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Embraer

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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: 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

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 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

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

The US regional airline industry is changing, only 3 BIG Majors left who use regional airlines, and now at least 584 small 50 seat RJ’s are on their way out to be replaced by up to 346 larger 76 seat RJ’s coming in (1.7 : 1.0 ratio) and that means the total US regional airline fleet is heading for a 14% decline of around 238 RJ’s, and can all of the 8 US regional “airlines” survive the changes ? and what is going to happen to all those 50 seat RJ’s ?

It is time to take a good and serious look at the US regional airlines and the “small” 37 to 50 seat regional jet market (Bombardier’s CRJ line and Embraer’s ERJ line), globally numbers 1,445 active aircraft, of which 1,054 (73% of global fleet) are operated by 8 US regional airlines for 4 mainline US … 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