Bombardier offers majority stake in C Series to Airbus

[twochai]

The Canadian press reports that Bombardier has offered a majority stake in the C Series programme to Airbus:

Bombardier pitched majority CSeries stake to Airbus: report - Business - CBC News

[peekay4]

Well there was a report last week suggesting Bombardier will need a huge infusion of cash next year, much earlier than thought.

And that their plans to IPO their rail business this fall won't come even close to covering their financial shortfall.

So basically, they are in a fight for survival at this point.

[striker26]

A few other forums point out this desperation of Bombardier. The C-Series is a fail, ill say it again, not an airplane that fits the market, nor allows Bombardier any future potential. This has nothing to do with "being Canadian" and support our companies, it has to do with dumb vision. I heard on the radio this morning from an industry analyst Airbus shrugged off the offer, im sure their scratching their heads...if im Airbus, why settle to compromise any a320 sales, let them sink. #Embraer

[er340790]

Personally, I don't think the CSeries is going to be sold to any interested foreign party anytime soon. Rarely is it mentioned the mega bucks Bombardier will receive when the Global Express jets and Challenger corporate aeroplanes are delivered to operators like Vistajet, Net Jets, TAG, etc.. Those sales from two and three years ago provide a sizeable income for Bombardier at present so, try not to focus on one number. Take in the complete picture.
Like Airbus and the A380, whose total sales sit at 317 and are not likely to increase much further. I wonder what the break even is for that program? The CSeries sits at 243 and it hasn't even been certified yet.

Willie Everlearn???

No, you know, I don't think he ever will...

[twochai]

The C-Series is a fail

Don't be so certain. At the time of first flight of the prototype CRJ in 1991 Bombardier had one firm order (from LH) for thirteen aircraft. They are now closing on 2,000 units produced as the CRJ created a new segment by filling a hole in the market.

The same will happen with the C Series - it will fill a significant gap between 100 seats and 150 seats.

[Torquelink]

The same will happen with the C Series - it will fill a significant gap between 100 seats and 150 seats.

100 - 130 seats will be fought over by Bombardier with the CRJ1000, CS100 and CS300, by Embraer with the E190-E2 and E195-E2, Mitsubishi with the MRJ90 and, eventually, MRJ100, and Sukhoi with the SSJ100. From 130 seats up there's the Airbus A319neo and Boeing 737-7MAX. There is no gap. Airbus were stringing Bombardier along and now know everything they need to know about the C Series. The C Series is, technically, a fine aircraft but Bombardier will never be able to compete on price with Airbus or Boeing. Already deals are being done where the A320 - never mind the A319 - is being priced less than the C Series.

If they'd launched a "CS500" variant with 150 two class seats from day one they might have picked up some volume orders and gained economies of scale but it's too late now.

[Rwy in Sight]

If they'd launched a "CS500" variant with 150 two class seats from day one they might have picked up some volume orders and gained economies of scale but it's too late now

Would it be technically feasible to make such an aircraft or it would be too long? Also I feel the combination A321/320 seems more attractive than the product line you describe.

[FLEXJET]

The potential issue I see with Bombardier is the reduced cash flow and a growing debt due to:
the failure of the Learjet 85, the two-years delay of the 7000/8000, the smaller amount of Global 5000/6000 orders, the rather slow sales progress of the Learjet 70/75 and overall the high cost of the CSeries program, with, to date, no new orders in 2015.

Probably nothing lethal in the short term but still worrisome.

[ExDubai]

Cashflow is the name of the problem. Bombardier burned to much money on different playgrounds. The Company is a perfect takeover candidate. China is looking to strengthen their Aviation industrie....

[D Bru]

Bombardier to have a close look at Fokker history

Excellent planes at the time, lost view of real competition and market, no real means to invest, too late too little. That was Fokker and it could be Bombardier aviation too.... I hope not

[striker26]

yup, and just to add about the CRJ having 1 order back in the 90's, well that's right it was the 90's. The CRJ was a huge success because the market demanded an alternative to short haul routes that didn't require high seat capacities. If it wasn't for the Q400 and rail, this company would be under already. I really hope they don't sell to a foreigner but Bombardier needs some serious downsizing.

[Longtimer]

And then there was lot of Canadian Taxpayer $$$ that also helped. But let's not forget they are not just aircraft and seem to be successful in selling their trains.

[ettore]

No deal

Fyi

Bombardier, Airbus Say Talks Over ‘Business Opportunities’ Have Ended

Bombardier, Airbus Say Talks Over ‘Business Opportunities’ Have Ended
Companies confirmed they were exploring strategic initiatives but didn’t provide details
By Ben Dummett
Updated Oct. 7, 2015 1:01 a.m. ET

Source : The Wall Street Journal

[peekay4]

Don't be so certain. At the time of first flight of the prototype CRJ in 1991 Bombardier had one firm order (from LH) for thirteen aircraft. They are now closing on 2,000 units produced as the CRJ created a new segment by filling a hole in the market.

The same will happen with the C Series - it will fill a significant gap between 100 seats and 150 seats.

One of Bombardier's problems focusing on the C Series is that they've effectively neglected the CRJ, conceding the regional market to Embraer and newcomer Mitsubishi.

In fact, Bombardier is likely losing money on both the CRJ and Q400 at current manufacturing levels, according to Bank of Montreal analysis. Firm orders mean nothing if they are selling at a loss!

Bombardier has talked about "re-investing" in the regional market, but frankly: 1) they don't have the money; 2) at this point, that might be throwing good money after bad. They might need drastic restructuring instead.

Bombardier created the C Series with an economic assumption of oil at $150/barrel. It's now at $50/barrel and could stay near this level for years.

Is Bombardier dead? No, but they're not likely to survive unscathed.

[Lonewolf_50]

Originally Posted by peekay4

In fact, Bombardier is likely losing money on both the CRJ and Q400 at current manufacturing levels, according to Bank of Montreal analysis. Firm orders mean nothing if they are selling at a loss!

Unless you can recover with various service and support contracts in the longer term ... but as I have no idea what the strategic planning at Bombardier looks like ...

[_Phoenix]

That was Fokker and it could be Bombardier aviation too.... I hope not
I really hope they don't sell to a foreigner

Fokker history was different, they invested in a smaller version: F-100 sales were good, then Fokker begun development of the Fokker 70, a smaller version of the F100. But sales of the F70 were below expectations and the F100 had strong competition from Boeing and Airbus.
But today, Boeing and Airbus have tons of orders (over 4100 of A319 to A321). Their real fear is that the waiting line for delivery is too long then some costumers might have a closer look to Bombardier offer, because the numbers ($$) do not lie:
Airbus A319neo: First Flight 2015. seats 144, Fuel efficiency per seat 2.04 L/100 km (115 mpg-US)
Boeing 737 MAX 7: First Flight (?) 2017, seats 144, Fuel efficiency per seat(?) 2.04 L/100 km (115 mpg-US)
Bombardier CSeries 100: First Flight 2013, seats 115, Fuel efficiency per seat 2.14 L/100 km (110 mpg-US)
Bombardier CSeries 300: First Flight 2015, seats 140, Fuel efficiency per seat 1.92 L/100 km (123 mpg-US)
Hang on Bombardier for another 4-6 months and you'll get the big slice of pie!

[peekay4]

The big problem with that _Phoenix, as discussed in another thread, at current oil prices the competition for CSeries is not only from the new MAX/neo but from older leases:

Bombardier Inc?s CSeries a tough sell as cheap oil revives used jet market | Financial Post

You're just not going to save enough $$$ from fuel efficiency to justify the total cost.

For many operators (especially if they already operate smaller craft from brand "A" or "B") the ROI for the CSeries is a very tough sell today vs. when oil was approaching $150/barrel.

[_Phoenix]

Peekay4,

Oil barrel price spikes should not influence too much the investment in an airplane, especially if that airplane beats the brochure. In my opinion is just matter of time and money turn back at long term

[Grizzz]

Bombardier has been divesting itself of many divisions for quite awhile, so nothing really new about this tact. The company has had losses on many fronts and splitting off divisions (Bombardier recreational products aka BRP, sea-doo, ski-doo, can-am etc) and the light rail division has been in flux for years (big chunk sold to SNC Lavalin, one of the worst corporate entities in Canada). The current atmosphere in Canadian political circles is to stop subsidies to business regardless of who and where, something A & B get to capitalize on in their respective operations. Federal election in less than 2 weeks here may change some of these options going forward, but I suppose most political options will be somewhat afraid of corporate subsidies, given the new pacific rim trade agreement and the anti-protectionist mechanisms sure to be a part of it. CS is a calculated gamble and i for one hope it succeeds, albeit without government parachutes.

[West Coast]

One of Bombardier's problems focusing on the C Series is that they've effectively neglected the CRJ, conceding the regional market to Embraer and newcomer Mitsubishi.

They've ceded the upper end of the market, 70-76 seats. In other words the one artificially limited by scope in many of the larger markets.
SkyWest has made no bones about it that refleeting is a priority. They've also made it clear that the 50 seat market isn't as dead as others have predicted. This evidenced by them pulling cheap 50 seat CRJ-200s out of the desert.

Not implying BA is going to build more CRJ 50 seaters, but that replacement is going to have to come from somewhere. Where I don't think is the solution will be larger aircraft with lesser frequency as predicted, though it will be a player.

Maybe a new new NG Q?