Other Aviation Issues

This category contains 56 posts

Russian MoD: S-400 data shows 4 x Israeli F-16D “Barak” fighter jets hiding behind Russian Il-20 (militarized 1950’s IL-18) to avoid Syrian missile which struck the Russian aircraft and killed 15 Russian airmen. This has strained Russian-Israeli relations and Russia is now sending its S-300 anti-aircraft missile batteries to Syria, maybe S-400’s? Israel needs to learn what international law is and that is just cannot keep attacking its own people in Gaza and neighbouring states from the air against without just cause and consequences its just too arrogant to accept any blame on itself for anything, always someone else’s fault? angels they ain’t!

  https://www.linkedin.com/in/tomas-chlumecky-aviation-doctor-3200a021/     Published time: 24 Sep, 2018 17:11Edited time: 24 Sep, 2018 18:46 Get short URL IL-20 is base don the IL-18 (NATO: “Coot”) 676 built between 1956 and 1985. The IL-18 could carry up to 120 passengers, pilots loved it, I talked to several CSA pilots and they thought the world of … Continue reading

SUMMARY: DAY #1 at Farnborough International Airshow – July 16, 2018

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/         July 16, 2018,  Airfinance Journal:        Day One of Farnborough 2018 belonged firmly to Boeing in terms of firm orders, although the US manufacturer saved up many of its largest announcements from deals done earlier in the year.   Airbus, meanwhile, … Continue reading

New survey shows continuing challenges for aircraft redeliveries in 2018

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Airline Economics Daily – July 2, 2018     A recent survey from IBA has shown that both lessors and lessees agree that the redelivery process is not started early enough, with records and engines topping the list of the most challenging elements of a … Continue reading

How the British Rolls Royce Nene Turbojet Engine Allowed Russia’s MiG-15 (NATO code named ‘Fagot”) to Fight the USAF in the Korean War, and 65+ years later it is still in service with the Korean People’s Army Air Force (KPAAF), whose most formidable offensive aircraft are the +300 AN-2 (Chinese Y-5) low and slow flying fabric biplanes with wooden props that are “stealthy” to US and South Korean radars?

SEE:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   North Korean, Chinese built F-5 (aka Mig-15)       Tomas’s Comment: This is a true story about how the British gave the Russians their RR Nene engine, which the Russian reversed engineered and developed their VK-1 turbojet engine which powered their first ‘real’ jet fighter the Mig-15 (aka “engine with a … Continue reading

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

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

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

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

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

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

UPDATE: 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 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: The Canadian government is going to put $C 1.3 billion into ailing Bombardier and BAILOUT its CSeries commercial jet program, yet the company AND the Canadian government are NOT revealing past government aid to the manufacturer. In fact, according to latest article in the ‘Financial Post’ both parties suppress any information about Canadian taxpayers support for the company, which in a democracy like Canada’s is outrageous. This is another example of the “corporate welfare” and “crony capitalism” in Canada today, when government and BIG business are bed fellows and there is no public accountability and transparency on billions of dollars of taxpayers money going to aerospace companies. When did we become a “crony state” where taxpayers are not allowed to know where their tax money went to and for what ? They say it could prejudice the competitive position of the company ? are you kidding me ? Everyone knows what a miserable screw-up Bombardier is today thanks to ex-President/CEO and now Executive Chairman Pierre Beaudoin. They tried to sell the CSeries program to 3 OEM’s in October, 2015 surely they gave out financial information on the CSeries program ? and everyone can read public financial statements to see how bad the company’s financials are. Yet, the company is NOT a good Canadian citizen, it hides and parks hundreds of millions of dollars away from our Canada Revenue Agency (CRA), in overseas brass plate corporations so it does not have to pay Canadian taxes that it now so badly needs from us, and has asked 51 times since 1966 for government assistance, that is an average of once a year for the past 50 years, a ‘regular customer’ for state aid and yet Bombardier goes out of its way to unethically hide its money from Canadian taxes yet dares to ask for state aid regularly to help it grow ! shameful corporate hypocrisy at its worst. It discriminates in its employment hiring against English speakers (aka Quebecois nepotism coming from ex-President/CEO directly) and the government has done nothing yet to investigate it, as it is against the Canadian Human Rights Act to discriminate and the company needs to be punished for that. The company sends new work to Mexico and Morocco, as it lays-off thousands of workers in Canada and it wants more and more money from Canadian taxpayers while the Bombardier and Beaudoin family’s that control 54% of the voting shares with only 13% of equity (worth around $US 345 million), don’t want to give up control, thinking they are too BIG to fail ! Probably they are right, off course local Quebec government made no such request of course (wonder why ?), Ottawa is at least trying to change the 2 tier voting system to reduce majority control. If you want taxpayers money, then you have to make it transparent, it is simple. If you don’t want your competitors to know you are being state subsidized and probably running foul of World Trade Organization (WTO) rules, then don’t take taxpayers money and find it elsewhere. After the revelations of Quebec’s Charbonneau Commission into widespread corruption in Quebec, mainly between BIG business and local politicians, I believe that with billions of dollars of taxpayers money out there somewhere and no accountability for it, our RCMP (Royal Canadian Mounted Police) must investigate, as this is how corruption happens in “crony capitalism”, when government and BIG business do their own things behind the closed curtains free of public scrutiny and accountability, especially in Quebec, so let’s get in there and find the money trail before its gone ! Lastly, if the control stays with the existing 2 families, Ottawa must say NO to any further state aid (aka “corporate welfare”), the $C 1.3 billion investment into a new limited partnership that will hold the CSeries program, is scam on the taxpayers of Canada, as Bombardier very well knows that the demand in the 100 to 150 seat market is very low with 9 years of steady decline and only 53 deliveries in that segment in 2015 by 3 manufacturers. Bombardier only has to look at it’s own 104 seat CRJ-1000 program a total commercial FAILURE with only 68 orders and 43 deliveries in 5+ years (only 4 deliveries and a $243 million write down on the program in 2015), add to this the new ‘normal’ on pricing deals in this 100-150 seat segment is now at 50% to 70% off list price, and it all adds up to a market segment that is totally wrong for the likes of a lightweight competitors like Bombardier due to weak demand and low to non-existing profit margins on sales, against the duopoly of Airbus and Boeing determined to crush the CSeries early on. This explains why they wanted to sell it 1 month before Canadian Certification, why else would you sell a program after 8 years of work ? They know where it is all heading and secretly they don’t believe in the program as it has NO FUTURE given the dynamics of what is happening in the market segment today. Canadian taxpayers are being duped into a $C 2.0 billion “investment” that has ZERO chance of being returned, better to buy 91% of all outstanding ‘B’ shares, and have something to show for the $C 2.0 billion. Lastly, when the CSeries becomes and orphan, it will not be the first Canadian jet airliner to fail, I take a quick look at the 1949 built Avro Canada C102 Jetliner, and 3 other jet airliner programs that were very good for there time, but like the CSeries were in the wrong market segment at the wrong time and failed with less than 37 units produced before becoming “orphans” (aircraft who have ‘lost’ their manufacturer or were ‘abandoned’ by their manufacturer).

I have recently written about the hundreds of millions of dollars of Canadian tax payers money Canadair and de Havilland received from the Canadian government in the 1980’s, and that Bombardier now wants $C 1.3 billion from Ottawa to match the $C 1.3 billion it has received from Quebec. For a company that violates the … Continue reading

UPDATE: 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: Bombardier “B” shares closed at $0.89 today, a reverse stock split is badly needed to avoid the stock being ejected from Canada’s benchmark S&P/TSX composite index. A reverse stock split would reduce the number of shares and increase the stock price accordingly, so as an example a 5:1 reverse split would reduce the TSX:BBD.B outstanding shares from 1.933 billion to 386.6 million shares and increase price to 5 x todays’ price to $4.45 all else being equal. Sounds good ? well only 25 months ago (January 17, 2014) Bombardier the stock was at $4.51 at the current share price decline, another reverse share split would be needed by the end of February, 2018 ! So, I expect that a Bombardier reverse share split will have to be at least 15:1 ($12.00 to $13.35 range) to avoid future problems after the split (e.g. CHC Group). If it were not for bad news these days, there would be no news out of Bombardier. On December 8, 2015 CHC Group stock (NYSE:HELI) hit $0.234 per share, they did a 30:1 reverse split on December 11, 2015 to avoid delisting on the NYSE, and the stock immediately went to $6.55 (7% discount after the reverse split from an expected at par price of $7.02 ) and they are now out of the ‘penny stock’ category. Today (February 4, 2016), CHC Group stock (NYSE:HELI) hit $2.10 per share, or better put, $0.07 per share without the 30:1 reverse split ! it’s all just “smoke and mirrors” to hide horrible stock devaluations by company’s in serious trouble (today’s CHC Group market cap is only $8.35 million for a $1.7 billion a year, 233 helicopter operation), so things can get worst for Bombardier even after a “cosmetic” reverse share split. These are dark days for Bombardier and the offshore helicopter market and their OEM’s as well.

Well, I have been right about the Bombardier shares (TSX:BBD.B) becoming “penny stock”, said it along time ago, the writing was on the wall, but no one really paid attention to my blog and it has stayed a penny stock since January 27th when it hit $0.99, today it hit $0.89 and a continuing slide to … 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

UPDATE: United Airlines as expected has chosen the Boeing B737-700 over the CS100/CS300 offer from Bombardier and E195-E1 from Embraer. Bombardier stock has dropped 9.17% to a new low of $1.09 (21.1.16 4:21pm) on the news, which should not have been a surprise to those that read my blog. This was the first head to head battle between Bombardier’s CSeries and Boeing’s B737 line, in the end it was all about PRICE, and now Bombardier and all investors see what I have been talking about for some time, Bombardier will NOT be able to compete with Airbus and Boeing on Price. The Duopoly is going to see to it that the CSeries gets undercut on price on every deal, and Bombardier has to be really worried now. The United Airlines deal for 40 x B737-700’s was apparently closed at $US +/-23 million per aircraft (a whopping 71% OFF the List Price), and here lies the Achilles heel of Bombardier, it is not able to compete on Price with the duopoly of Airbus and Boeing, and with low fuel prices, fuel efficiency, new design, value proposition, etc. all take a back seat to Price (capital costs). The writing is on the wall, little Bombardier entered the Big League totally ill prepared for the fierce competition and now it is going to get really tough to make any profitable deal as Airbus and Boeing are prepared to defend their market from a new entrant that they know is very vulnerable and shaky. In a simple SWOT analysis, the THREAT of entering this narrow-body segment was the defensive and offensive position Airbus and Boeing were and are going to take against any new competitor, and this should have been a major RED FLAG for NOT entering this market segment, and Bombardier is now realizing the severity of its weak position vis-a-vis Airbus and Boeing as competitors, as they are no Embraer and ATR, which Bombardier battled with for years with it’s dying Q400/CRJ brands, and ultimately lost to in the past 4 years. Now, on to this next Bombardier PR disaster, Delta Air Lines interest in the CSeries, which is not much different than the United Airlines deal, and the result, which I do not expect to be anytime soon , will be the same. Delta’s very successful and forward looking CEO Richard Anderson has already said what it will take to win his airline’s order when he said “at the RIGHT PRICE, it’s quite a competitive airplane”, right price ? what price ? List price of the CS100 is $US 71.8 million, CS 300 is $US 82.0 million, Bombardier CANNOT compete with deals at 70% off and stay in this business for very long, no way, now how, the duopoly has economies of scale with large production numbers, many different models, and can offer discounts on other aircraft deals to sell their B737Max and A320neo products. On top of the duopoly, the narrow-body segment has 2 new very well financially backed entrants coming, the Russian government backed Irkut MC-21 and the Chinese government backed Comac C919, and it is going to be a great time for airlines to make sweetheart deals, but sadly Bombardier Aerospace (Commercial and Business Aircraft) will not be enjoying the next few years at all, and ultimately “Combardier” (China’s Comac buying Bombardier) is a real possibility in the next 4 years.

Well it is official and as expected, United Airlines has chosen to order 40 x Boeing B737-700’s over the Bombardier CS100, CS300 and Embraer’s E195-E1. I touched on the reasons a few ago why Bombardier was NOT going to win this order, basically United Airlines operates 310 x B737’s already with 100 on order. It … 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

UPDATE: Canada’s first ULCC (ultra low cost carrier) is Winnipeg based NewLeaf, which will launch services to 7 Canadian destinations on February 12, 2016 with Boeing B737-400’s operated by Kelowna based Flair Airlines. It is not a perfect business model to start with, but given that Naked Jet/Enerjet and Canada Jetline have not been able to get their business plans executed for the past 2 years, it is better than nothing. In fact, this model was used to run Greyhound Air between July 1996 and September 1997, when Kelowna Flightcraft operated 7 x B727-200’s under its AOC for Greyhound Air, and Winnipeg was the hub, so it has been done before, but today the market landscape is different and it just may work. NewLeaf will offer fares as low as $99 one way but also will need to supplement it’s low fares with “non-ticket” revenue from baggage, seat selection, exit row, food and beverage fees, that today at US based ULCC’s make up around 45% of total revenue or 79% of the ticket price (i.e. Spirit Airlines), so expect that on average that $99 one way ticket will become on average a $+145 one way ticket when all is done and paid, still much lower than what Air Canada and WestJet charge today. Some people still think of WestJet Airlines as a low cost airline, but that story is long gone, as WestJet realized it did not have to be a low cost airline, just come close to Air Canada’s fares and the service would win over. Today Air Canada and WestJet Airlines have roughly the same passenger yields ($/RPM) at around $cents 0.192, both have the same average load factor of +/-81%, their PRASM (passenger revenue per available seat mile) are pretty much the same at $0.155, and Air Canada is reducing its units costs while WestJet’s keep going up. It is time for Canadians to have access to LOW airline fares, and have another choice over the duopoly that runs our airline industry, as we are the ONLY country in the developed world today without a low cost airline, and while Air Canada’s ‘rouge’ is a low cost subsidiary (mostly just due to higher seating density on its aircraft) it’s fares are the same as Air Canada’s, as its role is to make more money for Air Canada and not to reduce air fares to Canadians. It is estimated that 4.8 million Canadians fly each year from US airports that are close to our border (e.g. Buffalo, Detroit, Bellingham, etc.) to save on airfare ! This is the Canadian ULCC opportunity and challenge, to get some of those passengers back. With low frequencies and just 7 airports served, NewLeaf will not threaten Air Canada or WestJet but then 20 years ago WestJet started with 3 B737-200’s and 5 destinations and look at its evolution, every company has to start somewhere. Lastly, Iceland based ULCC operator WOW Air is coming to Canada in May, 2016 and is offering great deals to Iceland at $C 99 one way and $C 149 to Europe, it is about time Canadians had low cost options and let’s hope the low cost trend spreads fast and forces the duopoly to stop ‘milking’ Canadian air travelers !

Well, Canada finally has another low cost champion, as NewLeaf Travel Company Inc. (http://www.FlyNewLeaf.ca) announces it will begin operating Boeing B737-400 commercial flights to 7 Canadian cities for as little as $99 one way under the AOC of Flair Airlines of Kelowna, B.C. on Friday, February 12, 2016, only 1 week short of the 20th … Continue reading

SUMMARY: Consolidation in the Canadian regional airline industry is slower than I expected, but recent acquisitions by West Wind Aviation of Osprey Wings and Harbour Air (aka “World’s Largest Seaplane Airline”) acquisition of Salt Spring Air on top of EIC acquiring Provincial Aerospace and Chorus Aviation acquiring Voyageur Airways earlier in 2015 gives me some hope for more mergers and acquisitions (M&A) activity in this sector over the next 1-3 years. In fact, Harbour Air itself has sold 49% of it’s equity to a Chinese investor in 2015, and is now planning to enter the highly questionable Chinese seaplane market , just as it solidifies it’s dominant market position in and around the Vancouver area having also acquired Whistler Air (in 2012) and West Coast Air (in 2010), and then divested itself off Prince Rupert based North Pacific Seaplanes (in 2013). There are 6 privately owned Canadian regional airlines that could be in play in the next 2-3 years, as several airlines are well into their 2nd generation of management by owners and most do not have a 3rd generation waiting to take control and few are actually growing and basically stuck in their traditional market. Publicly owned Exchange Income Corporation (EIC) with 5 airlines now has shown that you can make money with regional airlines as long as you have good management, a good market position/niche and financing behind you. The industry is changing, in the north, most airlines are now First Nation owned and the remaining privately owned airlines will find eager investors if they truly want to sell and are prepared for suitors before they need a buyer, as most small airlines are unprepared to generate interest with potential buyers, as they don’t even know how to value their business’s worth, what are its attributes and how to attract a broader pool of investors willing to pay more for the company. Last, I will discuss the growth of seaplane airlines around the world and the need for new aircraft beyond just old landplanes with bulky and heavy floats attached, for the industry to really grow.

I have previously discussed the Canadian regional airline market, and that consolidation is coming as family run airlines are looking to sell their airlines, as witnessed by Exchange Income Corporation (EIC) of Winnipeg (TSX:EIF), which has bought 5 Canadian private family regional airlines in the past 12 years, and surely eyeing more: Perimeter Aviation in … Continue reading