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COMAC

This tag is associated with 6 posts

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

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

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

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

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

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

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

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