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A320neo

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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: Bombardier stock (TSE:BBD.B) has been at $1.00 all day today, and late this afternoon it went south of that “psychological” barrier and became a “penny” stock, as it closed at a 25 year low of $0.99 on the Toronto Stock Exchange. Investors are dumping their shares for good reasons. No new CSeries order since September, 2014, lost United deal to Boeing, 3 of the 4 first CSeries orders from 2009-2011 are NOT happening (Lease Corp. International, Odyssey, Republic add up to 53 ‘firm’ orders and 57 options) and the 4th is Gulf Air (2011 order for 10 x CS100’s and 6 options) that last week ordered 19 x A320/321 with 10 x A320 already on order, and their CEO Maher Salman Al Musallam comments on the CSeries are not optimistic “I don’t know, as a small airline, whether we are able to operate a third type or not”, “whether it’s going to be viable for Gulf Air to continue to renegotiate a delivery date with Bombardier or something else”, also today, the CEO of Gulf Air offered his resignation, no reason given. Meanwhile, Bombardier eyes Iran, but Iran will order 127 Airbus airliners this week, meanwhile Delta Air Lines order that Bombardier wants so badly, will not be any time soon and then will require a very good price, that will have to compete with Embraer, Boeing and maybe Airbus. Bombardier wants Federal government to buy 50% of CSeries, yet Quebec’s Mayors block East pipeline that western Canada desperately needs for its oil. If Bombardier gets money from the Feds, western Canada will NOT be happy with Ottawa. I say NO to any funding until current special voting shares by which 60% control is still in the hands of the 2 families, eliminated and then some sizable injection of capital by the 2 families that today control Bombardier and who orchestrated the current fiasco, otherwise I say NO to Federal money for Bombardier, too many other needs in Canada. Lastly, Bombardier needs to just stop talking about all the deals they are working on, it is bad PR when they lose and it is un-professional, when you sold something then brag about it but don’t brag about being in this or that campaign, because the sad reality is they will lose +85% of the campaigns when competing with the duopoly of Airbus and Boeing, it is just sad they are so “desperate” for any good news.

This is the event few would have expected at Bombardier a few years ago, but today the Bombardier shares (TSE:BBD.B) went to $0.99 a share, the lowest in +25 years (since 1991), and it is a “penny” stock today, this is how bad the company is now perceive don the market, a total mess from … Continue reading

SUMMARY: Paris Air Show 2015 is done, the winners were again the duopoly of Airbus and Boeing with 752 orders ($US 107.2 billion at “list price”) out of a total of 958 orders. The BIG loser was surely Bombardier which finally after 7 years from its launch, made its debut with both the CS100 and CS300 airliners, but left the show with 0 (zero) in new orders for their CSeries, Q400 and CRJ’s brands, which should be worrying, but after the show Bombardier said it was “absolutely satisfied”, with what ? The fact it had to choose the little known, barely profitable, Latvian government owned airBaltic as its launch customer for the CS300 (13 x CS300’s on order and 7 options) says novels about the poor quality of its order book. The airline’s order has a “list price” value of $US 1.44 billion, yet this airline has made a profit of only $US 11 million in the past 5 years on revenues of $US 688 million (1.6% net profit margin) ? unfortunately they have no “better” airline for such an important role. Meanwhile Bombardier now seriously talks of a stretched 160-180 seat CS500 to challenge Boeing and Airbus ? really ? it’s stock price keeps dropping, (TSE:BBD/B) is at $C 2.25 today down 45.8% YTD (year to date) and the corresponding drop in market capitalization to only $US 5.11 billion, investors are worried and Bombardier wants to spend more money on a CS500 to take on the big duopoly of Boeing and Airbus head on in the most lucrative market, the single-aisle/narrow-body segment ? Individual losers were the A380, A350-1000 and the MRJ, with no new orders, while little known Viking Air of Canada announces 50 “orders” from China for its pricey $US +7.5 million Series 400 Twin Otter even though the Chinese have a similar, good performing, FAA certified and cheaper Y-12E ? Embraer celebrated its 2 year anniversary at Paris of its E2 launch, booked 25 E2 orders at the show and now has 325 firm orders, while the CSeries is now 7 years past its launch (July 18, 2008) with only 243 firm orders, but realistically it is only 130 orders at best. ATR books 46 orders and 35 options at the show, as it solidifies its market dominance in the large turboprop market segment after 160 firm orders in 2014. Sukhoi’s SSJ-100/95 gets an order for 3 as shamefully up to 33 “white tails” (out of 85 delivered, or 39% of delivered aircraft) await customers even with price discounts of 56%, while the program struggles with production, sales, marketing, corporate governance and politics, as 51% partner Finmeccanica (Italy) is restructuring and understandably contemplating its exit from the Italian-Russian joint venture and surprisingly it also has doubts on its future with the very successful ATR program where its fully owned subsidiary Alenia-Aermacchi is a 50% partner with Airbus Group. Airbus and Boeing want to increase production of single aisle/narrow-body airliners (B737Max now has 2,773 orders and A320neo has 3,854 orders) to a possible 115 per month (Boeing to 52, Airbus to 63) by 2018 ! is that over optimism in this unprecedented period of growth ? can the already over extended supply chain even handle the extra work ? With an average monthly delivery of 112 aircraft in 2014 of all sized aircraft by both OEM’s (1,349 units), the latest Boeing 20 year forecast of 35,560 aircraft would translate to an average of 148 aircraft per month for all sized aircraft by both OEM’s, an increase of 32% on 2014 delivery numbers, with new orders in 1st half of 2015 already down on 2014 ? What role do speculative orders play in this order frenzy ? Deals at Paris are always quoted in List Prices but who is getting a good deal ? are you getting a good deal ? how do you know you got a good deal when almost everyone gets a discount, no one pays List Price and it is all so secretive, so how low can Boeing and Airbus go ? how about 64% off on big orders ? yup, enough to make sure that new competitors like the CS500, C919 and MC-21 do not win orders based on price. Lastly, Russia’s aggressive stand against NATO is seriously raising tensions in European countries on the Russian border, since 2008 Russia has annexed and integrated 4 Russian speaking enclaves/territories from 3 of its neighbors (Georgia, Moldova and Ukraine), now open conflict is a real possibility, and Russia’s military thinks a small tactical nuclear response today is possible without triggering a WW III ! in this political environment it is time for tough economic sanctions on Russia and especially its aerospace industry, the Sukhoi SSJ-100 is getting lots of financial support from President Putin, as it is the only Russian commercial aircraft ever built with any western appeal. It is time to stop buying Russian aircraft and stop ALL support for Russia’s aerospace industry, as any military conflict with Russia will make corporate profits absolutely irrelevant anyway !

With the 2015 Paris Air Show now behind us, it is worth to look at the final results of the big aerospace event and analyze the winners and the losers as it gives a pulse on which OEM’s are on top of their game and those that are not. —————————————————————————————————————————————————————————————– The battle in the narrowbody … Continue reading

ABSTRACT: Bombardier may have its CSeries launch customer in newly re-branded Lufthansa Group owned Swiss Global Air Lines which ‘should’ get the aircraft by 1Q/2016 ? at the earliest, while Bombardier desperately tries to ‘re-position’ the Q400 as a viable ATR-72-600 competitor with a “secret new technique” of slowing it down for better fuel economy and trip costs ?? the Q400 is $10 million more expensive, it uses 104% more power (shp), therefore it burns 40% more block fuel, engine maintenance is more expensive on PW150 than PW127 so how can it be economically close to the ATR which out sells the Q400 by a wide margin even with deep discounting on the Q400, meanwhile experts say the CSeries needs to be discounted by 50% to get the needed BIG airline orders as that is what BIG airlines expect, welcome to the BIG league Bombardier where huge discounts (30% to 50%) by Airbus and Boeing are the norm rather than the exception which can be up to 65%, and you can’t win a price war against Boeing or Airbus, can Bombardier even afford to heavily discount now that break-even has to be 580+ units as the CSeries program cost grows to $5.4 billion from an initial $3.4 billion and production is planned at only 10 per month ? break-even is now 6 years of production, can it afford NOT to discount with sales still stuck at a scant 243 “firm” orders (some highly questionable) after 6 years and NO major US airline order in sight ? meanwhile Lufthansa Group’s Austrian Airlines takes 17 x E195’s over CS100’s just like Air Canada kept its 25 x E190’s instead of buying the CSeries last summer, both after a thorough cost evaluation, so what gives with the economics of the CSeries ? Learjet without the Learjet 85 has little to offer, a sale of that company should be considered, the ‘good’ news is that Bombardier successfully raised $C 868 million in new equity and $C 2.25 billion in high yield debt to bolster its liquidity problem.

The news at Bombardier Inc. keeps getting worst, as this past week China’s locomotive manufacturers China CNR Corp. was acquired by China CSR Corp. in a $US 26 billion merger, creating a large state owned enterprise (SOE) that will surely give the 3 other large train manufacturers Siemens (Germany), Bombardier (Canada) and Alstom (France) lots … Continue reading

ABSTRACT: India’s LCC (low cost carrier) SpiceJet is in trouble, finally restructuring after 5 consecutive quarters of losses, just today it’s stock dropped 13.8%, as lessors start repossessing aircraft, yet 9 months ago it made a $US 4.4 billion order for 42 Boeing B737-8 MAX, now out of money ? where is the financial planning ? is the restructuring too late, again ? when will India’s airline industry be profitable with such low yields and high costs ? time for Air India to go bankrupt finally ? and yet LCC IndiGo is making money and orders 250 Airbus A320neo’s ready to dominate the Indian market with up to 528 Airbus A320/321’s by 2026 !

The airline industry in India is a bloodbath, everyone except LCC (low cost carrier) IndiGo and possibly GoAir is bleeding cash, with high operating costs and very low yields, the market is now facing another major bankruptcy after Kingfischer Airlines with SpiceJet in big trouble. India is the most under served airline market in the … Continue reading

Bombardier counters criticism of its “sluggish” CSeries sales by claiming the “CSeries dominates the 100 -149 seat category” SERIOUSLY ? Let’s look at this Public Relations ‘spin’ on what is clearly a dismal sales performance for the CSeries program with only 203 orders since 2009 and examine where the problem really lies with the CSeries.

According to Mr. Fred Morais, Marketing Director at Bombardier Commercial Aircraft, the description of CSeries as “sluggish” is not correct, in fact according to Bombardier it “dominates” (verb: like controls, commands) the 100-149 seat market” with its 203 orders from 12 customers and 1 undisclosed since 2009, apparently “these sales figures speak for themselves” says Mr. … Continue reading

Is the Overly Optimistic LCC Bubble in Southeast Asia about to Implode after a Splurge of Speculative aircraft orders and a Spree of new LCC’s Recklessly adding too much capacity too quickly ?

Too much of a good thing is not always good in the long run, in Southeast Asia you have LCC’s (low cost carrier) that have over expanded and added to much capacity and ordered too many aircraft and signs of trouble are now popping up, and fast.  The rise of low cost travel in SE … Continue reading