Liberal Party wins, Bombardier wins
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WHAAAAAATT????
Say it isn't so.
EU rapped by WTO for $10bn a year Airbus subsidies - BBC News
Willie
Say it isn't so.
EU rapped by WTO for $10bn a year Airbus subsidies - BBC News
Willie
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Yes and a similar decision on Boeing should come soon as well. Once the Quebec govt. 1.5 billion lifeline is questioned the C-series will also face similar retaliation from trade agreement nations as well. If Trudashian puts down the selfie cam at the UN long enough to sign a check for Bombardier, it will be another trigger for trade sanctions. This globalization thing is getting rather silly.
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...Tru-dough has lots of taxpayer money to throw around. His $30 billion deficit approach to getting our economy moving was just the first sign of his genius. Financing a trade dispute in defense of Bombardier would be peanuts to this clown, Mr. Selfie.
No doubt he'll eventually throw a mitt full at Bombardier because even the morons in parliament know Canadian aerospace will be virtually non-existent if Bombardier tanks.
Don't get me started on foreign pilots and our government's defense of Canadian jobs.
Willie
No doubt he'll eventually throw a mitt full at Bombardier because even the morons in parliament know Canadian aerospace will be virtually non-existent if Bombardier tanks.
Don't get me started on foreign pilots and our government's defense of Canadian jobs.
Willie
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Bombardier's credit rating has been downgraded again by S&P even further below investment-grade after the CSeries delivery forecast was cut in half.
"Bombardier is expected to face a cash-flow shortfall of as much as US$2 billion through 2017."
S&P downgrades Bombardier debt on CSeries delivery delays | Financial Post
"Bombardier is expected to face a cash-flow shortfall of as much as US$2 billion through 2017."
S&P downgrades Bombardier debt on CSeries delivery delays | Financial Post
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I am deeply saddened of Bombardier's credit degradation. ..as is my investment portfolio.
Regardless, I am, however, uplifted by Prime Minister Justin Trudeau Jr.'s near a surety that Quebec's economy will continue to receive massive federal government subsidies, and that Quebec will never take a back seat to Western Canada's economy, irrespective to the fact that all of Bombardier's products ultimately do indeed consume oil..
Puzzling, isn't it?
Regardless, I am, however, uplifted by Prime Minister Justin Trudeau Jr.'s near a surety that Quebec's economy will continue to receive massive federal government subsidies, and that Quebec will never take a back seat to Western Canada's economy, irrespective to the fact that all of Bombardier's products ultimately do indeed consume oil..
Puzzling, isn't it?
Last edited by evansb; 3rd Oct 2016 at 03:02.
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Bombardier to Cut 7,500 More Jobs
Latest cuts—on top of 7,000 layoffs unveiled in February—will result in restructuring charges of US$225 million to US$275 million.
The cuts will affect 2,000 jobs in Canada, mostly in Quebec. It may be strategic for them to cut those jobs now, before being bound by possible job protection restrictions in a future deal with Ottawa.
More from: Canada?s Bombardier to Cut 7,500 More Jobs - WSJ
Latest cuts—on top of 7,000 layoffs unveiled in February—will result in restructuring charges of US$225 million to US$275 million.
The cuts will affect 2,000 jobs in Canada, mostly in Quebec. It may be strategic for them to cut those jobs now, before being bound by possible job protection restrictions in a future deal with Ottawa.
Wall Street Journal -- Bombardier Inc. on Friday said it would cut another 7,500 jobs, or just over 10% of its global workforce, as it focuses on turnaround efforts amid a soft business-jet market and ongoing hiccups with its CSeries jet program.
The Montreal-based plane and train maker said the cuts, to hit administrative and non-production areas across the company, are expected to save it about $300 million by the end of 2018.
“The actions announced today will ensure we have the right cost structure, workforce and organization to compete and win in the future,” said Chief Executive Alain Bellemare in a release.
The latest job cuts are on top of the 7,000 layoffs it unveiled in February, which targeted operations in both Canada and Europe and were largely split evenly between its plane and train operations. ...
In its most recent quarter, which ended in June, Bombardier swung to a net loss and posted a nearly 7% drop in revenue.
The Montreal-based plane and train maker said the cuts, to hit administrative and non-production areas across the company, are expected to save it about $300 million by the end of 2018.
“The actions announced today will ensure we have the right cost structure, workforce and organization to compete and win in the future,” said Chief Executive Alain Bellemare in a release.
The latest job cuts are on top of the 7,000 layoffs it unveiled in February, which targeted operations in both Canada and Europe and were largely split evenly between its plane and train operations. ...
In its most recent quarter, which ended in June, Bombardier swung to a net loss and posted a nearly 7% drop in revenue.
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I'd never invest in an operation with so much nepotistic involvement as Bombardier. The company was built on non-aviation products and has been anything but sound and solvent since focusing on aviation. Trudeau may be engaging his GM moment over this bailout, is there even a billion (of the 30 billion) left for Bombardier?
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I'll repeat the story, as it seems to be fast becoming a prophecy.
A few years before Pan Am finally went under, they sold-off their Crown Jewels to investment banks in order to continue airline operations. These were the property portfolios and the HQ buildings in New York.
At the time, a (very) few wise voices suggested that they instead get rid of the airline which had been on life-support for years and keep the real estate. History shows what eventually happened.
The same is now happening with Bombardier. The Rail Transport Division has always been the cash-cow of the Corporation and its profits, and more importantly free-cash generation, provided the internal funds that were burned up in the initial part of the C Series financing. When that was gone, they turned to debt providers, shareholders, the QC Govt, then QC pension funds, then Federal Govt.... 2.5 years of delay costs a vast amount of money.
Don't forget, it is not just the QC Govt which is now on the hook. It is virtually every worker in QC whose contributions are now vested by their so-called pension 'trustees' in the C Series. (Now, there's a class action lawsuit if ever there was one!)
I have no doubt that the C Series is an excellent product technically, but the simple fact is that financially it is a dead-duck. Airbus and Boeing will never allow it to gain the production volumes and margins it needs to become viable. Even the most optimistic forecasts show that the project as a whole will not get its head above water for decades, if ever.
The question is: will Bombardier see the writing on the wall and cut its C Series losses now and try to hang on to the Rail Division... or will the latter be sacrificed as a politically expedient way by Tinky Winky & Co of postponing the inevitable for 2-3 more years???
I think I can predict the outcome: Rail Division to be sold off shortly, Govt life support to be forthcoming..... and in 2020 it will all die a death anyway.
Anyone up for a bet?
A few years before Pan Am finally went under, they sold-off their Crown Jewels to investment banks in order to continue airline operations. These were the property portfolios and the HQ buildings in New York.
At the time, a (very) few wise voices suggested that they instead get rid of the airline which had been on life-support for years and keep the real estate. History shows what eventually happened.
The same is now happening with Bombardier. The Rail Transport Division has always been the cash-cow of the Corporation and its profits, and more importantly free-cash generation, provided the internal funds that were burned up in the initial part of the C Series financing. When that was gone, they turned to debt providers, shareholders, the QC Govt, then QC pension funds, then Federal Govt.... 2.5 years of delay costs a vast amount of money.
Don't forget, it is not just the QC Govt which is now on the hook. It is virtually every worker in QC whose contributions are now vested by their so-called pension 'trustees' in the C Series. (Now, there's a class action lawsuit if ever there was one!)
I have no doubt that the C Series is an excellent product technically, but the simple fact is that financially it is a dead-duck. Airbus and Boeing will never allow it to gain the production volumes and margins it needs to become viable. Even the most optimistic forecasts show that the project as a whole will not get its head above water for decades, if ever.
The question is: will Bombardier see the writing on the wall and cut its C Series losses now and try to hang on to the Rail Division... or will the latter be sacrificed as a politically expedient way by Tinky Winky & Co of postponing the inevitable for 2-3 more years???
I think I can predict the outcome: Rail Division to be sold off shortly, Govt life support to be forthcoming..... and in 2020 it will all die a death anyway.
Anyone up for a bet?
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I agree with your scenario, and by 2020 a new federal party, (probably non-Liberal), will be elected to power, ..henceforth and forever be blamed for the demise of the Canadian Aviation Industry...
"What is past is prologue."
"What is past is prologue."
Last edited by evansb; 27th Oct 2016 at 03:07.
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The question is: will Bombardier see the writing on the wall and cut its C Series losses now and try to hang on to the Rail Division
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@er340790
Unfortunately not all has been well in the rail division. If we look at Bombardier's two big layoffs announced this year (including this latest one), the majority of the job losses have been in the rail division.
The reason is simple: looming competition from Chinese and Japanese train makers. In particular, China's newly-combined CRRC is truly massive and they've been winning high-profile contracts vs. Bombardier.
(Depending on the market, CRRC is both Bombardier's largest partner and their largest competitor).
CRRC's war chest absolutely dwarfs Bombardier's, and with the saturated Chinese market CRRC have a mandate to expand internationally. They tried to buy Bombardier Transportation last year, but having been rebuffed, they are poised to acquire some of Bombardier's competitors instead and may become an even more formidable opponent.
CRRC recently beat Bombardier for one of the largest rail deals in US history (Chicago CTA). CRRC's winning bid was something like US$200 million below Bombardier's. It's hard to be in the game when your pricing structure isn't in the same ballpark!
So Bombardier rail is in a tough position. They are under severe pressure to cut cost and figure out how to survive in a fierce market that's becoming more and more consolidated. Ideally they would acquire smaller competitors but the CSeries debacle has sucked out their free cash and put them in a huge debt position.
If Bombardier end up selling or merging their rail division, it isn't because they want to, but because they have to!
Unfortunately not all has been well in the rail division. If we look at Bombardier's two big layoffs announced this year (including this latest one), the majority of the job losses have been in the rail division.
The reason is simple: looming competition from Chinese and Japanese train makers. In particular, China's newly-combined CRRC is truly massive and they've been winning high-profile contracts vs. Bombardier.
(Depending on the market, CRRC is both Bombardier's largest partner and their largest competitor).
CRRC's war chest absolutely dwarfs Bombardier's, and with the saturated Chinese market CRRC have a mandate to expand internationally. They tried to buy Bombardier Transportation last year, but having been rebuffed, they are poised to acquire some of Bombardier's competitors instead and may become an even more formidable opponent.
CRRC recently beat Bombardier for one of the largest rail deals in US history (Chicago CTA). CRRC's winning bid was something like US$200 million below Bombardier's. It's hard to be in the game when your pricing structure isn't in the same ballpark!
So Bombardier rail is in a tough position. They are under severe pressure to cut cost and figure out how to survive in a fierce market that's becoming more and more consolidated. Ideally they would acquire smaller competitors but the CSeries debacle has sucked out their free cash and put them in a huge debt position.
If Bombardier end up selling or merging their rail division, it isn't because they want to, but because they have to!
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Republic Airways reach "deferral" deal with Bombardier:
My read: this deal effectively ends Republic's CSeries order (there is zero value for Republic to ever exercise the deferrals**) but allows Bombardier to "save face" and keep those CS300 orders in the books, i.e., to avoid PR damage from having them removed.
**(To Republic the CSeries order was an asset because it held early production slots for the CS300s, which potentially could be resold to other airlines. But since those early slots have been released, and is not restored by a deferral agreement, the value of the contract is effectively zero. If Republic ever want to take delivery of CS300s they'd have to get back in line and negotiate a new pricing deal just like any other customer).
REUTERS-Republic Airways along with Republic Airline and Bombardier, Learjet, and C Series Aircraft partnership entered into contract change order
Oct 26 Republic Airways Holdings Inc
* Republic Airways -On Oct 20, 2016, co along with Republic Airline and Bombardier, Learjet, and C Series Aircraft Limited partnership entered into contract change order
* Republic Airways -Amendment provided for deferral of scheduled aircraft payments to Bombardier and scheduled aircraft deliveries
* Republic Airways -In addition, co and Bombardier parties reached a settlement agreement to provide for a general unsecured claim in amount of $1.5 million
Oct 26 Republic Airways Holdings Inc
* Republic Airways -On Oct 20, 2016, co along with Republic Airline and Bombardier, Learjet, and C Series Aircraft Limited partnership entered into contract change order
* Republic Airways -Amendment provided for deferral of scheduled aircraft payments to Bombardier and scheduled aircraft deliveries
* Republic Airways -In addition, co and Bombardier parties reached a settlement agreement to provide for a general unsecured claim in amount of $1.5 million
**(To Republic the CSeries order was an asset because it held early production slots for the CS300s, which potentially could be resold to other airlines. But since those early slots have been released, and is not restored by a deferral agreement, the value of the contract is effectively zero. If Republic ever want to take delivery of CS300s they'd have to get back in line and negotiate a new pricing deal just like any other customer).
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As I said a couple of months back, a large part of Republic's problems stem from its contract flying with Delta. Delta desperately need to replace their MD-80s to meet NextGen & emissions but there were no manufacturers' slots - until the Republic ones miraculously are freed up....
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That could be true ICT_SLB, although the Republic orders were for CS300s while Delta purchased CS100s. In theory anyways they would be different slots.
Plus Delta wont take deliveries until 2018 so they actually don't need the earliest slots. Prior to the Delta deal there were less than 50 CS100 orders total. Even if Bombardier had only planned to produce 2 aircraft per month, the entire CS100 backlog would have been exhausted in 2018.
Plus Delta wont take deliveries until 2018 so they actually don't need the earliest slots. Prior to the Delta deal there were less than 50 CS100 orders total. Even if Bombardier had only planned to produce 2 aircraft per month, the entire CS100 backlog would have been exhausted in 2018.
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peekay4
From my experience with BA Production on other aircraft, it matters little which variant comes down the line and my bet is that, if there is no associated limit clause, Delta will take the 300 (the 100 is very much slanted towards operating from London City & long, thin routes). My comment on available slots was over the entire narrowbody market including 737s & A320s and is even more valid with the latest delays in P & W Geared Turbofan deliveries which is effecting Airbus at least as badly as BA.
From my experience with BA Production on other aircraft, it matters little which variant comes down the line and my bet is that, if there is no associated limit clause, Delta will take the 300 (the 100 is very much slanted towards operating from London City & long, thin routes). My comment on available slots was over the entire narrowbody market including 737s & A320s and is even more valid with the latest delays in P & W Geared Turbofan deliveries which is effecting Airbus at least as badly as BA.
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It doesn't seem to matter to BBD what version of the C series gets built because of how they designed the aeroplane and its production line. If slot 87 is a 100 today and someone ordering a 300 doesn't have to wait because of an order cancellation, then slot 87 could easily become a 300. It's only a fuselage plug and it won't disrupt the production line.
Delta can't wait to get their hands on the C series. The fuel burns are less than half that of the 737NGs, MD80s and B717s, not to mention it's technical superiority. There could even be more C series bought by Delta. They're that impressed.
Bombardier IS on the ropes. The question of survivability a hot topic and just as hot a debate. Will it survive? I haven't a clue. The difference between your Pan Am story and Bombardier is the difference in management, the economic environments, airline competition today vs the 80s, and the present day number of OEMs vying for orders. I'm not so sure BBD will lose the fight.
Willie
Delta can't wait to get their hands on the C series. The fuel burns are less than half that of the 737NGs, MD80s and B717s, not to mention it's technical superiority. There could even be more C series bought by Delta. They're that impressed.
Bombardier IS on the ropes. The question of survivability a hot topic and just as hot a debate. Will it survive? I haven't a clue. The difference between your Pan Am story and Bombardier is the difference in management, the economic environments, airline competition today vs the 80s, and the present day number of OEMs vying for orders. I'm not so sure BBD will lose the fight.
Willie
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tdracer,
The bypass ratio for the 737NG is only 5.3:1 (very much limited by gear length & ground clearance to the fan) while it is 12:1 on the CSeries. While bypass ratio is not the only measure of efficiency, it is a major factor.
The bypass ratio for the 737NG is only 5.3:1 (very much limited by gear length & ground clearance to the fan) while it is 12:1 on the CSeries. While bypass ratio is not the only measure of efficiency, it is a major factor.
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For very short hauls (say 500nm) against an old 737-classic, maybe the CSeries could achieve ~ 45% improvement in fuel burn. Which is quite a lot, but it is also an unfair comparison.
On more typical missions (> 1000nm) against the new generation aircraft (MAX, Neo) the fuel advantage drops to less than 5%.
And if you consider variables other than fuel, such as the cost of introducing a second type (separate crews, maintenance, parts / supply chain, etc.), that 5% improvement in fuel may fall short to justify a purchase. Especially since the price of oil is expected to remain in the $50-$75 range through 2025 or more.
Beyond that timeline, Boeing, Airbus, etc., may have their own clean-sheet aircraft with even better economics than the CSeries. So timing, as they say, is everything.
On more typical missions (> 1000nm) against the new generation aircraft (MAX, Neo) the fuel advantage drops to less than 5%.
And if you consider variables other than fuel, such as the cost of introducing a second type (separate crews, maintenance, parts / supply chain, etc.), that 5% improvement in fuel may fall short to justify a purchase. Especially since the price of oil is expected to remain in the $50-$75 range through 2025 or more.
Beyond that timeline, Boeing, Airbus, etc., may have their own clean-sheet aircraft with even better economics than the CSeries. So timing, as they say, is everything.