Bombardier offers majority stake in C Series to Airbus
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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.
And actually SkyWest has been clear that they want to trim down the 50 seat and below category.
This year, SkyWest has already cut their CRJ-200 flight hours by around 7% as compared to last year, and further reductions are planned through the rest of the year.
They are of course contractually obligated to fly certain routes with certain equipment -- even if such routes are currently operating at loss.
Yes in the long term there is a question for replacement of the 50-seat class. But I don't see SkyWest buying new 50-seat jets from Bombardier or anyone else. At least not anytime soon.
So I think from the manufacturer's perspective, the business case for 50 seat jets is just not there.
SkyWesg INC is cutting 50 seat aircraft, of both varieties. SkyWest airlines is still bringing aircraft out of the desert when they can find cheap leases, i flew a couple of them out of IGM. Yes, the more expensive leases are coming off contract and the total -200 fleet is downsizing, but its not going away anytime soon. Mostly as there's no real replacement on the horizon.
About the only type of flying that falls into that category is at risk flying. SGU has shown little patience at maintaining routes after local seed money has been spent and the route not earning its keep.
Already happened in the sub 50 seat category, at least at airlines. Perhaps INC still has some 37 seat ERJs. Kinda doubt it though.
Someone is going to. That market won't go away like the 19 seat market did and I doubt it will be under served by cutting 6 flights spread out over the day for one guppy. SkyWest tried something similar already, sending the EMB-175 into markets that were served by the multiple -200 flights They have returned to flying -200s again.
They are of course contractually obligated to fly certain routes with certain equipment -- even if such routes are currently operating at loss.
And actually SkyWest has been clear that they want to trim down the 50 seat and below category.
Yes in the long term there is a question for replacement of the 50-seat class. But I don't see SkyWest buying new 50-seat jets from Bombardier or anyone else. At least not anytime soon.
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[quote]
Naively, Bombardier hoped to escape a major reaction from Airbus and Boeing by limiting the C Series to 130 two class seats but A and B responded anyway with the neo and MAX. Many, many carriers told them that they needed 150 two class seats and, given how much larger the 150 seat+ market is than the 100 seat+, Bombardier would have picked up at least a part of this market with a CS500: it would have been the only all new offering in the space with new technology airframe and systems as well as engines. Why design an all-new 5 abreast cross-section cabin which they admit could easily be stretched and then limit it to 130 two class seats? When was the last successful narrowbody with only two variants (oh, all right - apart from the 757)?
Could have made a real dent in A's and B's market but, sadly, unlikely to happen now unless a well-heeled investor steps in: COMAC?
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.[/QUOTE
Could have made a real dent in A's and B's market but, sadly, unlikely to happen now unless a well-heeled investor steps in: COMAC?
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More speculation on pending orders:
Bombardier in talks with North American airlines on C Series jet orders
Allison Martell and Tim Hepher
20:13 EST Friday, Oct 09, 2015
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TORONTO/PARIS — Canada’s Bombardier Inc. said on Friday it is in advanced discussions to sell its new C Series jet to airlines in North America, without identifying the prospective buyers.
Montreal-based Bombardier has redoubled efforts to win a landmark order for the C Series after failing to sell the program to rival Airbus, and is pitching the jets hard to airlines in North America, said two sources familiar with the matter.
The sources said Bombardier was pitching Southwest Airlines Co. and American Airlines Group Inc., as well as similar airlines. One source said Bombardier was also pushing to sell the jets in China.
“We are in some pretty advanced discussions,” said Bombardier spokeswoman Marianella de la Barrera. “Our senior leaders are engaged.”
Air Canada, Canada’s biggest airline, is seen by many as an obvious potential customer for the C Series. The company declined to comment on Friday. American Airlines also declined to comment.
“We have nothing in the works that would have our customers expecting to see anything but a Boeing bird when they walk up to a Southwest gate,” said a Southwest spokesman.
A new order from a major U.S. airline would help restore confidence in the C Series program, which has not won a new firm order in more than a year.
But Bombardier may need to offer steep discounts to lure mainline carriers from Airbus and Boeing Co., which have deep relationships with those airlines, and have also cut prices to protect their market share.
Talks between Airbus and Bombardier ended abruptly on Tuesday after Reuters reported the discussions.
Bombardier in talks with North American airlines on C Series jet orders
Allison Martell and Tim Hepher
20:13 EST Friday, Oct 09, 2015
Print this article Email this article
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TORONTO/PARIS — Canada’s Bombardier Inc. said on Friday it is in advanced discussions to sell its new C Series jet to airlines in North America, without identifying the prospective buyers.
Montreal-based Bombardier has redoubled efforts to win a landmark order for the C Series after failing to sell the program to rival Airbus, and is pitching the jets hard to airlines in North America, said two sources familiar with the matter.
The sources said Bombardier was pitching Southwest Airlines Co. and American Airlines Group Inc., as well as similar airlines. One source said Bombardier was also pushing to sell the jets in China.
“We are in some pretty advanced discussions,” said Bombardier spokeswoman Marianella de la Barrera. “Our senior leaders are engaged.”
Air Canada, Canada’s biggest airline, is seen by many as an obvious potential customer for the C Series. The company declined to comment on Friday. American Airlines also declined to comment.
“We have nothing in the works that would have our customers expecting to see anything but a Boeing bird when they walk up to a Southwest gate,” said a Southwest spokesman.
A new order from a major U.S. airline would help restore confidence in the C Series program, which has not won a new firm order in more than a year.
But Bombardier may need to offer steep discounts to lure mainline carriers from Airbus and Boeing Co., which have deep relationships with those airlines, and have also cut prices to protect their market share.
Talks between Airbus and Bombardier ended abruptly on Tuesday after Reuters reported the discussions.
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More speculation on pending orders:
Bombardier in talks with North American airlines on C Series jet orders
Bombardier in talks with North American airlines on C Series jet orders
Aside from Air Canada, it's no secret that Bombardier is hoping to sign United, which may be in the market pending union negotiations.
But even if an airline is seriously considering the CSeries, it would be crazy to sign at this point, unless they can get some deep concessions from Bombardier.
Plus there are still questions on what will happen to the orders placed by Republic and IFC?
At this point, Bombardier is likely offering the CSeries at a loss.
The word is that Bombardier hopes that Airbus will come back to table, and that they had also approached Boeing, ATR and COMAC. Not an enviable negotiation position to be in.
Yesterday the Quebec government signaled that they'd be "ok" if a foreign company acquires majority stake in Bombardier. Unthinkable just a month ago!
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Peekay4,
Do you have any references to confirm your last 4 sentences?
Probable the very next large order will have best concessions, but why to sell at a loss one of the finest aircraft in the air? Soon CSeries100 will be certified then production is ensured for 2-3 years, which is close to ideal ratio between enough backlog vs. delivery date.
Do you have any references to confirm your last 4 sentences?
Probable the very next large order will have best concessions, but why to sell at a loss one of the finest aircraft in the air? Soon CSeries100 will be certified then production is ensured for 2-3 years, which is close to ideal ratio between enough backlog vs. delivery date.
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@Una Due Tfc
As mentioned above, ATR is a 50-50 JV between Airbus and Alenia -- but it is a separate company from Airbus.
Alenia itself is a major supplier to the Bombardier (they make the CSeries tail section). So they already have a lot in stake in the CSeries. Not very widely reported, last year Alenia played hardball by suing Bombardier for loss of income due the CSeries continuing delays.
@_Phoenix
No one is going to go on record that they're selling at a loss...
But FWIW, here's a point-by-point narrative for speculation:
Best option for Bombardier might be to enter "performance" contracts.
I.e., they would sell at a loss, but if the CSeries performance is as advertised, saving the airline money vs. competitor's projections (from better operational efficiency, fuel savings, reduced maintenance, etc.), Bombardier would get a percentage of that savings. Hopefully over the contract period they would at least break even, but this additional money isn't guaranteed.
As mentioned above, ATR is a 50-50 JV between Airbus and Alenia -- but it is a separate company from Airbus.
Alenia itself is a major supplier to the Bombardier (they make the CSeries tail section). So they already have a lot in stake in the CSeries. Not very widely reported, last year Alenia played hardball by suing Bombardier for loss of income due the CSeries continuing delays.
@_Phoenix
No one is going to go on record that they're selling at a loss...
But FWIW, here's a point-by-point narrative for speculation:
- Airbus can undercut the CSeries by offering the A319/320/neo at "very deep discounts" (read: loss) as part of a "package" deal with other aircraft.
- (By "very deep discount", let's say, 66% off Airbus published list price)
- Bombardier's "previous management" insisted selling the CSeries at a typical 50% discount, since the profit margin is already tight at this level
- That means the discounted price of a CS300 might be more than a discounted A320
- The "previous management" couldn't make sales at these prices and were let go.
- "New management" was brought in and given a mandate to be "more flexible" with pricing, to meet 300 firm orders sales target
- "New management" still couldn't sell the CSeries at this "super-thin" margin. They had no takers at Le Bourget and closed zero sales to date.
- Republic has had a change in strategy and may not take delivery of their 40 firm orders. They've bought E175s and have dumped their Q400s to Flybe.
- I guess more clarity and maybe formal announcement after Republic's union voting happening now.
- IFC (Ilyushin) might not take delivery of their 32 firm orders, since the ruble has tanked
- IFC also has difficulties getting financing other than from the Chinese due to sanctions on Russia
- Suddenly Bombardier potentially has to sign (40+32) = 72 new firm orders just to tread water. Remember, they've signed zero sales so far on super-thin margins.
- And that's before this failed deal with Airbus which has everyone spooked. No one wants to risk buying an "orphaned" aircraft.
- And meanwhile the price of oil has dropped to $50/barrel making the CSeries ROI difficult
- Given all this, as the article posted above by twochai mentions, now it looks like Bombardier will need to offer the CSeries at "steep discounts" (read: at a loss)
Best option for Bombardier might be to enter "performance" contracts.
I.e., they would sell at a loss, but if the CSeries performance is as advertised, saving the airline money vs. competitor's projections (from better operational efficiency, fuel savings, reduced maintenance, etc.), Bombardier would get a percentage of that savings. Hopefully over the contract period they would at least break even, but this additional money isn't guaranteed.
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There is a new free trade agreement Canada is about to enter into called the "Trans-Pacific Partnership". There may be new partnership opportunities for Bombardier arising from this deal. I've not seen specific details and have no clue how they may apply to Bombardier. However someone in the Pacific rim may now come to the rescue of Bombardier. Just my sixth sense setting off alarms as to how this new free trade alliance may end up affecting the C-Series.
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It is apparent to everyone that BBD are experiencing serious financial strain. It could well mean the end of the CSeries program and/or the company. At this point in time, I wouldn't know.
I do however, chose to consider the positives about this company along with the ever increasing number of negatives. Despite the financial demands on a company like BBD I still hold the opinion the aircraft will be a success.
When the Grown-up Airlines finally clue in to the potential this aircraft has of all but eliminating the regional airlines (reduced CRJ production and sales), how ideally suited it is for EU ops, what it can do to relieve Hub ATC pressures by developing secondary Hubs, how ideally suited it is for VIP and Corporate ops, sales figures should improve.
They still have options financially. I'm sure they are likely to approach a variety of potential investors, you'd expect that from any financially imperilled company. Despite all the speculation about success or failure, BBD responded with this:
"The company is 100% committed to the C Series aircraft, and we have the resources and liquidity to see the program through."
...I, for one, hope so.
Willie
I do however, chose to consider the positives about this company along with the ever increasing number of negatives. Despite the financial demands on a company like BBD I still hold the opinion the aircraft will be a success.
When the Grown-up Airlines finally clue in to the potential this aircraft has of all but eliminating the regional airlines (reduced CRJ production and sales), how ideally suited it is for EU ops, what it can do to relieve Hub ATC pressures by developing secondary Hubs, how ideally suited it is for VIP and Corporate ops, sales figures should improve.
They still have options financially. I'm sure they are likely to approach a variety of potential investors, you'd expect that from any financially imperilled company. Despite all the speculation about success or failure, BBD responded with this:
"The company is 100% committed to the C Series aircraft, and we have the resources and liquidity to see the program through."
...I, for one, hope so.
Willie
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Just for clarification, the TPP is not a "free trade" agreement, it is another "managed trade" pact involving reduced tariffs and reduced mandatory content legislation. "Free trade" or "balanced trade" will never be achieved until all participating nations have comparable standards of living, worker safety legislation, identical government subsidies and identical environmental regulations.
Meanwhile back to the C series programme, I too, hope for the best, even if further government support is required.
Meanwhile back to the C series programme, I too, hope for the best, even if further government support is required.
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peekay4
You raise some very good points to consider. I would like to comment for your consideration and I can assure you, I am NOT trying to insult your intelligence or anyone else's for that matter.
Airbus can undercut the CSeries by offering the A319/320/neo at "very deep discounts" (read: loss) as part of a "package" deal with other aircraft.
I don’t know if you realize it or not, but you’re suggesting Airbus is playing a dangerous game. I’ve read this kind of comment many times before.
The CS100 has NO direct competition. The A319, A320 and Neo are used by you and others for argument sake and nothing more. So, there’s no other practical reason for even mentioning A or B in comparison to the CSeries without differentiating.
If I may differentiate, Airbus used to have the A318 for direct competition but that was before the first C series test vehicle had even been assembled, which as of 3 years ago, the A318 is no longer produced. I’ll take that for direct competition any day.
As for the Boeing 737. CSeries used to have the B737-600 for direct competition but that aircraft too is no longer produced. Boeing sold a grand total of 69 600s, so neither Boeing or Airbus compete “directly” with Bombardier in this 110-130 seat market segment. Something many pundits seem to be oblivious to. There is some overlap when talking about aircraft types and seat segments. That may be pedantic but I’d also have to acknowledge CSeries has overlap with A&B products. Sorry, but to me, that overlap isn’t totally direct competition as many seem to think. It’s just competition and BBD simply isn’t going to dominate the industry.
Airbus have already “shrunk” their A320 twice just to get to the A318. Sold a grand total of 81 aircraft (to date) before finally tapping out. So I’d ask (I don’t any more) whether the lack of A318 sales is due primarily to the possibility no airline wants 110-130 seat aircraft OR whether the A318 was just too uneconomical to operate in that segment of the market. I could ask the same about the 600 series B737.
What this means for the CS100 is that it has (competitors, but) no direct competitor. Only Embraer E2 and MRJ are close. Since both are Regional Jets and both are outside scope they are unlikely to be sold in large numbers.
(By "very deep discount", let's say, 66% off Airbus published list price)
In my estimation, this is where the dangerous part comes into play for A&B. Bombardier got the jump on both A&B with the CSeries as evidenced by their response to the perceived threat BBD posed by possibly cutting into their duopoly. Re-engine successful models, throw in some new avionics and you have ‘new and improved’ solutions for about the same price. Easy.
Deep discount the product and you get it off the shelves. The problem is, in 5-10 years, depreciation and market values for yesterday and today’s NGs, etc. go into the toilet and those customers won’t be happy when they realize their treasured assets aren’t worth very much as a result of ordering nothing more than an old product with new paint, new engines and an updated avionics suite. We’ll see. That’s not genius on my part it's what I've read elsewhere.
BBD doesn’t have huge numbers of C series aircraft laying around Mirabel or in the desert, so they aren’t exactly in a position to offer anyone a “very deep discount” on the most modern aircraft, most fuel efficient, most environmentally friendly, quietest, longest range in its class airliner. Why would they? I’m confident in saying if BBD haven’t got the C series price point right by now, they soon will have.
Bombardier’s “previous management” insisted selling the CSeries at a typical 50% discount, since the profit margin is already tight at this level
I have no idea what their previous or present management will, won’t or might do.
The "previous management" couldn't make sales at these prices and were let go.
I think if you looked at the resumes and experience of the “previous management” team, you’d find most couldn’t have been further away from aviation before joining BBD than they were. Which I would guess has more to do with why they were let go than anything else. Today the management team are mostly experienced aviation professionals, well connected, who’ve been executives in closely and somewhat inter-related businesses.
"New management" was brought in and given a mandate to be "more flexible" with pricing, to meet 300 firm orders sales target
I don’t know where anyone would get a gem like that but I know I’m certainly not in any position to agree or disagree with any statement like that.
“New management” still couldn’t sell the CSeries at this “super-thin” margin. They had no takers at Le Bourget and closed zero sales to date.
Unfortunately, you are using a rather lame example here. No one sells aeroplanes at an airshow, or very few do at least. Aircraft sales are made months in advance of airshows and airshows used as merely a forum to ‘announce’ sales. Good for the OEM, good for the buyer and great for the airshow sponsor. BBD knew well in advance for LeBourget they would not reveal ANY new aircraft orders. For them it was about getting the C series there and putting up a demo flight for prospective (cautious?) buyers.
What airline customer arrives at any Airshow, shakes hands with an aircraft sales team in the morning and by mid-afternoon announces the purchase of a fleet of brand new A320s or B777s??? I seriously doubt that would happen. (Qatar Airways excepted)
Republic has had a change in strategy and may not take delivery of their 40 firm orders. They’ve bought E175s and have dumped their Q400s to Flybe.
Republic are still holding these aircraft positions according to the last thing I read on it. Seems to me they could get a decent price on their white tails or even on aircraft leases. Don’t assume Republic will automatically cancel their order just because they no longer own Frontier. There’s money to be made here NOT just the payment of penalties to BBD for their order cancellation. That sledge hammer has two sides.
IFC (Ilyushin) might not take delivery of their 32 firm orders, since the ruble has tanked
IFC also has difficulties getting financing other than from the Chinese due to sanctions on Russia
It may surprise you to learn that after LeBourget, European bankers were so impressed with the CSeries that they approached IFC with a new business proposition for financing their CSeries purchases. That deal is no longer in jeopardy. I guess you haven’t read that yet, eh?
Suddenly Bombardier potentially has to sign (40+32) = 72 new firm orders just to tread water. Remember, they’ve signed zero sales so far on super-thin margins.
You might also add to that, with 243 C series sold, any new customer will have to wait till probably 2018-19 maybe even 2020 before they see their aircraft. Sales could be made at any time and as long as BBD have a sales team, I’m sure they’re out there humping their butts to sell. As for super thin margins, I’m guessing the discount margins ARE thin. They are financially strapped and need the cash. It would make sense to me, but then I’m neither a salesman or a financial whiz. Ask my wife.
And that’s before this failed deal with Airbus which has everyone spooked. No one wants to risk buying an “orphaned” aircraft.
This was surprising to me. But, if you’re going out to industry for a backer, why wouldn’t you go to any of your closest competitors? Makes a lot of sense. Why Airbus would walk away should come as no surprise to anyone. A320 or Neo aircraft sold for future delivery is great but it is not money in the bank today (as BBD well know). The A380 sales are holding at 317 and not likely to increase with only about two airlines even remotely interested in buying. The A350 just recently started deliveries. The A400 troop transport grossly overpriced, grossly delayed, etc. it certainly comes as no surprise to me that they walked away from the idea probably more due to the asking price than anything. But, good game just the same. Who’s next?
And meanwhile the price of oil has dropped to $50/barrel making the CSeries ROI difficult
But, the price of oil will go back up. Right? Greed will see to that. Any comment about the price of oil today is nothing more than a red herring.
thanks for taking the time to read this. I always appreciate contrary opinion. It keeps me thinking and sometimes changes my thoughts and opinions.
Cheers,
Willie
You raise some very good points to consider. I would like to comment for your consideration and I can assure you, I am NOT trying to insult your intelligence or anyone else's for that matter.
Airbus can undercut the CSeries by offering the A319/320/neo at "very deep discounts" (read: loss) as part of a "package" deal with other aircraft.
I don’t know if you realize it or not, but you’re suggesting Airbus is playing a dangerous game. I’ve read this kind of comment many times before.
The CS100 has NO direct competition. The A319, A320 and Neo are used by you and others for argument sake and nothing more. So, there’s no other practical reason for even mentioning A or B in comparison to the CSeries without differentiating.
If I may differentiate, Airbus used to have the A318 for direct competition but that was before the first C series test vehicle had even been assembled, which as of 3 years ago, the A318 is no longer produced. I’ll take that for direct competition any day.
As for the Boeing 737. CSeries used to have the B737-600 for direct competition but that aircraft too is no longer produced. Boeing sold a grand total of 69 600s, so neither Boeing or Airbus compete “directly” with Bombardier in this 110-130 seat market segment. Something many pundits seem to be oblivious to. There is some overlap when talking about aircraft types and seat segments. That may be pedantic but I’d also have to acknowledge CSeries has overlap with A&B products. Sorry, but to me, that overlap isn’t totally direct competition as many seem to think. It’s just competition and BBD simply isn’t going to dominate the industry.
Airbus have already “shrunk” their A320 twice just to get to the A318. Sold a grand total of 81 aircraft (to date) before finally tapping out. So I’d ask (I don’t any more) whether the lack of A318 sales is due primarily to the possibility no airline wants 110-130 seat aircraft OR whether the A318 was just too uneconomical to operate in that segment of the market. I could ask the same about the 600 series B737.
What this means for the CS100 is that it has (competitors, but) no direct competitor. Only Embraer E2 and MRJ are close. Since both are Regional Jets and both are outside scope they are unlikely to be sold in large numbers.
(By "very deep discount", let's say, 66% off Airbus published list price)
In my estimation, this is where the dangerous part comes into play for A&B. Bombardier got the jump on both A&B with the CSeries as evidenced by their response to the perceived threat BBD posed by possibly cutting into their duopoly. Re-engine successful models, throw in some new avionics and you have ‘new and improved’ solutions for about the same price. Easy.
Deep discount the product and you get it off the shelves. The problem is, in 5-10 years, depreciation and market values for yesterday and today’s NGs, etc. go into the toilet and those customers won’t be happy when they realize their treasured assets aren’t worth very much as a result of ordering nothing more than an old product with new paint, new engines and an updated avionics suite. We’ll see. That’s not genius on my part it's what I've read elsewhere.
BBD doesn’t have huge numbers of C series aircraft laying around Mirabel or in the desert, so they aren’t exactly in a position to offer anyone a “very deep discount” on the most modern aircraft, most fuel efficient, most environmentally friendly, quietest, longest range in its class airliner. Why would they? I’m confident in saying if BBD haven’t got the C series price point right by now, they soon will have.
Bombardier’s “previous management” insisted selling the CSeries at a typical 50% discount, since the profit margin is already tight at this level
I have no idea what their previous or present management will, won’t or might do.
The "previous management" couldn't make sales at these prices and were let go.
I think if you looked at the resumes and experience of the “previous management” team, you’d find most couldn’t have been further away from aviation before joining BBD than they were. Which I would guess has more to do with why they were let go than anything else. Today the management team are mostly experienced aviation professionals, well connected, who’ve been executives in closely and somewhat inter-related businesses.
"New management" was brought in and given a mandate to be "more flexible" with pricing, to meet 300 firm orders sales target
I don’t know where anyone would get a gem like that but I know I’m certainly not in any position to agree or disagree with any statement like that.
“New management” still couldn’t sell the CSeries at this “super-thin” margin. They had no takers at Le Bourget and closed zero sales to date.
Unfortunately, you are using a rather lame example here. No one sells aeroplanes at an airshow, or very few do at least. Aircraft sales are made months in advance of airshows and airshows used as merely a forum to ‘announce’ sales. Good for the OEM, good for the buyer and great for the airshow sponsor. BBD knew well in advance for LeBourget they would not reveal ANY new aircraft orders. For them it was about getting the C series there and putting up a demo flight for prospective (cautious?) buyers.
What airline customer arrives at any Airshow, shakes hands with an aircraft sales team in the morning and by mid-afternoon announces the purchase of a fleet of brand new A320s or B777s??? I seriously doubt that would happen. (Qatar Airways excepted)
Republic has had a change in strategy and may not take delivery of their 40 firm orders. They’ve bought E175s and have dumped their Q400s to Flybe.
Republic are still holding these aircraft positions according to the last thing I read on it. Seems to me they could get a decent price on their white tails or even on aircraft leases. Don’t assume Republic will automatically cancel their order just because they no longer own Frontier. There’s money to be made here NOT just the payment of penalties to BBD for their order cancellation. That sledge hammer has two sides.
IFC (Ilyushin) might not take delivery of their 32 firm orders, since the ruble has tanked
IFC also has difficulties getting financing other than from the Chinese due to sanctions on Russia
It may surprise you to learn that after LeBourget, European bankers were so impressed with the CSeries that they approached IFC with a new business proposition for financing their CSeries purchases. That deal is no longer in jeopardy. I guess you haven’t read that yet, eh?
Suddenly Bombardier potentially has to sign (40+32) = 72 new firm orders just to tread water. Remember, they’ve signed zero sales so far on super-thin margins.
You might also add to that, with 243 C series sold, any new customer will have to wait till probably 2018-19 maybe even 2020 before they see their aircraft. Sales could be made at any time and as long as BBD have a sales team, I’m sure they’re out there humping their butts to sell. As for super thin margins, I’m guessing the discount margins ARE thin. They are financially strapped and need the cash. It would make sense to me, but then I’m neither a salesman or a financial whiz. Ask my wife.
And that’s before this failed deal with Airbus which has everyone spooked. No one wants to risk buying an “orphaned” aircraft.
This was surprising to me. But, if you’re going out to industry for a backer, why wouldn’t you go to any of your closest competitors? Makes a lot of sense. Why Airbus would walk away should come as no surprise to anyone. A320 or Neo aircraft sold for future delivery is great but it is not money in the bank today (as BBD well know). The A380 sales are holding at 317 and not likely to increase with only about two airlines even remotely interested in buying. The A350 just recently started deliveries. The A400 troop transport grossly overpriced, grossly delayed, etc. it certainly comes as no surprise to me that they walked away from the idea probably more due to the asking price than anything. But, good game just the same. Who’s next?
And meanwhile the price of oil has dropped to $50/barrel making the CSeries ROI difficult
But, the price of oil will go back up. Right? Greed will see to that. Any comment about the price of oil today is nothing more than a red herring.
thanks for taking the time to read this. I always appreciate contrary opinion. It keeps me thinking and sometimes changes my thoughts and opinions.
Cheers,
Willie
Last edited by Willie Everlearn; 13th Oct 2015 at 21:49.
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Bombardier to Delay New Global 7000 Business Jet | | Aircraft Completion News
Again a delay....... That's one of the biggest issues with BBD during the last years. The Global 7000/8000 should have been already in the market for 2 years in order to "fight" against Gulfstreams G650
Again a delay....... That's one of the biggest issues with BBD during the last years. The Global 7000/8000 should have been already in the market for 2 years in order to "fight" against Gulfstreams G650
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@ExDubai
Today they also killed the iconic CL-415 water bomber with the closure of their North Bay facility, citing no sales and production activity.
We're also hearing today that Bombardier now intends to pitch the CSeries to Embraer.
@Willie Everlearn
The CS100 is a big loser right now. With just 53 orders, it accounts for only 20% of the CSeries order book. Bombardier is not going to survive on the bottom-priced 20%. The vast majority of CSeries orders are for the CS300 which competes with products from "A" and "B".
Hence the comparison is appropriate.
The CS100 made sense when it was first pitched in 2004. It was supposed to be the size to "fill the gap". But the market has changed since then. Now the CS100 is in "no man's land". It's too big for the regionals, yet too small for the mainline carriers which want larger planes.
I've walked the grounds of Le Bourget by invitation of the French government, so I know how these shows work. The bottom line is, they announced zero sales -- and have not announced any sales for the past year.
All of Republic's orders are for the CS300, which they cannot fly for the mainlines due to current union contracts.
So about the only way they can fly those CS300s is if they create a brand new LCC to replace Frontier. At this point, that's a long shot.
Republic has no incentive to cancel their orders right away. Remember that we're already past Republic's original delivery start date. Each new delay from Bombardier plays into Republic's hands in terms of any cancelation fees.
And if it is Bombardier which ends up canceling the CSeries, then not only Republic doesn't have to pay anything, they will get their deposit back.
So they're just going to wait it out until the last moment. It doesn't mean they intend to take any deliveries.
Ha! The financiers told IFC they will provide financing IF (and that's a big IF) Ilyushin can find NEW non-Russian ("European") operators willing to buy the CSeries.
Which means they're NOT willing to finance IFC's current order. And why should they? IFC's current order is for airlines like UTAir-Ukraine and Moscow's VIM which are struggling right now with the ruble and various sanctions.
Eventually. But unless we have another 9/11 type event, cheap oil will persist for years.
That's because oil for delivery as far as 2023 is already price-locked in the futures market at under $64/barrel.
Bombardier as we know it might be long gone by then.
Can they still survive? Of course. But Bombardier management has to make tough choices and time is ticking.
Today they also killed the iconic CL-415 water bomber with the closure of their North Bay facility, citing no sales and production activity.
We're also hearing today that Bombardier now intends to pitch the CSeries to Embraer.
@Willie Everlearn
The CS100 has NO direct competition. The A319, A320 and Neo are used by you and others for argument sake and nothing more. So, there’s no other practical reason for even mentioning A or B in comparison to the CSeries without differentiating.
Hence the comparison is appropriate.
The CS100 made sense when it was first pitched in 2004. It was supposed to be the size to "fill the gap". But the market has changed since then. Now the CS100 is in "no man's land". It's too big for the regionals, yet too small for the mainline carriers which want larger planes.
Aircraft sales are made months in advance of airshows and airshows used as merely a forum to ‘announce’ sales.
Republic are still holding these aircraft positions according to the last thing I read on it. Seems to me they could get a decent price on their white tails or even on aircraft leases. Don’t assume Republic will automatically cancel their order just because they no longer own Frontier.
So about the only way they can fly those CS300s is if they create a brand new LCC to replace Frontier. At this point, that's a long shot.
Republic has no incentive to cancel their orders right away. Remember that we're already past Republic's original delivery start date. Each new delay from Bombardier plays into Republic's hands in terms of any cancelation fees.
And if it is Bombardier which ends up canceling the CSeries, then not only Republic doesn't have to pay anything, they will get their deposit back.
So they're just going to wait it out until the last moment. It doesn't mean they intend to take any deliveries.
It may surprise you to learn that after LeBourget, European bankers were so impressed with the CSeries that they approached IFC with a new business proposition for financing their CSeries purchases. That deal is no longer in jeopardy. I guess you haven’t read that yet, eh?
Which means they're NOT willing to finance IFC's current order. And why should they? IFC's current order is for airlines like UTAir-Ukraine and Moscow's VIM which are struggling right now with the ruble and various sanctions.
But, the price of oil will go back up. Right? Greed will see to that.
That's because oil for delivery as far as 2023 is already price-locked in the futures market at under $64/barrel.
Bombardier as we know it might be long gone by then.
Can they still survive? Of course. But Bombardier management has to make tough choices and time is ticking.
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peekay4
Thanks for the rebuttal. I appreciate your taking the time to engage as you do provide some interesting commentary. BTW, we hear in Montreal this morning courtesy of the CBC that BBD are now in discussions with Embraer regarding CSeries, so it sounds like confirmation the company is making the rounds seeking a financial partner.
I have to say, I think that's a better response to a crisis than cancelling the program this close to certification before trying at least to find additional investors.
I believe the aeroplane will fly and it will find a home with legacy carriers who still need to develop markets with 110-130 pax aircraft. This fact alone will impact regional airlines in that I think they will shrink further and/or disappear.
Let's see how this all plays out.
I, for one, sure as hell don't know but it's going to be fun to watch.
Willie
P.S. BBD killed the 415 at the same time they delayed the LR85 due to very weak sales, and that was a good thing. Now, if they could only dump Lear.
Thanks for the rebuttal. I appreciate your taking the time to engage as you do provide some interesting commentary. BTW, we hear in Montreal this morning courtesy of the CBC that BBD are now in discussions with Embraer regarding CSeries, so it sounds like confirmation the company is making the rounds seeking a financial partner.
I have to say, I think that's a better response to a crisis than cancelling the program this close to certification before trying at least to find additional investors.
I believe the aeroplane will fly and it will find a home with legacy carriers who still need to develop markets with 110-130 pax aircraft. This fact alone will impact regional airlines in that I think they will shrink further and/or disappear.
Let's see how this all plays out.
I, for one, sure as hell don't know but it's going to be fun to watch.
Willie
P.S. BBD killed the 415 at the same time they delayed the LR85 due to very weak sales, and that was a good thing. Now, if they could only dump Lear.
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I don’t know if you realize it or not, but you’re suggesting Airbus is playing a dangerous game. I’ve read this kind of comment many times before.
The CS100 has NO direct competition. The A319, A320 and Neo are used by you and others for argument sake and nothing more. So, there’s no other practical reason for even mentioning A or B in comparison to the CSeries without differentiating.
If I may differentiate, Airbus used to have the A318 for direct competition but that was before the first C series test vehicle had even been assembled, which as of 3 years ago, the A318 is no longer produced. I’ll take that for direct competition any day.
As for the Boeing 737. CSeries used to have the B737-600 for direct competition but that aircraft too is no longer produced. Boeing sold a grand total of 69 600s, so neither Boeing or Airbus compete “directly” with Bombardier in this 110-130 seat market segment. Something many pundits seem to be oblivious to. There is some overlap when talking about aircraft types and seat segments. That may be pedantic but I’d also have to acknowledge CSeries has overlap with A&B products. Sorry, but to me, that overlap isn’t totally direct competition as many seem to think. It’s just competition and BBD simply isn’t going to dominate the industry.
Airbus have already “shrunk” their A320 twice just to get to the A318. Sold a grand total of 81 aircraft (to date) before finally tapping out. So I’d ask (I don’t any more) whether the lack of A318 sales is due primarily to the possibility no airline wants 110-130 seat aircraft OR whether the A318 was just too uneconomical to operate in that segment of the market. I could ask the same about the 600 series B737.
What this means for the CS100 is that it has (competitors, but) no direct competitor. Only Embraer E2 and MRJ are close. Since both are Regional Jets and both are outside scope they are unlikely to be sold in large numbers.
The CS100 has NO direct competition. The A319, A320 and Neo are used by you and others for argument sake and nothing more. So, there’s no other practical reason for even mentioning A or B in comparison to the CSeries without differentiating.
If I may differentiate, Airbus used to have the A318 for direct competition but that was before the first C series test vehicle had even been assembled, which as of 3 years ago, the A318 is no longer produced. I’ll take that for direct competition any day.
As for the Boeing 737. CSeries used to have the B737-600 for direct competition but that aircraft too is no longer produced. Boeing sold a grand total of 69 600s, so neither Boeing or Airbus compete “directly” with Bombardier in this 110-130 seat market segment. Something many pundits seem to be oblivious to. There is some overlap when talking about aircraft types and seat segments. That may be pedantic but I’d also have to acknowledge CSeries has overlap with A&B products. Sorry, but to me, that overlap isn’t totally direct competition as many seem to think. It’s just competition and BBD simply isn’t going to dominate the industry.
Airbus have already “shrunk” their A320 twice just to get to the A318. Sold a grand total of 81 aircraft (to date) before finally tapping out. So I’d ask (I don’t any more) whether the lack of A318 sales is due primarily to the possibility no airline wants 110-130 seat aircraft OR whether the A318 was just too uneconomical to operate in that segment of the market. I could ask the same about the 600 series B737.
What this means for the CS100 is that it has (competitors, but) no direct competitor. Only Embraer E2 and MRJ are close. Since both are Regional Jets and both are outside scope they are unlikely to be sold in large numbers.
I think the sales performance of the 737-600 and A318 shows the size of the market for the CS100/CS300. Granted its much more economical but there has never been a large 100+ seater market and it seems there never will.
IFC (Ilyushin) might not take delivery of their 32 firm orders, since the ruble has tanked
IFC also has difficulties getting financing other than from the Chinese due to sanctions on Russia
It may surprise you to learn that after LeBourget, European bankers were so impressed with the CSeries that they approached IFC with a new business proposition for financing their CSeries purchases. That deal is no longer in jeopardy. I guess you haven’t read that yet, eh?
IFC also has difficulties getting financing other than from the Chinese due to sanctions on Russia
It may surprise you to learn that after LeBourget, European bankers were so impressed with the CSeries that they approached IFC with a new business proposition for financing their CSeries purchases. That deal is no longer in jeopardy. I guess you haven’t read that yet, eh?
I have no doubt that that the CS is a fine aircraft and I am sorry to see the state the project is in now. I wish I could see a rosier future for it but it's looking pretty bleak at present.