicting that Bombardier … Continue reading

UPDATE: Bombardier (TSE:BBD.B) stock closes at $0.89 today after breaking the $1.00 barrier yesterday, now institutional investors, mutual funds, ETF’s will start selling the stock as they do not hold “penny” stocks and there is a risk of the shares being delisted from Canada’s TSX stock index in the next 3-6 months if things do not change. Look the company is in BIG trouble, the CSeries will be it’s Achilles heel and predatory pricing by Airbus and Boeing is the arrow that will ultimately kill it. The CSeries is just not selling, it is positioned for a poor market segment, it faces the might of Airbus and Boeing pricing supremacy, it’s small order book of 243 “firm orders” of which +/- 90 are actually “limp/doughy/non-existing” orders that go back to 2009-2011 that surely will NOT happen, entry into service (EIS) is still 5 months away, production ramp up is just starting and Chairman of the Board, and ex-CEO Pierre Beaudoin is still there. New aircraft orders in 2015 were off by 65% while current backlog may have as little as 324 aircraft or 15 months of production at past rates. CSeries will be face Airbus and Boeing at every opportunity for a sale, and pricing will win out and even if Bombardier does win a deal here and there, the price will be so low that it may be a money losing deal, and here is no way to recoup any losses as sales of Q400’s, CRJ, Learjets and Globals continue to decrease rapidly, and the future Global G7000 “cash cow” looks as if they may have another “cash bleeder” on their hands instead. These are dark times for the future of Bombardier and the future of the Canadian aerospace industry, most likely we are going to lose a major industry within the next 4 years.

Well I have said it months ago that Bombardier’s stock (TSE:BBD.B) will become a “penny stock” by year’s end, and I missed it by 27 days, when January 27th, it hit $C 0.99 a share that is a market capitalization of only $US 2.11 billion, and I as expected today, the stock went further down … Continue reading

SUMMARY: Bombardier finally sees that “aggressive” pricing for the CSeries is a must, as the “game changer” has no new order since September, 2014 and it is now perfectly clear to all that the fuel efficiency of the CSeries will be closely matched by Airbus, Boeing, Embraer, Comac and Irkut as they will all incorporate new generation fuel efficient engines in their new aircraft programs. This year, 2016, is the make it or break it year for Bombardier, all eyes are on sales, EIS (entry into service) and production ramp up, 12 months from now the future of the company will be clearer, one way or the other. The CSeries has now lost its main competitive advantage, its value proposition (most fuel efficient airliner) and like all the others it will have to seriously discount it’s price to win any new order, and it is not prepared or capable of waging a price war. A major price war is looming as the duopoly of Airbus and Boeing, will not only have to deal with Bombardier’s CS100/300 and Embraer’s E195-E2 at the low end, but head on competition from China’s Comac C919 and Russia’s Irkut MC-21narrow-body airliners as well within the next 5 years. It is going to get ugly for Bombardier, as surely it “hopes” that Airbus and Boeing will not continue with the slow selling A319neo or Boeing the Max7 programs (a segment that is NOT very big, and was overestimated by many), but the duopoly will stay in the segment, for if anything, just to make sure Bombardier does not get a foothold in the BIG league of commercial aircraft. A price war with the likes of Airbus, Boeing and the Chinese and Russian Governments spells disaster for Bombardier in the long run, it cannot sustain regular discounts of +40% and continue as a going concern, they just cannot compete on price at this level, where even today before the new entrants arrive, discounts of 50% from List Price are ‘common’ from Airbus and Boeing on large orders . The current United Airlines requirement for 30 new 100+ seat jets will be an example of what is to come, as United is a huge Boeing customer, with 310 x B737’s (700/800/900’s) in service today and another 100 B737Max9’s on order, there is NO way hell, Boeing will allow Bombardier to win over this customer, and the deal will probably go for $US 40+/- million per unit (50% off List Price) for the B737-700 as the NG line still needs to be filled before the MAX line takes over,. To win with United Airlines, Bombardier will be required to offer a huge discount on the $US 71.8 million CS100 and the $US 82.0 million CS300, that it would create a huge loss for the company, as it has no way of getting that loss back from its product line (unlike Airbus & Boeing that delivered 1,397 aircraft in 2015) yet a major North American order for the future success of the CSeries is a MUST if the program is to have a future. Bombardier unlike the duopoly, will have a low production rate of 10 units per month by 2020, not enough to spread its costs/losses, while the duopoly is planning on producing 122+ A320/B737’s per month by 2018, a greatly reducing unit costs, and they will fight to keep Bombardier out of it’s “turf”, especially after it announced it may go with the larger CS500 (165+ seat) jet down the road, a direct challenge to the A320/B737. Anyway, Airbus believes the CSeries will become an “orphan” aircraft, “a nice little plane”, that was probably forever doomed to be a poor seller, and Airbus should know, they were the first OEM Bombardier went to, in their attempt to sell the program last year ! All the indications are there that the market is not there, up-gauging of aircraft, low sales in the 100-150 segment by all to a lack of interest from lessors. Lastly, while the CSeries will have to deal with the duopoly, the $75 million a piece Global G7000 business jet will also have to deal with the duopoly if it plans on selling a lot, as the ACJ319/320 (Airbus Corporate Jets) and the BBJ (Boeing Business Jets) are in the same segment, a segment that has averaged only 16 units a year for the past 18 years, so the G7000 may sadly not be the “game changer” either.

I have been quiet for awhile on Bombardier, watching what will unfold, with a heavy heart, seems that the new year is not going to be much better than last year, when Bombardier’s stock (TSX:BBD.B) lost 60.9% of its value, ROI (return on investment) was -44.0% and market capitalization is down to $2.51 billion, cash … Continue reading

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

I will start with my usual lack of progress report on Bombardier and where it is heading, and then further below is the unedited opinion of a Bombardier insider on what the heck has been going on at the very troubled OEM. I can report on what I see for the point of view of … 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

SUMMARY: Bombardier’s stock (TSE:BBD.B) hit a new 22 year low again today at $C 1.46 a share, a 62% drop from a year ago, market capitalization is now $C 3.25 billion (less than CAE and just above WestJet Airlines) for a $US 20 billion a year company, that is just unacceptable for any public company. The company just announced a 2 year delay in its new $US 75 million per unit Global 7000 business jet program (already behind by 2 years), right after it announced a 30% production reduction from 80 to 55 units per year of its “cash cow” Global 5000/6000 business jet brand due to a ‘softening’ market globally but also very much due to competition from the #1 OEM in the ultra-long range segment (+/- 48% market share), Gulfstream Aerospace, which is having a very strong sales year (book to bill ratio is 1.0+) with its new G500/600’s and existing G650/G650ER’s , and # 3 OEM (+/- 15% market share), Dassault, with its new Falcon 8X and 5X. Bombardier’s CEO Alain Bellemare is doing a great job keeping the “Titanic” afloat, but 1st half results are worrying, both Commercial and Business Aircraft did have slightly better revenues than last year, BUT most worrying are the Book to Bill ratios (orders/deliveries), Commercial had 0.67 (CRJ line only 0.26) while Business Aircraft had 0.29, in short, both Commercial and Business Jet divisions are seeing very few new firm orders, yet Embraer posted book to bill ratio of 2.64 for its E-Jets (124 firm orders, 47 deliveries) in the first half of this year, the 124 E-Jet orders vs 7 CRJ orders (7 x CRJ-900’s for Mesa) so far this year, says novels about the two products attractiveness, their marketing, promotion and sales, a very serious downward trend indeed for the CRJ brand. Now Bombardier will see deteriorating revenue and cash flow numbers from Commercial and Business aircraft divisions at a time it needs lots and lots of cash, as it “Burned” over $US 1.553 billion in free cash-flow (FCF) in the first 6 months of this year on the CSeries and G7000/8000 programs, and is on target to “Burn” another $US 1.5 billion by year’s end, which wipes away all the new equity and debt it raised in February of this year. An IPO (initial public offering) of Transportation division (trains) is set for the 4th quarter this year which will raise lots of cash (up to $US 5.0 billion for 100%, but only a minority will be sold, most likely to Siemens), so around $US 2.0+ billion is possible as debt is very high at almost $US 10 billion, so where is Bombardier heading ? Many analyst and investors believe there is NO clear path to recovery in sight, while Macquarie Financial lowers BBD.B target stock price to $C 1.00 and yet its own subsidiary, AirFinance (commercial aircraft lessor) has 40 CS300’s on order worth $US 3.14 billion ?? On the bright side, the CSeries is 3+/- months away from certification, and new orders will start coming in after that and the stock will rebound on any positive news. More liquidity is badly needed by 2017, but the Beaudoin family’s control 54% of Bombardier through special class shares, a situation many investors find unacceptable, and many of them may not be lining up next year when Bombardier will need to raise more equity and debt once again, and NOW is the best time for ex-CEO Pierre Beaudoin who created the current mess, and who is now Bombardier’s Executive Chairman of the Board, to go ! It is what is best for the future of the company, as many tough times are still ahead, and there should only be one ‘master’ at the helm at this time as the company’s future is at a crossroad.

Well I am back to writing about Bombardier, my last article was on July 16, 2015 when Bombardier’s stock (TSE:BBD.B) was at a 22 year low of $C 1.84 a share, and I thought it had hit rock bottom, having laid off up to 6,950 employees since January 2014 in 4 rounds and a 5th … Continue reading

ABSTRACT: Bombardier announces its 4th round of lay-offs in 17 months, another 1,750 employees are let go on top of 5,200 laid-off already. The sacred “CASH COW” of Bombardier Aerospace, the high margin Ultra-Long Range Global brand is facing a softening in its market segment. The Bombardier Global brand (the $52M G5000 and $62M G6000) keeps Bombardier Aerospace alive, generating $4.5B (on 80 deliveries) in revenue in 2014 (43% of Aerospace revenue, 60% of Business Jet revenue with only 27% of deliveries). New competition from the Gulfstream’s G500/G600 and the Dassault Falcon 8X is threatening Global sales and margins at a time when Bombardier is bleeding cash certifying the CSeries and its new Globals ($75M G7000 and $71M G8000). Presently Bombardier Commercial has only 90 CRJ’s in backlog (18 months of production) and only 52 Q400’s in backlog (26 months of production), while the CSeries with $5.3B in deferred program costs and big price discounting by Airbus, Boeing and Embraer, will see every CSeries sold at a HUGE loss for many years to come. Now Bombardier is looking to sell its rail unit to raise cash, and in all seriousness all of this leaves the new Global 7000 and 8000 as the only hope for a brighter future at Bombardier Aerospace, and the possibility of a future Chinese acquisition of Bombardier Commercial (aka “Combardier”) is very real.

Once again Bombardier has acknowledged that things are not well with the world’s only plane and train manufacturer, and will lay-off another 1,750 employees on top of the 5,200 already announced since January 21, 2014. The big hit will be in Montreal (completions) with 1,000 employees, Toronto (assembly) with 480 employees and Belfast, Ireland with … Continue reading

ABSTRACT: Bombardier has gone outside the company and family for its new President/CEO, Mr. Alain Bellemare from UTC, his main task has to be the radical turnaround of the $10.49 B a year Aerospace Division, as the $US 3.4 B CSeries program is now $US 5.4 B ! and EIS is NOT until 2016, in 2014 Aerospace lost $995 M, free cash flow was a $ -1.059 B, Commercial Aircraft’s CRJ and Q400 sales slowly fading even with +30% discounts (only 27% of revenue) while business jet orders are down 59% in 2014 from 2013 with a disappointing Order to Bill Ratio of only 0.6 (sold less than it delivered), Business Aircraft has always been strong (72% of revenue) now facing new competing aircraft programs that are going to challenge it’s sacred high margin ‘Cash Cow’ Global brand ($4.5 B in sales on 80 delivered and 43% of total revenue), off course more liquidity is needed to finish the CSeries and Global 7000/8000’s, so $US 2.1 B in new in debt and equity will be raised, while the struggling CSeries order book of 243 units now needs at least 550 orders to break-even, it is time to fix Bombardier Aerospace from the top down and possibly JV with China’s Comac (aka “Combardier”)

Following up my blog article on Bombardier Aerospace on January 20th, where I dared to ask the question if it was time for Bombardier to look outside Bombardier and the family for a new CEO, like they did back in 2002, the answer came Feb 11th, when Mr. Alain Bellemare was hired as the new … Continue reading

ABSTRACT: Bombardier takes another credibility hit, stock drops 25% in one day as investor confidence is shaken and they are selling, another senior executive departs, the Learjet 85 is “paused” with a $US 1.4 billion write down, certifying 4 new jets at once costing $US 6.9 billion was “nuts”, the Q400 and CRJ’s programs are near their end, another 1,000 employees are to be laid off on top of 2,000 last year, corporate credit rating cut, talk of a Q400 and CRJ assembly line in China, only 243 firm orders for the CSeries after 78 months of effort, and probably 100+ will NOT take delivery, Alenia a major CSeries subcontractor sues for $US 121 million, CSeries EIS not till 2016, low fuel prices diminish the fuel efficiency argument for CSeries, while it’s launch customer is a secret ? sell Commercial Aircraft Division to China’s COMAC and create Combardier ? capital markets worried about liquidity and management, Business Aircraft Division now discounting some aircraft, Learjet cannot survive on only 33 Learjet 70/75 sales (+/- $US 335 million) a year, is it doomed ? sell it off ? with a cashflow of only $US 800 million in 2014 will Aerospace have the cash to complete certification and produce the $US 1 billion Global 7000/8000 business jets and the $US 4.5 billion CSeries ? time for an outsider as CEO – again ?

Bombardier, the world’s only plane and train manufacturer continues to disappoint shareholders, employees and customers, and on Wednesday, January 15th, we saw the wall crash down, when Bombardier stock (TSX:BBD.B) crashed downwards by 25.85% in one day ($US 1.8 billion in market capitalization) on volume of 57 million shares, to $CAD 3.07 from $CAD 4.14, ouch … Continue reading