C100 At Paris Airshow

[blues deville]

While this may be a great airplane, up until United's recently announced plan to purchase 100 regional jets, it hasn't really caught anyone's interest. Bombardier has completely mis-calculated the cost of developing a new jet and neither Boeing or Airbus are interested investors as they have done their best to shut down any potential sales by improving the 737 and 320 models. Going up against these established plane makers was a huge risk and unfortunately it has not had the desired results. Should the Feds or Quebec gov't bail them out similar to the auto industry? Lots of jobs, technology but no sales?

[Seeker]

We have a federal election in the works, a large Quebec based corporation is in trouble and this is Canada. Is there any reason to expect something different from the Feds here? Would a bailout of BBD now be any different than the corporate bailouts that came on the backs of the taxpayer back in 2009?

Bombardier is playing the game. By going to Airbus, BBD is getting their ducks in a row, crossing the T's so to speak, or paving the way for that nasty Anglophone government to come to the rescue again. I'm wondering how long it's going to be before the labour givebacks begin, which will I think will be necessary before the Feds get involved.

If it was going to be a political football it would have had to happen at least a few weeks before the election otherwise it doesn't get enough play to be worth it.

[Lakelad]

.

Fate of Bombardier Inc’s lone Canadian CSeries order rests on federal election outcome

Fri Oct 16, 2015 - The Canadian Press
Ross Marowits

MONTREAL — The fate of Bombardier Inc’s lone Canadian CSeries order appears to hinge on the results of Monday’s federal election.

Porter Airlines, which placed a conditional order in 2013 for 12 of the 110- to 125-seat planes, hopes to get permission to fly it on a lengthened runway at the Billy Bishop Toronto City Airport.

However, both the Liberals and NDP oppose amending an agreement with the city of Toronto and PortsToronto that would permit jets at the island airport even though CSeries testing suggests it’s the quietest commercial jet in its class that is currently available.

The Conservatives said they would “consider a proposal” from the city and port authority once a formal request is made. It said the government approved a passenger tunnel that was previously scrapped by the Liberals.

“This highly popular airport is a vital economic driver in this city,” a party spokesman said Friday. “Liberals just don’t get it.”

Polls suggest the Liberals hold a slight edge and could form a minority government.

The head of a local community group opposed to jets at the airport believes the proposal is “dead” if either of the opposition parties are victorious.

“If I were Bombardier, I wouldn’t count on those orders,” said CommunityAir chairman Brian Iler.

He said the issue could be resolved quickly if the new government in Ottawa quickly announces its unwillingness to reopen the agreement.

Regardless of the election, PortsToronto said it will continue to work on studies requested by Toronto City Council and deliver them early next year.

Porter wouldn’t comment on the electoral impact on its CSeries order, but Bombardier says it’s not concerned about the order.

“They’re going through the appropriate channels; we’re following the due process and we’ll see what results,” said spokeswoman Marianella de la Barrera.

The potential loss of a Canadian order comes as Bombardier scrambles to find a partner for the aircraft, after approaching Airbus, that helps to address its financial challenges. The company has booked orders and commitments for 603 CSeries aircraft, including 243 firm orders.

Porter’s conditional order is valued at US$870 million, rising to nearly US$2.1 billion if it exercises options for another 18 aircraft.

Bombardier says it is pitching the plane to several airlines around the world, including, reportedly, Air Canada.

Analyst David Tyerman of Canaccord Genuity isn’t counting on Porter getting a hold of the airplane because political developments are difficult to predict.

“What they say now and what they do later could change but obviously (the opposition parties’ positions) would reinforce my view that I cannot count on this order,” he said in an interview.

Montreal-based Bombardier said the commercial aircraft has undergone 90 per cent of the testing required to win certification this year before entering into service in the first half of 2016.
​

[Vsplat]

Looks like a nice aircraft. For the record, I hope it succeeds.

But again with all the financial drama. I look at this saga and all I have are questions.

Questions like: When do we cross the line from helping out it times of need to enabling bad behaviour?

I'm a poor student of history, but it seems to me that there have been some pretty hefty cash infusions into Bombardier in the past via incentives and facilitated purchases. Did they learn from those times? Set achievable goals? Pay their execs appropriately? Protect Canadian jobs? Or did they continue the binge/purge cycle that has been their unfortunate hallmark? How does TC Certification feel about Bombardier's approach? Better, or worse than it was in the RJ/Global Express/DHC-8-400 startups?

My circle of aquaintences is rather small, yet it is astonishing the number of engineers I know who 'used to work at Bombardier' but got hammered during a downturn. Why is that? How will helping this company, this time around change things?

Finally, given the length of time to get a return on an investment this size, is Bombardier healthy enough and oriented properly to support this product? It's not the RJ and I assume they have learned, but if the aircraft sell at fire-sale rates, where will they get the stable cash flow to mount a sustainable customer support program? Are they not already behind the financial power curve?

It is a tough spot, being a Canadian in aviation, wanting our aviation industry to prosper, but also being a taxpayer, tired of buying gas plants that turn out to be more gas than plant....

Over to the smart people with the answers.

Vs

[Guest]

VS: this fits in with your comments.

Bombardier to cut hundreds of jobs at Downsview plant Bombardier’s aerospace division is cutting 1,750 worldwide

Ryan Remiorz / THE CANADIAN PRESS

Bombardier Inc. chief executive Alain Bellemare, left, and Chairman Pierre Beaudoin at the company's annual meeting on May 7. The new CEO Alain told shareholders that layoffs are one of the tools it will apply to cut costs.

By: Vanessa Lu Business reporter, Published on Thu May 14 2015

Almost 500 employees at Bombardier’s Downsview plant will lose their jobs as the aerospace company cuts its workforce by 1,750 due to weak demand for some of its business jets.

About 1,000 of the lost jobs will be in Montreal where Bombardier has its main operations, while 480 are in Toronto and 280 are in Belfast.

The cuts will begin in June and continue until the first quarter of 2016.

Bombardier says it’s reducing production of its Global 5000 and Global 6000 aircraft, the largest of its business jets, to reflect weakening demand especially in markets such as Latin America, China and Russia.

The president of its business aircraft division, Eric Martil, said demand has been soft across the industry.

“Despite this short-term softness in international markets, we are well positioned to be the market share leader in the segments where we compete,” Martel said in a statement.

Last week, when Bombardier reported its first-quarter earnings it hinted that another round of cost-cutting was coming to adjust to weaker demand for business jets and warned layoffs were likely in Toronto and Montreal.

About 4,500 workers work at the Toronto assembly facility and Montreal completion centre.

Desjardins Capital Markets analyst Benoit Poirier pointed out in a note to investors that Bombardier has reduced its aerospace and support function workforce globally by at least 4,550 employees since July 2014. Bombardier aerospace currently employs 34,100 around the world.

“Overall, we see this announcement as positive as it reflects the new management’s proactive initiatives toward making the hard decisions to turn the story around,” Poirier wrote.

He was referring to new CEO Alain Bellemare, appointed in February, who said last week that reducing the company cost structure was a priority to increase flexibility in this changing market environment.

Bombardier has been weighed down by the costs of developing the CSeries jets, which seat between 100 to 160 passengers, now pegged at $5.4 billion (U.S.), up from the original $3.4 billion price tag.

The company has had to do both a debt and equity offering, and now plans to sell a minority stake in its train division, known as Bombardier Transportation.

The first CSeries is now expected to be delivered in early 2016 to Swiss International Air Lines, which will be the launch customer, though Bombardier is still hoping to win certification later this year.

It is taking both versions of the CSeries jets to the Paris air show next month, where it desperately needs to win more orders.

In the first quarter of the year ended March 31, Bombardier saw its profits fall 13 per cent to $100 million, or 5 cents per share.

On Wednesday, Ontario agency Metrolinx revealed that its LRV test models are about a year behind schedule due to production problems with Bombardier.

The problem with the Metrolinx cars, reported the Star’s Tess Kalinowski, is the same as that described this week by frustrated TTC CEO Andy Byford.

The first of the 204 new streetcars were so flawed that the TTC couldn’t risk putting them into service because they would almost certainly break down. Defective laminate, loose screws and faulty electrical connectors are among the issues on the new TTC vehicles.

​

[rudder]

There is a much larger macro issue going on here.

The facts are that BBD is going to run out of cash. CCAA is not an option as it will wipe out the Beaudoin family stock holdings (and wealth). Therefore, a balance sheet adjustment is imperative. It is unlikely that BBD will find a risk partner in the aerospace industry to complete the C-series development and production.

Therefore, sources of capital are likely restricted to traditional equity partners (Caisse) or from asset sales. BBD turned down an offer for the rail division. They may have to revisit that decision if no other options present themselves. Potential problem is that some of the aerospace debt may be cross collateralized. A rail sale may not be a viable option. Alternatively, the Caisse will no longer tolerate the 'super majority' status of the Beaudoin family stock holdings. It is that particular arrangement that has put the company in the very position that it finds itself today. As a result, any capital infusion from the Caisse will be conditional on that particular clause being diluted or removed.

Finally, the C-series order book. BBD needs a major North American order (think 100 aircraft on a 50 firm/50 option basis). Potential customers are United, JetBlue, and AC. It does not appear realistic that AC will need 100 aircraft in the 110-130 seat category given the Boeing MAX order. That leaves UA and JB. These are companies that are accustomed to getting 25-50% off list for large volume firm orders from Boeing and Airbus (and in the case of JB a huge discount for the E190's as an initial large volume launch customer). Unfortunately, BBD is a company that is accustomed to offering maximum 10% discounts based on its current aerospace product line. Furthermore, nobody is going to risk a commercial fleet plan that spans 10-15 years on a product that may be subject to manufacturer insolvency (think Fokker). The risk based pricing would have to be on obscenely favourable terms.

So, there is a staring contest going on between the Beaudoin family, the BBD BOD, the Caisse, and potential North American customers. Somebody will have to blink. My guess is that it will be the Beaudoin family. What other choice do they have?

There will be many more interesting developments to come. An AC order for 25/25 is not out of the question. But BBD will have to eat the remaining 20 E190's.

[Seeker]

There will be many more interesting developments to come. An AC order for 25/25 is not out of the question. But BBD will have to eat the remaining 20 E190's.

A small correction - Boeing is taking 20 of the 190s and 25 will remain in the AC fleet.

[rudder]

Thx.

[Super 80]

Finally, the C-series order book. BBD needs a major North American order (think 100 aircraft on a 50 firm/50 option basis). Potential customers are United, JetBlue, and AC. It does not appear realistic that AC will need 100 aircraft in the 110-130 seat category given the Boeing MAX order. That leaves UA and JB. These are companies that are accustomed to getting 25-50% off list for large volume firm orders from Boeing and Airbus (and in the case of JB a huge discount for the E190's as an initial large volume launch customer).

JetBlue is interested in the C Series but is looking for the same deal Air Canada was looking for, they want their thirty owned E190's to go away more or less immediately and the rest to go away as the leases expire.

Airbus and Bombardier aren't quite as open to horse-trading other OEM's aircraft as Boeing is.

I continue to believe the C Series will get some political orders from US airlines seeking to remind Boeing and Airbus not to take them for granted. All it took for Delta to get the 767-400ER they had been begging for was an order for nine Airbus A310's.

[dagger]

One order for the CSeries that might be in grave danger is the Porter order. Not that delivery would have occurred any time soon, since extending the Toronto Island runway would take until 2019, but Liberal MP and likely minister Adam Vaughan is saying that jets flying off YTZ is not in the cards.

[Super 80]

Adam Vaughn says a lot of things.

If that clown gets into cabinet it will be as the Honourable Minister for the status of people who identify as elves, wearwolves, vampires and ponies.

[J.O.]

You may disagree with him but he did win the right to advocate for the interests of his constituents and there was no secret as to his views on the matter. Please, try to keep the personal attacks to a minimum. The election is over and they add nothing of value to the discussion.

[Homerun]

Is Porter's order firm? I don't think it is, so it won't be included with the rest of the 235? or so firm (mostly questionable) orders.

[rudder]

Porter/Deluce fantasy about jets at the island is dead. It was unlikely to get past city council and now will never get past the new federal government. Porter was aligned with the party that is relegated to dusting off the benches on the opposite side of the house and that will be neutered for the next 4-5 years. Live by the sword - die by the sword.

I certainly hope that if Porter was sincere in their desire to operate the C-series aircraft that they have a Plan B. My guess is that they do not.

The good news is that the viability of the C-series program was not dependant upon the Porter highly conditional Letter of Intent. It is time to move on from this ridiculous debate. CYTZ will remain open as a turboprop only facility. And hopefully the new federal government will revisit the slot allocation policy as well with a view to some modicum of fairness.

Porter's world may end up turned upside down.

[DEFCON]

But then, no one can say for certain where the politics will take the issue down the road and that's largely because the substance of real relationships, honour, loyalty and true friendship aren't commodities that can be easily found amongst the thugs we elect.

[Super 80]

You may disagree with him but he did win the right to advocate for the interests of his constituents and there was no secret as to his views on the matter. Please, try to keep the personal attacks to a minimum. The election is over and they add nothing of value to the discussion.

This man has done nothing in his public life that suggests he should be taken seriously, on any subject.

[Guest]

Will they be able to withstand such a drain on their finances?

Bombardier Inc will lose US$32M for each CSeries built in 2016-17: analysis

‎Today, ‎October ‎26, ‎2015, ‏‎17 minutes ago | Kristine Owram

Bombardier Inc. will lose US$32 million on each of the first 50 CSeries aircraft it builds, meaning the program will continue to bleed billions of dollars through at least 2018, according to a new analysis by U.S. aviation consultancy Leeham Co.

It’s normal for an aircraft manufacturer to lose money on the first several planes it builds, as production costs are highest at the beginning of a program and an all-new aircraft such as the CSeries is often priced aggressively to lure customers.

However, Bombardier lost control of the program’s timing, meaning it’s now stuck dealing with high costs at a time of weakening revenues.

“Developing new aircraft has several challenges,” consultant Bjorn Fehrm wrote in the Leeham analysis.

“One of the major ones is the economic management and timing of the cash flows that an aircraft program causes.”

• Bombardier’s initial plan was to spend US$3.5 billion on developing the CSeries between 2008 and 2013, but the budget has ballooned to at least US$5.4 billion and the aircraft is now expected to enter service in 2016 — almost three years later than originally scheduled.

The company was relying on cash flow from its business aircraft division, particularly the high-margin Global 5000 and 6000 ultra-long-range jets, to offset the initial costs of developing the CSeries.

However, the delays mean the CSeries is now set to ramp up production just as the Global 5000 and 6000 are under growing competitive pressure and the new Global 7000 and 8000 — also delayed — are still under development.

“On top of this, the business jet market went soft during 2015 due to changes in several important markets like China and Russia,” Fehrm wrote.

Assuming that Bombardier is able to produce a maximum of 50 aircraft during the first two years, Fehrm estimated that the company will lose $32 million per aircraft, or a total of US$1.6 billion, in 2016 and 2017.

This comes while Bombardier will still be putting the finishing touches on the larger CS300 version of the aircraft, meaning the program as a whole will burn through about US$1 billion of cash in both 2016 and 2017, he added. That number will shrink slightly to US$700 million in 2018.

Bombardier had US$9 billion in long-term debt at the end of the second quarter and US$3.1 billion of cash and cash equivalents, leading many analysts to predict that it will need to raise more money by next year.

However, downgrades by bond-rating agencies have made it more expensive for Bombardier to borrow, while the battered stock price — down 64 per cent this year — would make an equity offer unattractive.

Meanwhile, sales of the jetliner have stalled at 243 firm orders, well short of the company’s 300-order target by the time the CSeries is delivered to its first customer next year.

Fehrm recently did a similar analysis of Boeing Co.’s 787 Dreamliner and predicted that the company will never make a profit on the jet when the costs of its development and production are factored in.

kowram@nationalpost.com

[MD2]

rudder,

I trust you have had an opportunity to read the replies to your comments on the other thread. You seem to adopt a very partisan view and assume sinister intentions for Porter, however you will find people in business are generally very pragmatic.

J.O.

Hopefully you see the difference between Adam Vaughan advocating for his positions, which he has been for over a decade, and single-handedly declaring an end to a democratic process which the city council adopted. A council in which he was a member himself!

[DEFCON]

Is there any possibility that Boeing could consider purchasing the program for dimes on the dollar and have the aircraft relabelled as the new Boeing '797'?

[MD2]

DEFCON, that is doubtful.

More than likely they just want a partnership that would benefit both parties but leaves them in control. They probably do want some more liquidity, but not that badly as there are other options. C series aircraft is reminiscent of the Avro Arrow project: revolutionary technology ahead of its time. It is unlikely political bruised ego of competitors can bring similar fate again!

[QFE]

Quebec to the rescue.

Announcement Thursday.

[Maverick]

Quebec to the rescue.

Announcement Thursday.

While I do not condone the principle of corporate bailouts I think in this case the feds have to do so. Unlike the banks there will be a tangible affect on employment.

Bombardier, for all its warts is still a world class company that is the #3 commercial producer of airliners. Do we want to throw that out?

There is also the not so insignificant possibility that they will be building the Dassault Rafale for Canada after the F-35 gets cancelled.

[Lakelad]

Quebec to the rescue.

Bombardier to book major charges, outline aid from Quebec: sources

Wed Oct. 28, 2015 - Globe & Mail

Andrea Shalal And Allison Lampert

Canada’s Bombardier is set to book a writedown on its C Series program and announce that the government of Quebec will be investing in the narrow-body jet program, according to several sources familiar with the matter.

The embattled Montreal-based company will also permanently mothball its Learjet 85 program, the sources said.

Bombardier, which has been looking at a wide range of options to help it fund its long-overdue and over-budget C Series jet program, will form a joint venture with the Quebec government on the C Series, said the sources, who asked not to be named as they were not authorized to discuss the matter.

To form a joint-venture, Bombardier will write down billions of dollars it has already sunk into the C Series, said the sources. If a deal is reached, the government would be on the hook to fund half the final development costs on the new jet, which is slated to enter service next year.

'That would mean Quebec would potentially front up to $1-billion or more in order to fulfill its side of the deal.'

.

[rudder]

While I do not condone the principle of corporate bailouts I think in this case the feds have to do so. Unlike the banks there will be a tangible affect on employment.

Bombardier, for all its warts is still a world class company that is the #3 commercial producer of airliners. Do we want to throw that out?

There is also the not so insignificant possibility that they will be building the Dassault Rafale for Canada after the F-35 gets cancelled.

I would be surprised if the feds touch this (even the Trudeau government).

While the govt of Quebec may be comfortable providing tax payers dollars to support a company with lopsided shareholder voting rights, the Caisse would not and the same will likely hold true for Ottawa.

The vast majority of the C-series production benefits flow to QC so it seems logical that it is Quebec tax dollars that are being provided to BBD.

[conehead]

There is also the not so insignificant possibility that they will be building the Dassault Rafale for Canada after the F-35 gets cancelled.

Yes, in the 1960's, Canadair manufactured 340 F-104's in Montreal, under licence from Lockheed. Lots of good jobs there.