dagger Posted October 14, 2003 Share Posted October 14, 2003 11:32 (Dow Jones) Brazil's Embraer (ERJ) likely to get the Air Canada (ACNAQ) order for regional jets over Bombardier (BBD.B.T.), says Octagon Capital's Jacques Kavafian. Embraer's new jets are better suited to Air Canada's needs than Bombardier's, he says. And Air Canada has already warned that export subsidies give foreign firms a leg up in the bidding - allowing the airline to blame Canadian government policies if Embraer gets the nod. Bombardier downgraded to sell from hold. In Toronto, BBD.B.T. up 1 Canadian cent to C$6.17. In New York, ERJ up 2.3% to $24.63. (MAG) Link to comment Share on other sites More sharing options...
Guest CDB Posted October 14, 2003 Share Posted October 14, 2003 While trying the find the link for Dagger's post I came across this interesting article: http://www.globeinvestor.com/servlet/ArticleNews/story/GAM/20031014/RAIRC14 Link to comment Share on other sites More sharing options...
Super 80 Posted October 14, 2003 Share Posted October 14, 2003 Super 80’s investment advice: When a company in an industry that requires massive R&D spending announces that they are going to "maximize shareholder value" SELL! Bombardier blew it when they abandoned the BRJ project, The CRJ is still just a Challenger on Viagra. The CRJ might look pretty good next to an old Saab or Fokker – but against a real jet built from the ground up it is pretty sad. Link to comment Share on other sites More sharing options...
Guest lupin Posted October 14, 2003 Share Posted October 14, 2003 The export subsidies available to international customers buying CRJs is only a minor set back.If ac wants ,they can buy the airplanes from bombardier from an outside source and get the subsidies. At this point its still early to tell who will get the order.I still think bombardier has the edge but that Air canada is playing the game to get the best deal possible(quite understandable under the circumstances) .Would it really make sense to introduce another aircraft type to the fleet??Jazz is already operating the crj,so is mainline ac,why go to another type unless the crj is to be phased out? Just my thoughs.... Lupin Link to comment Share on other sites More sharing options...
dagger Posted October 14, 2003 Author Share Posted October 14, 2003 It's true that Air Canada wouldn't necessarily want two regional jet fleet types in the future, but the deal can include the return of leased planes to GECAS - which is to finance the next purchase and can remarket the aircraft. Or EMB might do the same. This happens a lot in the industry, particularly in hard times. I remember when Boeing agreed to take eight brand new A340-300s going to Singapore Airlines (they weren't even delivered yet) if SQ would buy the Boeing 777s instead. And it worked! When you think of it, AC's 35 CRJs is not a whole lot of aircraft to remarket, and it screws Bombardier because it puts 35 used aircraft in the market cheap, depressing book resale values and possibly costing Bombardier some new aircraft sales. This is a big order, and this kind of tactics would be anticipated. Link to comment Share on other sites More sharing options...
Guest AME Posted October 14, 2003 Share Posted October 14, 2003 The cost of the aircraft would almost have to be nil in order to off set the expense of converting types... especialy when you consider tooling,spares,training etc... and the fact that it would take probably 12-18 months to convert, the additional 35 CRJs wouldn't have that great of an effect on the market. I'm not saying you're wrong, I'm just saying that it's not as simple as trading in your Ford for a Chev Link to comment Share on other sites More sharing options...
Super 80 Posted October 14, 2003 Share Posted October 14, 2003 Air Canada doesn't own any of the CRJ's, they are all leased. I don't really understand the details of the leasing spinoff from Bombardier to GE Capital, but the bulk if not all the CRJ's are probably owned by GE Capital. And since GE Capital would be likely involved in any new air canada deal, taking back the CRJ's would probably not be a very big issue, there is a CRJ backlog for GE's leasing clients, so they would probably not be a big issue in the grand scheme of things. I believe the deal Air Canada is looking at would be large enough to offset the economics of the existing CRJ fleet. I think the bottom line is simply that Air Canada does not want the CRJ when they can have the Embraer 190 - and I don't think anyone would fault them for that. But the pressure to buy Canadian is certainly an issue, and using the lack of export financing as an excuse is an easy out. Link to comment Share on other sites More sharing options...
Super 80 Posted October 14, 2003 Share Posted October 14, 2003 Air Canada doesn't own any of the CRJ's, they are all leased. I don't really understand the details of the leasing spinoff from Bombardier to GE Capital, but the bulk if not all the CRJ's are probably owned by GE Capital. And since GE Capital would be likely involved in any new air canada deal, taking back the CRJ's would probably not be a very big issue, there is a CRJ backlog for GE's leasing clients, so they would probably not be a big issue in the grand scheme of things. I believe the deal Air Canada is looking at would be large enough to offset the economics of the existing CRJ fleet. I think the bottom line is simply that Air Canada does not want the CRJ when they can have the Embraer 190 - and I don't think anyone would fault them for that. But the pressure to buy Canadian is certainly an issue, and using the lack of export financing as an excuse is an easy out. Link to comment Share on other sites More sharing options...
Super 80 Posted October 14, 2003 Share Posted October 14, 2003 Air Canada doesn't own any of the CRJ's, they are all leased. I don't really understand the details of the leasing spinoff from Bombardier to GE Capital, but the bulk if not all the CRJ's are probably owned by GE Capital. And since GE Capital would be likely involved in any new air canada deal, taking back the CRJ's would probably not be a very big issue, there is a CRJ backlog for GE's leasing clients, so they would probably not be a big issue in the grand scheme of things. I believe the deal Air Canada is looking at would be large enough to offset the economics of the existing CRJ fleet. I think the bottom line is simply that Air Canada does not want the CRJ when they can have the Embraer 190 - and I don't think anyone would fault them for that. But the pressure to buy Canadian is certainly an issue, and using the lack of export financing as an excuse is an easy out. Link to comment Share on other sites More sharing options...
Guest The Clumsy Lover Posted October 14, 2003 Share Posted October 14, 2003 Exactly... The rumour around the vista building on the 9th from RG was that the 318 is the looker right now. Airbus is willing to give some deals with the 340's thrown into the package. This would solve all the millions in costs of tooling up. Most likely smoke and mirrors but from a commonality point of view it makes sense. The fleet plan... 318, 319, 320, 321, 340, 767, 747 (for another year anyway) Link to comment Share on other sites More sharing options...
dagger Posted October 14, 2003 Author Share Posted October 14, 2003 Can you clarify your meaning about a rumor... I presume RG is Robert Giguere, I presume the Vista is that cargo terminal used by international operators mainly. Do you mean you heard Giguere speak of this issue, or is this a case of someone who knows Giguere, told someone who told someone who spread it around the Vista building Link to comment Share on other sites More sharing options...
Guest Kilo Mike Posted October 14, 2003 Share Posted October 14, 2003 Hi Dagger. Yup , yup , yup , nope. That help? KM Link to comment Share on other sites More sharing options...
Guest George Posted October 14, 2003 Share Posted October 14, 2003 Bombardier has the edge?????????????? I would candidly say that out of a four horse race, Bombardier is #4. Do you think anyone would sit in row 30 of a RJ compared to a WJ 737-700? Not likely. If Bombardier wins, you'll know the fix was in with the Feds, 'cause there is no commercial or customer reason to buy the RJs. Link to comment Share on other sites More sharing options...
Guest Gino Under Posted October 14, 2003 Share Posted October 14, 2003 What??? Let a little air outta that ego buddy. ...a Challenger on Viagra? Really? and your total time on the ERJ vs CRJ is??? Link to comment Share on other sites More sharing options...
Guest Gino Under Posted October 14, 2003 Share Posted October 14, 2003 An RJ compared to a B737-700? How tough is that one to figure out? Thank goodness airline management don't buy aeroplanes based on looks and size. You're talking about two completely different aircraft serving completely different RPKs, markets, with completely different cost factors. Where did you come with that 'fix' theory? Not to be insulting but, I suggest you have a look at some literature on the Avro Arrow and the state of aerospace in Canada and why it's where it is today. Heavily subsidized! For my money, I'd go with the BBD CRJs. Say, 700s???? No commercial or customer reason to buy the RJs????? Haven't you noticed the industry is turning into a joke??? LCCs are the new way of doing business. Cheap seats, no service and high frequency. That means RJs. BAE, Embraer, Bombardier, Dornier, Fokker, you name it. It's a new world order, I'd say. The cost of placing the ERJs or B737-700s into service for air chance doesn't make even the remotest ounce of sense at an airline that can barely afford taxi fare from HQ to Dorval. Engines, spares, documentation, training, etc. Are you kidding???? They simply don't have that kind of money to throw around. Sorry to say...but IMHO, Bombardier seem to be the fore runners. Period! Why would air chance throw out all that CRJ Ops experience and Mtce experience? Air Canada are trying to survive and to live to fight another day. I'm surprised that more on this forum don't seem to be interested in their successful return from 'protection'. Especially those who would be interested in finding a flying job when the smoke clears. It will benefit no one to have only one or two carriers in this country. The day that happens we're all fookt I'm afraid. But, what do I know?? Link to comment Share on other sites More sharing options...
Guest lupin Posted October 15, 2003 Share Posted October 15, 2003 who's comparing an rj with a westjet 737?? I think you missed something about this discussion.I don'remember westjet being involved at any point with the air canada selection of a regional aircraft with 70-100 seats Link to comment Share on other sites More sharing options...
Guest lupin Posted October 15, 2003 Share Posted October 15, 2003 the 318 makes very little sense compared with any of the other airplanes.Its almost twice the price of the crj and emb170,and will not result in any substancial savings in gas (specially with a pair of cfm-56 under the wing) Here are the prices heard at the airplane show and tell in yul. crj high 20ies emb170 27 million 717 35 million 318 45 million if anyone has any better figures feel free to share!!these came from the yul line manager Link to comment Share on other sites More sharing options...
Guest Thud Posted October 15, 2003 Share Posted October 15, 2003 Take it from an insider ..... when the elite passengers had the opportunity to "size up" the RJ vs EMB vs B717 vs A318 on Sept 11/03, the answer was a resounding NO WAY to the RJ family. The front-runner is still the EMB product and close behind is the A318. Airbus is making some "tres important" pitches wrt financing and A340 deliveries that may be just too good to refuse. Link to comment Share on other sites More sharing options...
Guest The Clumsy Lover Posted October 15, 2003 Share Posted October 15, 2003 Yes - Rob Giguere Yes - The vista building, he was giving a talk to the troops on the RJ that day. Yes - I heard him say that myself Like I said though, probably smoke and mirors to try and make the boys feel better. I wouldn't trust anything that he has to say in front of a bunch of pilots. In front of a bunch of creditors maybe ... Link to comment Share on other sites More sharing options...
dragon Posted October 15, 2003 Share Posted October 15, 2003 " ...In front of a bunch of creditors maybe ... " or then again, not there either.. Link to comment Share on other sites More sharing options...
Guest George Posted October 15, 2003 Share Posted October 15, 2003 No commercial or customer reason to buy the RJs????? Haven't you noticed the industry is turning into a joke??? LCCs are the new way of doing business. Cheap seats, no service and high frequency. That means RJs. BAE, Embraer, Bombardier, Dornier, Fokker, you name it. It's a new world order, I'd say. Let's see, how many RJs does WJ or Jets Go or Canjet fly????? None?? They all seem to fly 737 or MD80 type aircraft you say? Yeah, I guess those Super Elite pax would love to fly point to point for 2 or 3 hours in the Bombardier RJ... You've been smelling too much Jet A-1, there Mr Mechanic. Link to comment Share on other sites More sharing options...
Guest dwb yyc Posted October 15, 2003 Share Posted October 15, 2003 How about this math. 318's at twice the price of a RG + AC crew at twice the price as Jazz + half full airplanes = bankruptcy protection in 2005. Sounds like the normal math the AC management are have been using for years. Lets hope the equity investors have better calculators. Link to comment Share on other sites More sharing options...
dagger Posted October 15, 2003 Author Share Posted October 15, 2003 In other words, true to form they are discounting the hell out of the aircraft. A list price of $45 million? That's a joke. When AC got its A330s, they were purchased - before being refinanced - at a discount of $40 million per plane off the list price. They basically cut the price to that of a 767-300. It wouldn't shock me for an order this large if AC got an offer like $22 million per A318. This is Airbus style. Combine this and farm subsidies and you get a pretty good idea why taxes are so high in Europe. Link to comment Share on other sites More sharing options...
dagger Posted October 15, 2003 Author Share Posted October 15, 2003 There is no way that an A318 is twice the price of an RJ. Airbus is the biggest discounter in the business. If an RJ-700 is, say, $20 million, you'd be shocked at how little more Airbus will charge for an A318 to get a massive order from the Star Alliance. Plus an A318 has longer range, could take J seating, and with AC now offering Tango and 50% J fares, a larger lower seat mile aircraft on some trunk routes isn't a bad idea. You don't need eight RJ flights between Toronto and Quebec City. Four A318s would be more cost-effective and offer more capacity along with good time of day coverage. But all of this only makes sense if they offload all the CRJs to Jazz to run on the truly regional routes. Link to comment Share on other sites More sharing options...
dragon Posted October 15, 2003 Share Posted October 15, 2003 daggers correct. in addition, airbus makes its REAL money on parts.. any idea how them apples stack up?.. Link to comment Share on other sites More sharing options...
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