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Air Canada still interested in CSeries as potential Embraer replacement

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Air Canada still interested in CSeries as potential Embraer replacement

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Old 21st Feb 2015, 00:46
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Air Canada still interested in CSeries as potential Embraer replacement

I still believe the CS300 will be a game changer once certified. Obviously the bigger the order the lower the unit price...

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Air Canada still interested in CSeries as Embraer replacement option
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Old 2nd Mar 2015, 18:11
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I am not permitted to give details, but the Transportation side of Bombardier (trains, metro, trams etc) has been cross-subsidizing the Aerospace C-Series side since its very inception.

The dividend suspension and equity fund-raisings are the last steps in this cash-burning process.

Despite the stalwart backing of both the CDN and QC governments, the real question is whether Bombardier will even be around to see this project through to fruition and its subsequent long service life.

Clue: Think BOEING 717.
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Old 4th Mar 2015, 21:01
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REFILE-Qatar Airways says no longer interested in CSeries | Reuters

(Reuters) - Qatar Airways is no longer interested in ordering any CSeries jets as a result of the delays to the new single-aisle aircraft made by Bombardier , Chief Executive Akbar Al Baker said on Wednesday.
"We have completely forgotten about it because you cannot wait indefinitely," he said in an interview on the sidelines of the ITB travel fair in Berlin.
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Old 5th Mar 2015, 01:47
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I am not permitted to give details, but the Transportation side of Bombardier (trains, metro, trams etc) has been cross-subsidizing the Aerospace C-Series side since its very inception.

The dividend suspension and equity fund-raisings are the last steps in this cash-burning process.

Despite the stalwart backing of both the CDN and QC governments, the real question is whether Bombardier will even be around to see this project through to fruition and its subsequent long service life
A cousin of mine who has been in the aviation management business for 40 years had this to say when Bombardier announced the C series: "They're gonna bankrupt the company with that thing."
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Old 17th Mar 2015, 13:14
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Qatar Airways was never a serious CSeries buyer. The C Series simply doesn't fit with QRs fleets of aircraft or route structure. Never did. Based on Mr. aB's taunting of A&B, who's truly comfortable with them as a customer anyway?

It would seem odd to me that any aerospace company (insert whatever name you like here), especially one who's business it is of designing and building aeroplanes for the airlines of this world, would fear bankrupting themselves over the challenge of designing, testing, certifying and manufacturing a completely new aircraft. Otherwise, where would the B787 or A380 have come from AND which was certified "on time"?

It remains to be seen whether or not this company will end up bankrupt over the C Series or become a smashing success. But one things for sure and certain, it looks friggin' awesome and I'm sure pilots are going to enjoy flying it. Especially the 300 model.

I'll say it again, the day the CRJ received certification, Bombardier only had a commitment of 12 firm orders. Look how many they sold. C Series has already outsold numerous existing aircraft types based on their day of certification. Including the B737.

C Series is scheduled to fly at Paris in June.

Willie

Last edited by Willie Everlearn; 17th Mar 2015 at 13:45.
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Old 17th Mar 2015, 18:15
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From a PR standpoint I dont think AC or WJ for that matter is going to say they dont like the aircraft, if they did the PQ would have a field day blaming them for all of Bombardiers woes, lets hope it turns out to be a good aircraft, but the jury is still out on this one.
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Old 17th Mar 2015, 20:00
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Politics aside, this IS undoubtedly a good aircraft, in fact, it's better than good. It's ideal for the seat segment of the market it's aimed at. But I'm inclined to think, especially if 'good aircraft' are actually measured in sales, that this is already a good aircraft.

Pre-certification sales, when looking back at actual sales numbers at type certification of other manufacturers as the yardstick, then this aircraft is already a success.

As for sluggish sales, I know I'm reluctant to buy things sight unseen as I suspect companies who are considering the purchase of a $70 million asset are. Turning up at Paris this June will likely have a more positive impact on C Series sales.

We'll see. As you say, the jury is still out.

Willie
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Last edited by Willie Everlearn; 17th Mar 2015 at 20:15.
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Old 18th Mar 2015, 21:00
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The introduction of the Mitsubishi MRJ90 looms on the western horizon.
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Old 19th Mar 2015, 16:38
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The introduction of the Mitsubishi MRJ90 looms on the western horizon.
The MRJ-70 and MRJ-90 use a much narrower fuselage cross section, seating from 70 to 96 seats in 2x2 'Y' configuration. As such, the MRJ constitutes more of a threat to the Embraer E-Series, both CEO and NEO, which also have 2X2 configuration, but up to 130 seats in the stretched E-195 in LCC configuration.

The C Series, on the other hand, has a cross section significantly wider than either competitor - allowing 2x3 in 'Y' configuration (2x2 'J' configuration) and a seat count from 108 to 130 dual class, or 160 single class for the CS300 in a Ryanair style, single class layout.

The MRJ and the E-Jets are in a quite different market segment than the CS100 and 300.
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Old 20th Mar 2015, 19:54
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Cut-price Lear Jet anyone???

(Bloomberg 20 March 2015) -- A breakup may be Bombardier Inc.’s best option for gaining liftoff.

Shares of the $3.5 billion maker of planes and high-speed trains have slumped almost 40 percent in a year, while rivals such as Boeing Co. and Airbus Group NV rallied. Delays and cost overruns and delays on the new CSeries jetliner dragged Bombardier to its first annual loss in almost a decade last year. The company’s debt is more than twice its market value.

Chief Executive Officer Alain Bellemare, who joined Montreal-based Bombardier in February, said this week he’s leaving “all options” on the table. That has some analysts and investors predicting asset sales that could range from the Learjet division for as much as $750 million to a stake in the rail business, which had 2014 revenue of more than $9 billion.

“They really have to focus this company and get rid of stuff that’s nice to do, but not critical to do,” Nick Heymann, a William Blair & Co. analyst in New York, said in a telephone interview. “That way they can get the debt down. You have to sell businesses that are not necessary so that this company can get back to investment grade.”

Deal Leeway

Bombardier’s controlling family would need to back any such plans and probably doesn’t feel the need to consider a breakup, at least not now, said George Ferguson, a Bloomberg Intelligence analyst. Even so, there may be interested buyers. Textron Inc. and Embraer SA may be drawn to Learjet, according to Macquarie Capital Markets, while Heymann sees France’s Alstom SA as a potential suitor if Bombardier offers a stake in its rail unit.

“You would hope the new CEO has some leeway to think about asset sales,” Bob Sharpe, a vice president at Heartland Advisors Inc., said by phone from Milwaukee. Heartland owns Bombardier shares.

Isabelle Rondeau, a spokeswoman for Bombardier, said Thursday that the company has no comment on possible asset sales beyond what Executive Chairman Pierre Beaudoin, the former CEO and a grandson of the founder, said on a Feb. 12 conference call with analysts and reporters.

Bombardier “will explore other initiatives, such as a potential participation in industry consolidation, in order to deleverage the company,” Beaudoin said on the call.

Debt Load

The company had about $7.4 billion of long-term debt as of Dec. 31 before borrowing $2.25 billion via a bond sale last month. Bombardier is also raising $868 million of equity, a transaction that requires shareholder approval on March 27.

Meantime, testing continues on the CSeries, Bombardier’s biggest jet to date. With seating for as many as 160 passengers, the plane is intended to challenge Airbus and Boeing’s single-aisle models.

Bombardier has spent about $4 billion on the program as of Dec. 31. About $1.1 billion in expenses remain to finish flight tests on the plane and meet a goal of starting deliveries this year, according to a slide presentation in February when Bellemare, 53, was named CEO after leaving United Technologies Inc. a month earlier.

With the stock slumping, Bombardier was valued Thursday at just 8.3 times estimated earnings for 2015, according to data compiled by Bloomberg. Boeing, Airbus and Textron all trade for more than double that multiple, the data show.

On Friday, Bombardier shares fell 0.6 percent to C$2.50 at
2:24 p.m. in Toronto.
Reassuring Investors

Selling off pieces could reassure investors that Bombardier can handle rising interest payments, according to John Stephenson, CEO of Toronto-based Stephenson & Co.

“They need to clean up the debt,” said Stephenson, a former Bombardier shareholder who has no plan to resume buying for now. “That’s the big worry. Everyone agrees the stock is cheap from a valuation standpoint. Some consolidation and cleanup would really help.”

Chief among possible candidates for a sale is the Wichita, Kansas-based Learjet unit, which focuses on small private planes that sell for as much as $14 million apiece. Bombardier said in January it would “pause” development of the all-composite Learjet 85 due to weak demand. Bombardier also cut 1,000 jobs at Learjet and booked a $1.4 billion writedown.

While Beaudoin said on the Feb. 12 conference that there were no plans to sell Learjet, Macquarie’s Konark Gupta in Toronto has estimated the division could bring in $250 million to $750 million. Potential buyers include Textron as well as Brazilian planemaker Embraer, the analyst wrote in a Feb. 26 note to clients.

Bigger Planes

Bombardier’s larger private-jet models such as Challenger and Global produce more in earnings than Learjet, said David Tyerman, an analyst at Canaccord Genuity in Toronto.

“Of the aircraft assets, Lear is certainly the one that has had the most problems,” Tyerman said in a telephone interview.

Embraer declined to comment Thursday about Learjet. Providence, Rhode Island-based Textron “can’t comment on market rumors,” said Dave Sylvestre, a spokesman.

Selling a minority stake in the Bombardier Transportation train business to Alstom is another possible scenario, according to Gupta and Heymann. The unit has a potential value of $4 billion to $5 billion, Gupta said. Besides high-speed trains, it makes signaling systems, locomotives, tramways and subway cars.

The rail unit has stirred speculation in part because of ex-CEO Beaudoin’s comments last month about participating in industry consolidation. He cited the planned combination of China’s two biggest train makers as a driver for mergers and acquisitions.

Alstom ‘Fit’

Alstom will be in a position to weigh buying a piece of Bombardier Transportation after closing the 12.4 billion euro ($13 billion) sale of most of its energy business to General Electric Co., said Gupta and William Blair’s Heymann.

“Alstom’s surplus cash and Bombardier’s cash shortfall could be a natural fit,” Gupta said.

Christine Rahard, a spokeswoman for Alstom, said in an e-mail Friday that the Levallois-Perret, France-based company declined to comment.

Smaller deals could include selling Bombardier’s amphibious aircraft business, which has been dwindling in size over the past decade, said Cam Doerksen, an analyst at National Bank Financial in Montreal.

Some analysts say there’s no great urgency for any asset sales after the moves to sell equity and debt this year. The founding family is unlikely to want to pursue a split unless unforeseen issues with the CSeries created a financial hardship, according to Ferguson of Bloomberg Intelligence.

“I think they’d only want to break up the company if they were afraid they were going to lose the company,” he said in a phone interview. “The debt and equity they’ve raised, by our calculation, gets them well into 2016.”

While Bellemare may get the luxury of time in considering possible deals, he probably needs to come up with a strategy within nine months, William Blair’s Heymann said.

“The extra money they raised means they have the flexibility to handle any other unforeseen issues, but Alain has to go to work hard and by year-end have a very clear line of sight,” Heymann said. “There are plenty of options and there’s no gun to anybody’s head.”
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Old 20th Mar 2015, 21:12
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It would be great to see them shed Learjet. It would have been greater to see them divest themselves of Learjet a couple of years ago. But, there you go. Timing is everything, isn't it? Certainly, before CSeries first flight, would have made more sense.
With CL415 production suspended, they might as well sell or terminate IT along with Lear.

Writers like to point out that the CSeries is "intended to challenge Airbus and Boeing's single-aisle models", but it should also be remembered that that challenge is in a specific seating capacity range and the models A&B offer in that range. If the CSeries is a threat at all, (which I believe it is) it's to the A318s and B737-600s specifically. However, both those models are essentially not sold any more so I fail to see where the suggested 'intent' to challenge has even the slightest of meanings in this context.

I suppose writers of articles have to put something down to make it interesting.
Willie

Last edited by Willie Everlearn; 20th Mar 2015 at 21:23.
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