PPRuNe Forums - View Single Post - US Dept of Commerce slaps 220% tax on Bombardier c series
Old 9th Nov 2017, 04:09
  #272 (permalink)  
peekay4
 
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No need to go that far.

Let's assume the CSeries will be sold at an average of $30 million per unit -- reportedly what Air Canada paid for the CS300 and much higher than Boeing's $19.1m number.

And we'll even be generous in assuming a 6% unit margin, which is higher than Airbus or Boeing's unit margin.

Since Bombardier will now only get 31% of any profits, that means Bombardier's profit per CSeries sold is only around $550k.

Bombardier has sunk more than $5.4 billion into the program so far, which means (simplistically) they need to sell close to 10,000 (!) aircraft just to get their investment back.

That's double the entire projected 100-150 seat market segment for the next 20 years! Even Bombardier's most optimistic assessment projects only 3,400 CSeries deliveries over 20 years. How many can they sell in the five years between 2020 and 2025 when Airbus can buy out the program?

Yes there are other revenue streams (parts, maintenance contracts, training, etc.) but there are also other costs (e.g., Bombardier is on the hook for up to $750 million in further CSeries investment over the next 3 years).

The numbers are far from adding up for Bombardier. Not to mention that they are $10B in debt largely due to the CSeries, with almost ~ $1 billion maturing in 2019.

I haven't crunched the numbers for Airbus, but I suspect the program's economics aren't so good from their perspective, either. The CSeries acquisition was more of a strategic move rather than a purely financial one.
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