Quebecois nepotism

This tag is associated with 5 posts

SUMMARY: Bombardier’s rise to become the 3rd largest Commercial Aircraft manufacturer in the world, was due to 4 acquisitions between 1986 and 1992 (1986-Canadair, 1989-Shorts Brothers, 1990-Learjet and 1992-de Havilland), with all but one using billions of Canadian and UK taxpayers money and lots of political help (aka cronyism) to make it happen. The story behind the acquisition headlines, with their give away low acquisition costs, billions in written off aircraft programs, state subsidies and hidden airports that were later sold at big profits, all kept from public eyes. Bombardier’s current product line is 30+ years old, with the 1980’s Challenger CL-600 business jet (now Challenger 650 still in production) from which a family of CRJ regional jet airliners came from, while the early 1980’s 37 passenger DHC-8 is still produced as the 90 passenger Q400. The CSeries is Bombardier first new commercial airliner since it entered the aerospace industry 30 years ago in 6 short years. Contrary to Bombardier’s PR BS, Bombardier is definitely NOT an innovator, just excellent at low risk, low development programs that just stretched existing aircraft, like 12 passenger Challenger CL-600 business jet into the 104 passenger CRJ1000 and the DHC-8-100 into the high density 90 passenger Q400. Attached to the bottom of this article is an paper entitled “The Rise and Fall of Bombardier” and how Bombardier REALLY become an Aerospace power house. The CSeries program is still suffering, Air Canada was enticed to buy by Quebec dropping a long disputed lawsuit against Air Canada and Ottawa offered changes to some legislation, only last weak Air Canada threatened to walk away from the deal as Ottawa had not moved on the legislative changes, and even stated the obvious that “there are other alternatives other than the CSeries”, proving it bought not because it was an aircraft it had to have or needed, but because it was politically coerced to make a deal in crony capitalist Quebec, where politicians and big business are all in bed together to screw Canadian taxpayers, and enrich a few. Meanwhile, the 75 x CS100 Delta Air Lines deal was good for an order WIN, yet the deal is expected to lose $525 million ($7 million per aircraft), and is nothing but a money LOSER deal. Is this the ONLY way Bombardier can sell the CSeries ? through political coercian or selling below cost ? if so then the game will be over soon for the program. But why is the stock up from February’s $0.77 a share ? business deliveries will be off by 25% this year, the Q400 is down to 42 orders in backlog and dying while the CRJ line has 86 in backlog (with 23 x CRJ1000 questionable) and dying as well, high end Global business jet demand is down, while the CSeries even with the Delta and Air Canada deals has only 330 orders (with +25% of existing orders HIGHLY questionable) after 8 years of sales effort ? and with all existing orders currently at a loss, loses are expected well into 2021. Bombardier the world’s only plane and train manufacturer can’t deliver trains on time ! so NO reason to be optimistic, other than the fact Bombardier looks set to DUMP the Cseries program on naive Canadian taxpayers for $2.0 billion for a 2/3 ownership, and raise another $1.0 billion in new stock offering for the new partnership called CSeries Aircraft Limited Partnership (CSALP). Bombardier failed to find a buyer last fall for the CSeries, but now thanks to crony capitalism in Canada, Canadian taxpayers have been suckered into owning the program that NO other aerospace company wanted 9 months ago. Bombardier will get the program off its books and collect $3.0 billion in new capital after writing off $3.2 billion in the CSeries program in 2015. Now the program will be a Canadian government program, and will draw fire from the WTO and the US for state aid, illegal and prohibited subsidies and price dumping, the saga is just beginning and no light at the end of the tunnel for the CSeries.

To my regular readers, I apologize for not writing in the past 6 weeks, been busy with several airline projects in the developing world, but I am back and still not seeing anything positive about the CSeries. Let’s see if Farnborough International Airshow (June 11-17) has anything new from Bombardier, other than the announcement of … Continue reading


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

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


UPDATE: Bombardier could not sell/dump the CSeries program to Airbus, Boeing or Embraer last year, but it has found a buyer (aka sucker) in the Province of Quebec and most likely the Canadian Federal Government. The two Governments will together invest (aka “throwing taxpayers money out the window”) $C 2.0 billion for what the Prime Minister naively calls a “superlative” (unrivaled/marvelous) aircraft ? that for all it’s acclaim of “game changing” greatness has only 243 orders since 2009 of which 100+ are “dubious” orders from questionable customers that will most likely not happen. If the CSeries is so “great”, why are airlines not buying it ? yet buying the new Embraer E2’s at a much faster rate ? The CSeries is positioned in the 100-150 seat market segment, which has been in a steady decline for the past 9 years now, and had only 53 deliveries last year by 3 OEM’s. This latest call for government assistance is the 51st request by Bombardier since 1966 which can only be called “corporate welfare” or “crony capitalism”, yet Bombardier is still 54% controlled by 2 families with only 13% of the shares, and no interest to put in more money into their own struggling company or willing to lose majority control, yet one of their own, Executive Chairman Pierre Beaudoin, mismanaged the company so badly and wiped away billions of dollars of investors money as the stock value plummeted and billions in corporate net losses accumulated since taking the helm in June, 2008. But thanks to Canadian taxpayers the company and it’s owners will be saved for a little longer as the CSeries will be put into a new limited partnership with its own CEO/President, which will shelter Bombardier financials from the eventual collapse of the program, a great set up for Bombardier, and a major rip off for Canadian taxpayers, again. A better solution would be to take the $2 billion and buy shares in Bombardier directly, which today would get you 1.739 billion ‘B’ shares or 91% of all outstanding ‘B’ shares, at least taxpayers would have a majority ownership in the total Bombardier business which is better than owning the eventual “orphaned” CSeries program, and have nothing to show for it in the end. The current 100 to 150 seat market’s low demand and low pricing (United got $23 million per B737-700 recently) cannot profitably sustain all the players, from Bombardier’s new CS100/300 the Boeing B737-Max7, Airbus A319neo and the Embraer E190/195-E2’s, so who will be the loser ? The Canadian taxpayer off course ! The Bombardier forecast of 7,000 units over 20 years is total BS, garbage in, garbage out as in the last 10 years, only 1,879 deliveries were made in this segment (188 per year average) by 3 OEM’s, now there are 4 OEM’s in this segment with price discounts off list price +50% being the new normal, as Airbus and Boeing are determined to crush Bombardier’s entry into their ‘turf’. Bombardier’s 104 seat CRJ-1000 should be a RED Flag on this market segment, 6 years into the program and only 70 orders (now less with some cancellations) and only 45 deliveries and a very low backlog, with a $243 million write off last year in anticipation that it’s days are soon over. There is a disaster in the making, as very LOW DEMAND combined with very LOW PRICES equals very low or non existing PROFIT MARGINS for Bombardier, which it cannot afford as it will be totally dependent on the CSeries in a few years as its own CRJ and Q400 line are both in the declining stage of their life cycle. I am convinced Bombardier knows the program is a dead end, and that is why they tried to sell it in October, 2015 only 1 month before Canadian Type Certification, does that makes sense anyway ? Now what airline wants to buy an aircraft which has a 25 year life from an OEM that only 5 months was looking to dump it on anyone ?

I expect the Canadian government to give into Quebec’s pressures and provide Bombardier with a bail out of $1.0 billion for a 1/3 share in the CSeries program, joining Quebec which has already committed to invest $1.0 billion into the program , that many experts, including myself believe will fail miserably. This money will be … 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 Aerospace is changing its top management for the better and hopefully mediocrity within it’s ranks is on its way out at all levels, new CEO Alain Bellemare has ditched his President of Commercial Aircraft, Mike Arcamone and replaced him with Fred Cromer (ex-President of ILFC) while Swiss Global Air Lines will be the CSeries launch customer in 3Q/2016. The CSeries still has many issues ahead, flight testing schedule will change, entry into service (EIS), deep price discounting by Boeing and Airbus (40% to +50%). A major slow down in demand for business jets in China and Russia spells trouble for the Global brand, while Russia’s IFC is reviewing its order for 32 CS300’s and another 75 orders are highly questionable (in fact 44% of orders are questionable), just as more CSeries orders are badly needed, especially a BIG North American customer. Future of Learjet is up in the air, as some big changes are a must for restructuring the company, as stock price languishes below CAD$ 3.00 since February 10th and compared against it’s peers Bombardier financial performance is very poor, how long will it remain the world’s only manufacturer of trains and planes ? The good news is that there is change, and with that comes hope for everyone, new people bring new ideas, new enthusiasm and new energy, Bombardier for too long did the same things over and over again, expecting different results and off course failed to produce different results, now I see a some light at the end of the dark tunnel for Bombardier Aerospace, in the end success in business is ALL about having the right people in the right positions !

For the regular readers of my Blog, you know that I have been very critical of Bombardier Aerospace for some time, and I do take pride in the fact that I believe I was spot on for calling for BIG changes at the top. Back on January 20, 2015, I was the first to call … Continue reading