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General Aviation

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SUMMARY: The General Aviation turboprop deliveries are out for 1st Quarter, 2017 and deliveries are down to 99 aircraft and $273.M in revenue, from 109 deliveries in 1Q/2016 (-9.1%). The decline is due to the large drop in the Twin Turboprop Pressurized Segment, which had only 12 deliveries of King Airs (and NO Piaggio Avanti Evo) versus 27 deliveries (inc. 1 x Piaggio Avanti Evo) in 2016, a drop of 55%, what is happening to the King Air demand or the “walking dead” Piaggio Avanti EVO ? The Agricultural Turboprop Segment did the best with 46 deliveries up from 38 in 2016 (+27.7%) with revenues of $54.1M. The Single Engine Pressurized Segment was stagnant at 23 deliveries as in 2016, with Pilatus delivering 4 less (-25%) PC-12NG’s than in 2016, and total revenue of $98.7M (+26% more than the twin market). The Single Engine Utility market was down to 18 deliveries and had revenue of $42.1M on the back of 4 (-33%) fewer Caravan deliveries, but Quest’s Kodiak was up to 9 deliveries (+80%) over 2016 delivery of 4 aircraft. The big “loser” this past Quarter is Textron Aviation with 12 King Air deliveries down from 26 and then the Caravan with deliveries down to 8 from 12 last year, so what’s up at Textron ? as 16 less turboprops were delivered versus 2016. The “winners” are Quest Aircraft’s Kodiak with 9 deliveries up from 5 last year, and the Air Tractor with 36 deliveries up from 28, a good start for most, but Textron ?

  READ MORE ON THE TURBOPROP MARKET, JUST CLICK ON GENERAL AVIATION   The First Quarter, 2017 General Aviation turboprop deliveries are out from GAMA, and total aircraft unit deliveries are down (-9.1%) to 99 from 109 in 1st Quarter, 2016 and total revenue was $273.2M ($2.75M per average aircraft delivered). ————————————————————————————————————————————————————————————— The Agricultural Aircraft … 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

SUMMARY: Bombardier’s on going 5 Year Transformation Plan looks to $25 billion in Revenue by 2020 (+53% on 2016 Revenue of $16.33 billion which is down 18.8% or $3.8 billion since 2014), with $15 billion (60%) to come from Aerospace, Commercial Aircraft (BCA to $5 billion + 129% on 2016) and Business Aircraft (BBA to $9 billion +54% on 2016). I look at how realistic that is given the CSeries poor sales after 8+ years (320) and several old, tired and dying programs that need to be culled, from the Q400, Learjets to the 1970’s designed CL-600 Challenger and its evolutionary cousins the CRJ, G5000/6000 (BBA’s once “cash cow”) and new G7000 line. My take is that Bombardier will fall short by at least $6.5 billion on its Commercial and Business Aircraft goals, as realistically by 2020 all Bombardier will have to sell in Aerospace is its CSeries, the new Global 7000/8000 business jets and the Challenger 350. At the same time all of its products are going to face lot more competition from Airbus, Boeing, Comac (China), Irkut (Russia) and Embraer on the Commercial Aircraft side as the ‘duopoly’ turns into 5 competitors, with Bombardier the weak “5th Wheel”, while Business Aircraft (BBA) is facing new competing aircraft from Gulfstream (G500/600), Dassault (Falcon 5X/8X) and Textron (Longitude/Hemisphere). Bombardier is also facing a ‘perfect storm’ of tougher global market, economic and political forces that will challenge Bombardier’s on going struggle to become financially viable without taxpayers Government money. Empowered by ‘state aid’ the company is now arrogant enough to launch another new aircraft program, as Sweden is investigating serious bribery charges against the company and the top 5 Bombardier executives get almost 49% pay increase for what I do not know ? yet 14,500 employees are being laid off, and the “gong show” at Bombardier continues.

READ MORE ON BOMBARDIER on this Blog just go to ‘Categories’ and click on Bombardier https://www.linkedin.com/in/tomas-chlumecky-3200a021/recent-activity/posts/ ———————————————————————————————————————————————————————————– Bombardier Inc. released its 2016 Annual Report last month and while the company had Revenues of $US 16.339 billion in 2016 (down 18.7% on Revenue of $20.111 billion in 2014) and recorded a Net Loss of $981 million … Continue reading

UPDATE: The Czech Republic’s 10-14 seat twin engine turboprop utility, the Evektor EV-55 Outback has been put on hold. Ever since its first flight in June, 2011 the program never had the money to move forward to certification and production, and the $200 million Malaysian investment by former P.M. Dr. Mahatir bin Mohamad never materialized and was in short, a sad “joke’. This is what happens when you have a good performing and well positioned product, but you cannot sell it to investors, because you do not understand what investors want to see and hear. This turboprop General Aviation market is tough business and small companies struggle to compete even after certification and production (PAC 750XStol, Piaggio Aero P.160 Avanti) and then there are those that take years to get certified and still face an uncertain future (Epic 1000, Mahindra Aerospace GA-10, Dornier Seastar/Seawings, Caiga AG 3000, etc.), this program sadly cannot and may not get to the starting gate, and join other programs from the Czech Republic that made it to prototype stage but never into production (LET-610G, Ibis Ae-270, Wolfsburg 270, VUT-100 Super Cobra, Ayres LM-200 Loadmaster, Z-400 Rhino) and now the Czech General Aviation industry faces total collapse, barring production of small 2 seat light sport aircraft (LSA’s).

READ: BLOG Article of March 9, 2017 on the 2016 General Aviation turboprop market   Evektor’s Press Release – numerous media today: 16. 3. 2017 It is our obligation to inform you that Evektor has temporarily put the EV-55 project on hold until some uncertainties have been solved with our Malaysian investor. In any case, to secure … 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: Bombardier is looking into upgrading its CRJ line, which after +1,864 deliveries is now down to around +/-58 orders at best in backlog or 14 months of current production (April, 2018). The sad reality is that the CRJ is no longer very competitive against the current Embraer E175 and the new E175/190-E2’s will make the CRJ obsolete. After having upgraded the CRJ cabins in 2016, now the focus is on possible new engine (unknown at this time), but that is an expensive upgrade versus the current GE CF34 engines, and adds weight, which for a long fuselage aircraft like the 119 foot long CRJ-900, with rear mounted engines is not good for C of G issues. With only 19 CRJ orders in 2016, Bombardier has been milking and living off its backlog, but is there any life for the CRJ really ? even after +/-30% discounts off list price, sales are not impressive anymore. The CRJ is a 1970’s Canadair CL-600 Challenger (the Type Certificate for all CRJ’s), stretched 4 times with a tight cabin width of just 8 feet and 5 inches (2.69 meters) that has been become a 50 then 70 then 85 and finally 104 passenger airliner, while Embraer designed and built the EJets from scratch, and that is now paying off got Embraer and blowing up in Bombardier’s face. At a time when the CSeries is still struggling for orders, Bombardier Aerospace needs all of its products to sell and sell, yet the Learjets, Challenger 650, Global G5000/6000, Q400 and CRJ are sadly in the final decline phase of their product life cycle as new competing products are coming online across all segments..

Follow up to the January 4, 2017 Blog “Lots of Talk about Bombardier’s turnaround”   Bombardier is now looking for solutions to keep its CRJ line open for a couple of years as the backlog now dwindles to 14 months at current production rate of 4.2 per month and current order book. Now paying for … 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

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

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

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

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

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

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 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: 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: Since 2013, Republic Airways 2010 order for 40 x Bombardier CS300s plus 40 options was a ruse by the manufacturer, as Republic sold Frontier Airlines and could not even dream of operating 130 seat airliners as a Regional CPA (capacity purchase agreement) carrier for US Major airlines, as it is limited to 76 seats by Major airline pilot scope clauses with their respective airlines. Not sure what all the fuss is about, as I explained in my previous article, that of the 288 ‘orders’ the CSeries now has (inc. LOI for 45 x CS300’s for Air Canada, not an order yet), only 155 I believe are solid orders, and 133 are ‘weak’ orders. Bombardier is desperate to reach it’s magical 300 sales, a number used since 2009 that does not mean anything, as it is surely not it’s breakeven as that is much higher, just a goal that is NOT going to be achieved by EIS (entry into service) in any real sense of the word. Bombardier now wants the Federal Government and Quebec to join it in a 1/3 share for each in the CSeries program, that will be separated from the company, to make it’s numbers look better and to get $1.0 billion from the Federal Government. I think it is a ruse on Canadians, as Bombardier itself does NOT believe in the CSeries, as recently as October they tried to sell the program at a reported very low price to Airbus and Embraer, wake people, they want out ! they know it is going to be a disaster. Otherwise why would they sell the CSeriest program just before certification after 8 years of effort ? because they see that demand is not there in the 100-150 seat market to carve out an existence with 3 other OEMs and their 4 aircraft types, plus the pricing discounts that we have witnessed in the past 2 months (United’s 65 x B737-700 deals at -71% of list price, Air Canada’s 45 x CS300’s LOI deal at -60% off list price). Predatory pricing by Airbus and Boeing will make profitability next to impossible to achieve. Low demand and low prices is a recipe for ultimate disaster for Bombardier. So, with no OEM’s interested in the CSeries, now they want to ‘dump’ the program on the Canadian taxpayer ! still looking to get out somehow. Meanwhile, the 2 families that control Bombardier do want to give up their controlling interest and don’t want to put in their money into the program, as they know the ultimate outcome will be an “orphaned aircraft”, that the hopefully for them, we the dum ass Canadian taxpayers will be stuck with it thanks to our naïve government that will take the Quebec bait. We have in the past given aerospace so much money, billions of taxpayers money went to Canadair and de Havilland, and the companies for very little. In fact Boeing in 1985 bought de Havilland for $112 million from the CDIC, yet between 1981 and 1984 we the taxpayer put in $950 million to develop the DHC-8, and then in 1992 Bombardier bought de Havilland. I say NO Federal money to Bombardier, we just don’t have it, budget deficit will be huge this year, let them swim or sink.

Republic Airways Holdings Inc. (NASDAQ:RJET) has filed for Chapter 11 bankruptcy, which is a reorganization process, but has raised concerns about the CSeries order for 40 x CS300’s from 2010 and 40 options, as the stock drops to $0.92 per share (93.7% in the past 11 months from $14.67), and market cap drops to $47 … Continue reading

SUMMARY: The 2015 General Aviation turboprop market numbers are out, with 557 aircraft (46 less than in 2014) worth $US 1.894 billion (equal to 2014 figure). Single engine turboprops were 78.5% of all deliveries (25.5% were Ag aircraft, 27.3% were pressurized singles and 25.7% were utility singles). The winners were Textron Aviation (USA) King Air line with 117 deliveries (inc. 74 x King Air 350’s), Daher (France) TBM 900 with 55 deliveries, Quest Aircraft’s (USA based, Japanese owned) Kodiak 100 with 32 deliveries. While the losers were Piaggio Aerospace (Italy based, Abu Dhabi owned) with only 3 Avanti Evo deliveries and Pacific Aerospace’s (New Zealand) PAC 750XStol with only 4 deliveries at a time the SE turboprop utility market had its best year ever with 143 deliveries worth $US 306.6 million ? New comer will be Textron Aviation’s SETP single, Mahindra Aerospace’s (Australia based, Indian owned) GA10 single utility and Evektor Aircraft (Czech Republic) EV-55 twin turbine utility. Overall a good year considering Exim Bank was shut down for awhile hurting some foreign export orders and the Euro/$US exchange has made US aircraft more expensive in Europe. Piper Aircraft (USA based, Brunei Darussalam owned) new M600 delays are worrying, its M500 deliveries are down as are it’s piston deliveries, and the ‘improvements’ to the M600 are not good enough to make it a close competitor to the likes of the TBM900, Textron’s SETP and possibly EPIC E1000. Mahindra Aerospace is struggling with its GA10 certification, 2 years behind on a rather simple stretch and Rolls Royce re-engine of it’s piston powered GA8. Meanwhile, “old” Type Certificate designs looking for a revival in their fortunes, like the Dornier Seastar (Germany/China), Turbo Mallard (USA) G-73T and Australian/Indian GA18 (ex-GAF N24A) are not looking very promising, few second chances in this business, though the Chinese continue to buy old Type Certificates in the “hopes” of reviving them, none so far have succeeded, and few if any will.

The General Aviation turboprop market in 2015 was mix of success and failures for the 9 remaining OEM’s, of which only 3 are now US owned (Textron Aviation, Air Tractor and Thrush Aircraft) and 6 owned by France, Japan, Switzerland, UAE, Brunei Darussalam and New Zealand. Two of the foreign owned companies are USA based … Continue reading

SUMMARY: For the 3rd time in 32 years the Dornier Seastar amphibian is back (1st flight 1984), this time as Dornier Seawings GmbH (Germany), in a joint venture with 2 Chinese state owned companies in Wuxi, China, where the 2nd production line will be (really a 2nd line ?). After bailing out and failing to manufacture the aircraft and employ 250+ workers in Saint Jean-sur-Richelieu, Quebec as promised 4+ years ago when it was Dornier Seaplane Company of Florida, under CEO Joe Walker (ex-Adam Aircraft founder), not sure who takes the program seriously today, but the Chinese love to buy and bring home out of production aircraft, that then disappear into what I call the “Black Hole” and are never seen again. I don’t believe that much has has changed on the aircraft since I was Marketing Manager for Dornier Seastar GmbH in 1990-1991, except the 5 bladed prop versus the old 4 bladed prop, but have to give credit to Conrado Dornier for not giving up on his dream. There is a big market out there for regional seaplanes/amphibians but no aircraft, everyone makes do with costly, heavy, slow and inefficient land planes dragging big floats through the air. There has to be a better way, I have worked on several true amphibians like the Frakes G73T Turbo Mallard (Mallard Aircraft is looking for investors today) and the HU-16B/G-111, TPE-331-14 conversion, all good and usable aircraft but old designs. Diamond Aircraft (Canada) is going to build the composite airframe for Dornier, hopefully with newer composite material, and it is a boost to a Canadian OEM that has struggled since 2008 to regain it’s market position of 2007 when it delivered 471 aircraft and revenue of $185 million. Today, it’s output and revenue is +/-50% of what it did 8 years ago, it is another Canadian aircraft manufacturer trying to regain a lost market position, as it’s single engine jet VLJ, the D-JET program diverted money and attention from its core GA market, sounds familiar ? and I hear rumors that Wangfen, a Chinese company, is looking to buy Diamond Aircraft (Canada) ? Anyway, I look forward to one day seeing new amphibians that will fill a void that has not been filled since the days of flying boats, the market today is right for a revival, the Russian Beriev Be-200 has so much potential, but the Russians have NO idea how to sell a “concept” before you try and sell a “product”, that was Dornier Seastar’s problem back in 1991 when it stopped development of the Seastar, hope they have learned something the past 25 years that will make it a success this 3rd time around (3rd time around a charm ? or 3 strikes you’re out ?), we shall see.

  I read with great interest the latest news on the German 14 seat Dornier Seastar CD2 amphibious aircraft being built by Canadian based Diamond Aircraft for German based Dornier Seawings GmbH, as I was a young Marketing Manager for the program in 1990-1991 before it went it into liquidation after receiving German LBA VFR … 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: The 10 to 14 seat EV-55 Outback twin PT6A powered STOL utility aircraft continues its EASA CS23 certification, but the latest order by China’s Guangdong Long Hao Group for 50 x EV-55’s with plane unseen, no spec, no certification for 2 years at least, etc. raises serious concerns about what is going on at Evektor, as the Malaysian’s are screwing up the whole program with their lack of leadership, experience and knowledge in the industry. The Malaysian investor, Aspirasi Pertiwi Sdn Bhd which has only 9% of the voting shares yet controls the company ? is not living up to its Agreement with Evektor, and is apparently in breach of its Agreement with Evektor and changes are coming to the arrangement, as several investigations are forthcoming. It is very unfortunate that the EV-55 Outback is once again delayed but the aircraft will survive and be certified and then do very well commercially as it is very well positioned in the market. The Malaysians really have NO idea of Part 23 certification, the General Aviation market and aircraft production. The full inside story cannot be revealed yet, but it is a mess and this mess will be cleaned up through the appropriate legal processes in due course. Again, a warning to companies seeking investors, be real careful who you bring on board, the promise of money is not the only criteria, check out experience, knowledge and most importantly past achievements and failures.

I have been updating the progress of the 10-14 seat Evektor EV-55 Outback twin PT6 utility, which I was involved with from the beginning in analyzing the market segment, helping to raise money from the Czech Ministry of Trade and Industry and then specifying the aircraft’s size, performance and price point. I was stunned to … Continue reading