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Canada The great white north. A BIG country with few people and LOTS of aviation.

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Old 17th Feb 2016, 14:30   #81 (permalink)
 
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Great timing!!

Interestingly AC plans to fly 737MAX-8 and -9s and the CS300...
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Old 17th Feb 2016, 14:40   #82 (permalink)
 
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Great timing!!
Indeed...... I've just heard that the Quebec Government dropped today their legal case against Air Canada for moving their heavy maintenance out of Montreal. According to one of my colleagues it was part of the Air Canada privatization act that the heavy maintenance had to be kept in Montreal and Winnipeg.

Last edited by ExDubai; 17th Feb 2016 at 15:01.
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Old 17th Feb 2016, 14:42   #83 (permalink)
 
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Well the other shoe dropped...

Bombardier misses expectations, will layoff 7,000 staff, announces reverse stock-split, reduces 2016 estimates.

Excerpts from CBC:
Quote:
Bombardier to cut up to 7,000 jobs over 2 years

Montreal-based Bombardier plans to cut its workforce by up to 7,000 people even as the airline has finally signed a deal to sell its CSeries jets to a major North American airline.

Bombardier said Wednesday up to 2,000 of the total cuts will be contractors. Most of the job losses will be in Canada and Europe and be partly offset by hiring in certain areas, such as its new CSeries aircraft program.

Bombardier also announced plans to consolidate its shares, which have sold off heavily on the TSX since the start of 2015 as CSeries delays began to mount.

But under Bombardier's new proposal to shareholders, the company will do a reverse stock split that will consolidate shares and put the individual price of each one to between $10 and $20.
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Old 17th Feb 2016, 14:45   #84 (permalink)
 
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A source told me today there were many back door meetings with the provincial and federal governments. Im sure some type of subsidy was given to Bombardier to reduce the price of its CSeries to AC even further, its not the way any company should run, more like a band-aid solution.
Dead right. If, as the Govt seems to believe, AC is a NATIONALISED INDUSTRY then such 'Flagship' orders are understandable. Still bad, but understandable.

But, legally, AC is not. Consequently AC's private shareholders should be screaming bly murder at this aircraft being foisted upon them by Mr. Hopey Changey Trudeau and his merry gang. They could start with a class action suit for any consequential losses that arise from operating this unwanted ugly duckling of an aircraft.

The only real solution....? Well, Concorde was effectively given away to BA and Air France to operate. It's going to take something close to that for a supposedly commercial operation to sign on the dotted line. The truth will eventually emerge one way or another.
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Old 17th Feb 2016, 15:22   #85 (permalink)
 
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From my point of view Air Canada did a great job. The price pressure was on the BBD side. I assume Air Canada made a real bargain. They got rid of that legal case with the Quebec Government which they would have lost and I bet that "Mr. Trudeau and his merry gang" listen now much more to the Air Canada requirements then to the Emirates requirements.

So, well done Air Canada

Last edited by ExDubai; 17th Feb 2016 at 16:55.
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Old 17th Feb 2016, 16:44   #86 (permalink)
 
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Yes I think Air Canada will end up ok.

Note that the announcement is for a Letter of Intent (LOI). There are no firm orders yet at this stage. We don't know what conditions are attached to the LOI.

I'm sure Air Canada will insist on many concessions / guarantees from Bombardier and/or the government before converting the LOI to actual orders.

Another aspect is that reports say AC will use the CS300 on routes currently served by E190s. So that's rather puzzling in terms of size, range and cost.

Even if they end up converting many of the orders to the smaller CS100s they must be getting a really good deal from Bombardier to operate the CSeries on pure regional jet routes.

Another sobering thought is that Bombardier needs roughly 70 more deals of this size just to make its financial targets for the CSeries...
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Old 17th Feb 2016, 18:21   #87 (permalink)
 
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Hey everyone!!! Don’t forget, since this is a Canadian to Canadian business transaction it’s a lose lose for Canadians, 3500 jobs cut here, you think Air Canada’s going hire 7000 employees? Im sure Mr Trudeau was presented with this ongoing issue at Bombardier (5 years + in the making) and in 2 minutes said “ahhh, just give them a discount”, in turn to save their own backside, Bomb said hey, lets save our pensions and 30 million salaries for years to come with this opportunity. I really hope Delta doesn’t go with the C series and its nice most ME airlines wont, why? Because you gotta give credit where credit is due, and that’s with Embraer, no job cuts there – they’re in the same market mind you…..sucks how are our taxes are being used, every unemployed person in Quebec should call Ottawa for a job now, use the word “Bombardier” and “subsidy”!
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Old 17th Feb 2016, 19:19   #88 (permalink)
 
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Bombardier to cut 7,000 jobs; wants federal aid despite Air Canada order - The Globe and Mail

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Old 18th Feb 2016, 18:14   #89 (permalink)
 
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I believe Bombardier are experiencing a life threatening financial crisis at a time when they don't seem to be selling very much of anything. How is it a surprise or not to be expected that layoffs would be part of addressing some of their cash flow concerns and workforce size?
Most of their layoffs are in rail transportation, not aerospace.
Should Bombardier (or any company for that matter) pay for employees to sit around doing nothing because they have nothing for them to do, or shouldn't the government pay employment insurance benefits to the program contributors who might find themselves unemployed as a result of necessary workforce adjustments. Isn't that why we pay this insurance? And, Bombardier isn't the only company dealing with layoffs. Who at Bombardier didn't see this coming for the last 2 years?

What many don't seem to realize or consider is how carriers like AC are slowly starting to reclaim the regional flying they surrendered to create the regional airlines back in the mid-80s now that they have an aircraft that can actually fill the bill. It's easy to see a C series flying CYYZ-KIAH, CYUL-KDFW or CYHZ-CYVR.
How about Montreal to London City? When that ball gets rolling the 'express' carriers will be much smaller than they are today.

As for ME carriers, the big three don't have a role for C series but the corporate operators do.

Willie
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Old 18th Feb 2016, 19:25   #90 (permalink)
 
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The corporate operators are looking for a Global 7000/8000. Gulfstream did an exellent job with the G650. I still don't get it why BBD gave up that market.
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Old 19th Feb 2016, 00:52   #91 (permalink)
 
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What many don't seem to realize or consider is how carriers like AC are slowly starting to reclaim the regional flying they surrendered to create the regional airlines back in the mid-80s now that they have an aircraft that can actually fill the bill. It's easy to see a C series flying CYYZ-KIAH, CYUL-KDFW or CYHZ-CYVR.
How about Montreal to London City? When that ball gets rolling the 'express' carriers will be much smaller than they are today.
Some carriers like WJ failed to envision C Series market and potential. They will continue to fly Canadians or north Americans via big hubs, through hassle of two-three intentional airports, even for a simple domestic flight. As example, most of the eastern flights (Montreal, Ottawa, Quebec) are via CYYZ to destinations US or Caribbean, just to fill the preferred wide bodies. On the other hand, C Series will be able to operate from medium size airports(Q400s airfields), from far north to a small Caribbean island, between US City Centres or European City Centres, direct cost effective flights, a business jet capability for a regular carrier price.
This is the future:
https://youtu.be/3HtxFg1hSC8

Last edited by _Phoenix; 19th Feb 2016 at 01:21.
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Old 19th Feb 2016, 01:31   #92 (permalink)
 
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ExDubai,

With over 700 Globals delivered and 199 business jets delivered in '15 vs. 154 at Gulfstream, not sure they gave up on that market. The G7000 is delayed for a large part due to the C-Series delays--only some much engineering talent, money and time.

Phoenix,

Airlines use hubs because it is cheaper, not because it is convenient. For your scenario to work, airlines will have to get premium fares for those non-stop sectors over sending the pax thru hubs where larger, more efficient planes can be used. How many far north cities can generate 200+ pax a day to the Caribbean island.

GF
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Old 19th Feb 2016, 02:18   #93 (permalink)
 
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110-150 seats size is an ideal compromise between airfield performance, fuel consumption and range, it opens many possibilities not available for a larger size. No problem for cities with population 500K+, i.e Sunwing flies 737s, direct from Quebec City to Varadero but cannot include a stop to a small island airfield, or to fly to Varadero from two smaller towns
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Old 19th Feb 2016, 03:03   #94 (permalink)
 
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If it's the ideal compromise, how come 110-150 seat airliners have sold so poorly? The Fokker 100, B737-500 and -600, the A319, the 737-7MAX, the MD-95 (B717)--all a bust. I submit with today's labor and infrastructure costs; planes of 100-130 seat range cannot produce enough revenue. The Fokker had the highest CASM at American, probably at USAir, too.

GF
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Old 19th Feb 2016, 03:27   #95 (permalink)
 
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See details here:
C Series | Economics - Commercial aircraft - Bombardier

From my limited perspective, I prefer to pay 100$ extra for a vacation package, after 4h of a delight flight I can smell the ocean vs. flying like a cow for 8h with smelly feet.
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Old 19th Feb 2016, 04:46   #96 (permalink)
 
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GF

Pick any decade you like since WW2 and you quickly discover how often this airline business has changed. Influences like fuel price, deregulation, and air agreements have had an enormous impact on its evolution. Continuous change and revamping never ends. But aircraft lifespans do. (Except those clapped out DC-3s)

The aircraft you list simply were temporary solutions and nowhere near as quiet, economical, or as environmentally friendly as the C Series. They might have simply been in the right place at the wrong time.
Airbus and Boeing have been telling the airlines they need large aircraft not small aircraft. Why? Because A&B don't build smaller regional airliners. Airline economy is in revenue seats so more seats is better for profit margins. They only modify current models by stretching, shrinking or strapping new engines on them to make their economics look good to the buyer and it doesn't hurt if the price tag is ridiculous because your pricing is based on a "cheaper by the dozen" sales approach. (Those deep discounts used to try and cut C Series out of the game will come back to haunt A&B in about 10-15 years as the resale, leasing and trade in values hit rock bottom. Today's buyers will be some pissed at A&B.)

Bombardier has spent over 30 years in the regional turboprop and regional jet markets and they know how and why those regional airlines were created. Scope clauses presented a huge obstacle and not just for legacy airlines and their unions. OEMs are directly impacted by those same frustrating scope clauses and the OEM that can find a way to circumvent the scope clauses will have found that magic recipe. The same recipe A&B use to stay away from regional airlines. DONT BUILD REGIONAL JETS.
Making Bombardier a serious threat now that they have entered that arena.
C Series is simply not a regional jet because it is out of scope. Too heavy with too many seats for regional airline purposes. Bombardier is providing legacy carriers with an ideal aircraft solution for scope headaches and legacy carriers are starting to see how this aircraft can get back the services surrendered out of necessity in the mid 80s because of uneconomical and elderly DC9s and 737s in operation at that time.

There's a reason Bombardier aren't aggressively selling regional jets like Embraer, Sukhoi, Mitsubishi and others because the regional airlines are becoming passé. They've quietly switched to customer support for those RJs while producing a new aircraft that could one day change the game yet again. I, for one, expect to see regional airlines shrink, or simply go out of business as their legacy partners deploy C Series to reclaim services and terminate commercial agreements.

Remember? The CRJ wasn't supposed to sell and many said it would kill this company. The day the CRJ was certified there were only 12 firm orders.

The C Series should have a very bright future for all the right reasons.

Willie

Last edited by Willie Everlearn; 19th Feb 2016 at 05:08.
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Old 19th Feb 2016, 07:19   #97 (permalink)
 
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Yet here we are talking about routes like CYYZ-KIAH which is a regional route served by E175s and CRJ700s (and not even always full).

Why put an expensive mainline operated CSeries with even more capacity on this same route?

Or lets talk about that Toronto - London City route using the CS300. Today Air Canada flies a profitable route YYZ to LHR on a 2-class 200 passenger 767-300 and benefit from Star Alliance connections at the LHR.

Why compete against the current service using a smaller plane to LCY and incur all the cost of operating a new type? Even in the best case scenario, the CSeries would simply cannibalize Air Canada's existing service!

Show us the numbers that these routes make sense from a financial perspective!

It's easy to say "don't build regional jets" but why is Air Canada planning to use the CSeries exactly as regional jets, on existing E190 routes?

Why pay premium for the CSeries long range capability then simply fly them on short regional routes?

Why is it that Embraer has record backlogs and shares (in R$) trading near all time highs?
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Old 19th Feb 2016, 17:30   #98 (permalink)
 
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So according to this article:

http://www.thestar.com/business/2016...ion-plans.html

So that means the 737 will replace their a319/20/21 family, and the Cseries with the EMB, most of which I believe have gone to SkyRegional. So we should see many new routes. With many CRJ parts interchangable with CSeries, and Bomb. Being in Canada, AC will save money I guess not having to stock EMB parts and shipping. What really baffles my mind is why not relay the 75 CSeries offer to Embraer (cheaper aircraft) to get an even better deal? AC will say Canadian loyalty, but its clear there was a huge discount, going to Embraer would’ve exposed the subsidized discount
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Old 19th Feb 2016, 19:47   #99 (permalink)
 
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I suppose if you're someone who thinks or is convinced Air Canada were somehow coerced or 'forced' to buy the C Series because of Quebec politics or Federal government arm twisting then you really don't have a good grasp on the commercial decisions airlines make. If the C Series isn't a good, commercially viable, fit for them then I seriously doubt they'd buy the aeroplane.

I for one, couldn't begin to determine the financial viability of any routes AC might choose to operate a CS300 on. I haven't a clue. But I could certainly suggest examples based on city pairings within the aircraft's range capabilities. What they decide to do is up to them.
It's also worth noting the C Series DOC is very competitive with both the E170 and CRJ. It's certainly going to have the passenger appeal neither regional jet has. I'd question the notion of parts interchangeability between the C and the CRJs. Whatever AC ends up paying for these aircraft I'm sure it's at a price agreeable to both parties. I'm also sure a discount was in the deal. I'm also sure it was in U.S. dollars.

Willie
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Old 19th Feb 2016, 22:44   #100 (permalink)
 
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striker,

I very much doubt there are any CRJ spares interchangeable with C-Series.

Willie,

Yes, I saw the video--the DOCs were calculated using $90 bbl oil, now it's a third of that reducing the advantage. The real problem is the capital costs which completely eliminate the DOC advantage. With doubts of the financial strength of BBD; doubts of the future of the program and resale values, the financial markets are aggressively depreciating C-series residual values, raising the capital cost of one to twice a B737 or A320. Plus loads of off-lease A & B planes are depressing that market.

It's a hard sell, if you understand the finances rather than wishful thinking. And, believe me, I'd love to see it wildly successful. It's technically marvelous, better than expected.

GF
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