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Bombardier

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Bombardier signs agreement with DAIR to spur innovation in Ontario’s aerospace sector, but referring to Bombardier’s innovation and aerospace is a self contradiction (oxymoron) given its massive reliance on developing its product line by stretching the 1970’s CL-600 Challenger (ALL CRJ’s and ALL Globals) or stretching the DHC-8-100 into the Q400, stretching an aircraft for decades is not innovation in my book.

You can read more of my Articles and Posts on LinkedIN at:   https://www.linkedin.com/in/tomas-chlumecky-3200a021/  Bombardier signs agreement with DAIR to spur innovation in Ontario’s aerospace sector AviTrader-June 22, 2018     Tomas’s Comment: It’s interesting and good for aerospace education, but let’s be real, Bombardier is not a big innovator in aerospace, outside the miserably failed … Continue reading

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

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

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

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

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

The Canadian Government off course is standing by Bombardier on this, but as I have been on this issues since the Delta Air lines deal, I know through contacts and Boeing knows even better what the price to Delta Air Lines (DAL) was. Now comes a lot of trouble, which was expected as the CSeries … Continue reading

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

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

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

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

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

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

SUMMARY: 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: 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 Bombardier CSeries CS100 has received it’s Canadian Type Certificate, which is good news, and raised the stock by whole $0.19 a share, clearly showing investor apathy for the stock ! The BEST news is that it looks as if the man responsible for the chaos at Bombardier in the past 5 years, ex-CEO and now Chairman of Bombardier, Pierre Beaudoin will leave the company in early 2016. Certification is one hurdle, still many hurdles to jump through before the CSeries and Bombardier are in a good place, lots of things can still go wrong from entry into service, production ramp up to new technical issues (e.g. B787 battery problems). As for the 5 year transformation plan, there is NO WAY that Aerospace will reach its planned 2020 revenue of $14.9 billion with two planned “cash cows” (CSeries and G7000) that are a roll of the dice if they are to be successful in their respective markets. For surely, the current programs will not be competitive or even produced by 2020 (e.g. Learjet 70/75, Global G5000/6000, CRJ line, Q400 and possibly the Challenger 650) as these programs are in their declining product life cycle stage, and facing newer and better products in the next 4 years that will make them obsolete. Lastly, I am still not seeing a market in the 100-149 seat segment, where is it ? where does Bombardier see this BIG market ? as the 125 to 149 passenger B737Max7, A319neo have not found it (only 109 orders out of 7,270 Max and neo current orders, or 1.5% of orders), and Embraer’s 118 passenger E195-E1 and Bombardier’s 104 passenger CRJ1000 sales were the least of all their respective models (only 11% of total EJet sales and 8% of CRJ700/900/1000 sales), combining for only 233 deliveries of 100+ passenger aircraft in 10 years, so the large regional jets have also NOT found a market in the 100-150 passenger market either. Maybe the market has up gauged and moved into the 150+ seat segment ? and Bombardier’s forecasts were and are wrong based on old data (e.g. DC-9’s, Fokker F-100’s, MD-80’s, B737-200/300/500/600′, BAe 146-300’s, etc.) and not taking into account new trends in up-gauging of aircraft, de-hubbing and focus on lowering CASM’s. The CSeries is badly positioned and will struggle for orders, even ICF International believes the CSeries program is a 50 unit per year aircraft program !

Well finally the Bombardier CS100 has received its Transport Canada Type Certificate today, and the stock (TSX:BBD.B) has gone up $C 0.19 to $1.36 (as of this afternoon, Dec 18/2015) or 16.4%. This is good news, but even better news is that it looks as if Chairman of Bombardier, Pierre Beaudoin will step down some … Continue reading

UPDATE: Well, things are really BAD with Bombardier and the CSeries program, as in desperation the company has offered to sell it to Airbus and Embraer for for next to nothing, a desperate plea and MAYDAY signal for help in selling the CS100/300 ! the program is in MAJOR trouble, worst than anyone thought possible. The fact that Airbus and Embraer said NO to the program and confirming there are serious production problems with the aircraft has to be scary for customers, airlines, investors, employees and any would be ‘white knight’. Its worst then I imagined, and when industry ‘guru’ Richard Aboulafia of Teal Group says “Bombardier should pull the plug” and “that this is the beginning of the end for the very troubled program”, as I have always advocated it is time to start talking to Comac (China) about “Combardier” or pull the plug on the program. Comac is very interested in Bombardier, the two OEM’s already cooperate on commonality between the CSeries and the C919, and they need each other, one needs money the other needs industry know how and experience, and Bombardier is the only commercial jet airliner manufacturer in the world one can buy today. Bombardier (TSX:BBD.B) rose last week on news that United Airlines may buy a fleet of 100+ seat airliners if its pilots agree to a 2 year contract extension, its a ‘game’, Delta’s CEO Richard Anderson tried the same thing this July with a 60 aircraft/$US 4.0 billion order/ ‘carrot’ with his pilots, they rejected his deal, and he cancelled the order, relax we are very far away from any major US airline order. Bombardier investors are hard-up for any good news, stock is very volatile right now and I am looking for it to break the $1.00 mark before Christmas. Latest launch of the Q400 “combi” is troubling to me, up to 50 passengers in the front and 9,000 lbs of cargo in the back through a small 1.72m x 0.71m door ?, its a weight and balance operational nightmare on a 32.81 meter long “teeter totter” (aka seesaw), good luck with that ! Bombardier needs money, lots of it by mid-2016, look for it to sell Learjet for sure, and then a part of Aerostructures and Engineering Services, part of Transportation, “pause” the new G8000 program and bring in the Quebec government through Caisse (2nd largest pension fund in Canada) and Quebec’s public pension manager, poor pensioners in Quebec ! These are truly dark days for Bombardier, the next 10 weeks will determine its future one way or another.

The last time I wrote about Bombardier was September 15, 2015 and I was thinking at the time, it cannot get worst, but here I am 24 days later and I am seriously worried about the viability of Bombardier’s viability as a going concern, as the bad news just keeps getting worst, the fact Bombardier … Continue reading

UPDATE: Bombardier stock (TSX:BBD.B) hit a low of $1.19 on Wednesday (today it “rallied” and closed at $1.29) as it continues its spiral towards becoming a penny stock, if it was listed on the NYSE (New York Stock Exchange), it would mean possible de-listing of the stock, as Vancouver’s CHC Group (global helicopter company) is now facing for its NYSE:HELI stock that is now hovering at around $0.30 a share (-90% YTD). After my many warnings about the many questionable and poor quality of airline orders for its CSeries, investors and aviation experts are now finally starting to take notice that after 7 years of sales the current minuscule 243 CS100/300 ‘firm’ orders are in fact a whole lot smaller, with many questionable airline orders possibly as low as 130 ‘real’ orders (53% of what is on the books today). Bombardier desperately needs a NEW CS100/300 brand name airline order in the next 30-45 days to prevent the slide of its stock below $C 1.00, as that is the only way in the short term it can gain some investor confidence to stop the stock’s downward spiral. The CS100 is going to be certified in the next 3-5 months, but by then the stock will be a penny stock if no quality new order or some new un-predicted good news is forthcoming soon from Bombardier. The planned IPO of Transportation division in 4th Quarter will raise up to $US 2.5 billion for a 49% sale, but it will most likely impact BBD.B stock negatively, as the trains are 50% of Bombardier’s business, these are desperate times at Bombardier and most Canadians want to see a bright future for this promising company. With 54% of the special voting shares in the hands of the Beaudoin family, new investors are reluctant to be subordinated and a possible hostile takeover is not yet possible. But with the company at a historic crossroad, the possibility of “Combardier” (China’s Comac buying Bombardier), is a real possibility in the next 18-24 months, as this is the only major aircraft OEM the Chinese can possibly buy today, to help them achieve their global aerospace ambitions of being #3 behind Airbus and Boeing, and they are surely watching events in Montreal with great interest.

A week ago (August 14, 2015) I wrote my last blog on Bombardier when its stock price (TSX:BBD.B) was at $C1.46, since then it has dropped to $1.19 on August 19th, followed by a jump to $1.27 in a flurry of 8.17 million trades, as investors were thinking it has reached its bottom, yet without … Continue reading

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

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

MAYDAY ! As if the situation was not bad enough at Bombardier following the Paris Air Show, where NO new orders for any of it’s 3 commercial aircraft were announced, and this week, it’s stock (TSX:BBD.B) hit a 22 year low at $C1.90 per share, down 49.3% in the past 12 months, and down 61.3% in the past 5 years ! another 49% drop and its a “penny stock” (<$C1.00). Meanwhile market capitalization of the company is now at an extremely low $C 4.3 billion for a company with $US 20+ billion in revenue. The latest bad news was that there is a "review" and a 18+ month delay in the new Global G7000/G8000 business jet programs. The Global brand is Bombardier's "cash cow", it is the light at the end of the tunnel today, as it provides the best margins, 60% of business jet revenue, 43% of Bombardier aerospace revenue with just 27% of total aircraft deliveries, trouble there means bigger troubles for the whole company, especially now. The ultra-long range business jet segment is weakening all over the world, new competitors are coming in like the new Gulfstream G500/G600's and Dassault's 8X and 5X, while the current Global G5000/G6000's badly need a "revamp" (e.g. Challenger 300 to 350 and 605 to 650), but everything is on the back burner these days because of the CSeries, a program that has changed the company for the worst, and a program that may yet destroy the company directly or indirectly in the end. Yet they want to stretch it into a 160 seater (CS500) and go toe to toe with Airbus and Boeing in the largest and most contested and price discounted aviation market segment today, the single aisle narrow-body, which will be joined by the Comac C919 and Irkut MC-21 in the next 5 years ? oh boy !

I thought things could not get worst for Bombardier after the Paris Air Show last month, but they have, as investors have seen the share price (TSX:BBD.B) hit a 22 year low last week of $C 1.84 and as of yesterday it closed at $C 1.90 per share as investors sell and lose confidence in … 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 has gone outside the company and family for its new President/CEO, Mr. Alain Bellemare from UTC, his main task has to be the radical turnaround of the $10.49 B a year Aerospace Division, as the $US 3.4 B CSeries program is now $US 5.4 B ! and EIS is NOT until 2016, in 2014 Aerospace lost $995 M, free cash flow was a $ -1.059 B, Commercial Aircraft’s CRJ and Q400 sales slowly fading even with +30% discounts (only 27% of revenue) while business jet orders are down 59% in 2014 from 2013 with a disappointing Order to Bill Ratio of only 0.6 (sold less than it delivered), Business Aircraft has always been strong (72% of revenue) now facing new competing aircraft programs that are going to challenge it’s sacred high margin ‘Cash Cow’ Global brand ($4.5 B in sales on 80 delivered and 43% of total revenue), off course more liquidity is needed to finish the CSeries and Global 7000/8000’s, so $US 2.1 B in new in debt and equity will be raised, while the struggling CSeries order book of 243 units now needs at least 550 orders to break-even, it is time to fix Bombardier Aerospace from the top down and possibly JV with China’s Comac (aka “Combardier”)

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

ABSTRACT: Fast growing Exchange Income Corporation (EIC) of Winnipeg buys its 7th aviation company for $246 million, Provincial Aerospace Ltd. (PAL) and is now the 3rd largest fixed wing commercial aircraft operator in Canada with around 117 aircraft and few have heard of the company, yet it has what we need in Canadian aviation, vision, desire to grow, good leadership and ability to source financing, who said you can’t make money in this industry ? it takes financial experts working closely with experienced aviation executives and letting them do their jobs ! finally a quick look at the Maritime Patrol Market that PAL is in.

Back on January 31, 2013, I wrote a blog entitled “Consolidation through mergers and acquisitions in the Canadian regional airline industry and how to Value them ?”. I introduced the Exchange Income Corporation (EIC) (TSX: EIF) run by Mr. Mike Pyle out of Winnipeg, which today owns 6 aviation companies, 4 are regional airlines in … Continue reading

Bombardier Aerospace is finally reorganizing, 1,800 employees will be laid off on top of the 1,700 laid off in January, last week’s Farnborough Air Show was disappointing with only 5 Q400 orders booked and Embraer’s E2 line launched only 13 months ago has surpassed the 5 years of “Game Changing” CSeries sales efforts by 75 aircraft (278 vs 203), something is seriously wrong in Montreal.

Well, the news out of Bombardier Commercial Aircraft just got worst with the announcement that, Mr. Guy Hackey, CEO/President of Bombardier Aerospace since 2008 will “retire” due to organizational changes, that may see up 1,800 employees laid off on top of the 1,700 laid off in January, the bad situation with the CSeries is terms … Continue reading

This year’s Farnborough Air Show was all about the new Airbus A350 and A330neo and almost everything in the industry looks good, increasing orders, backlogs, airline profits, production, low interest rates and yet several of the regional aircraft manufacturers like Bombardier are struggling to get new orders.

The 2014 Farnborough Air Show is over and once again Airbus and Boeing dominated the show with big deals worth $US 115.5 billion in orders for 697 out of roughly 900 aircraft orders ! for comparison, last year’s Le Bourget Air Show had 1,450 orders worth $295 billion. This year the show was all about … Continue reading