US Dept of Commerce slaps 220% tax on Bombardier c series
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Airbus buys into C-Series
Because they didn't read my posts here and in Aviation Week ! ;-) I'm shocked, actually, and it reflects very badly on Boeing's management. It may also have been favoured by the affinity between Quebec and France. I'm curious what the political fallout in Canada will be, and no doubt the governments there will concentrate on investment recouped and try to forget about jobs lost. A very smart move on Airbus' part, given that their bottom end was not covered either.
The partnership is expected to result in significant CSeries production costs savings by leveraging Airbus's global supply chain expertise, but the company won't be paying any money for the acquired stake or absorb Bombardier's (TSX:BBD.B) large debt.
Airbus will acquire a 50.01 per cent interest in the CSeries Aircraft Limited Partnership, which manufactures and sells the plane in exchange for access to Airbus's sales, logistics, procurement and support expertise.
Bombardier will own 31 per cent and the Quebec government's investment agency will hold 19 per cent, down from 49.5 per cent when it invested US$1 billion in the program.
Airbus will acquire a 50.01 per cent interest in the CSeries Aircraft Limited Partnership, which manufactures and sells the plane in exchange for access to Airbus's sales, logistics, procurement and support expertise.
Bombardier will own 31 per cent and the Quebec government's investment agency will hold 19 per cent, down from 49.5 per cent when it invested US$1 billion in the program.
Strange. Very, very strange...
Hmm, perhaps Boeing didn't think of that - of exploring doing such a deal itself, I mean.
Delta better not be in a hurry to get their aircraft - setting up an aircraft assembly line is a multi-year process.
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So, Bombardier and Quebec just gave Airbus a controlling half of a multi-billion dollar investment in return for management expertise?
Only final assembly would be in the US. They could still put a big tariff on the components imported from Canada - unless of course they move the subassembly work to the US as well.
Canadian taxpayers must be loving this, especially when Airbus has already stated they plan to move at least part of the production jobs away from Canada.
Delta better not be in a hurry to get their aircraft - setting up an aircraft assembly line is a multi-year process.
Last edited by underfire; 17th Oct 2017 at 03:24.
Other than sticking it to Boeing, what's in this for Airbus to build an aircraft that competes with your own line?
My only thought would be they can now stifle any expansion of the C-Series and prevent it getting bigger and competing with A320/A321.
My only thought would be they can now stifle any expansion of the C-Series and prevent it getting bigger and competing with A320/A321.
Given that the existing orders have all been sold at substantially below production cost, I wonder how many years of losses Airbus will be willing to eat to see the program turn profitable before they just pull the plug?
I wonder if Quebec threw language into the agreement requiring Airbus to keep x thousand jobs in Quebec? If not, they could be in for a rude surprise.
I wonder if Quebec threw language into the agreement requiring Airbus to keep x thousand jobs in Quebec? If not, they could be in for a rude surprise.
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Given that the existing orders have all been sold at substantially below production cost,
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In its current configuration the C-Series and 320/321 don't compete. Neither Airbus nor Boeing build an aircraft in this class.
You can be fairly sure Airbus didn't do this out of charity.
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Given that the existing orders have all been sold at substantially below production cost,
My only thought would be they can now stifle any expansion of the C-Series and prevent it getting bigger and competing with A320/A321.
The larger series, which many think is a threat, will be a well placed advancement marker in the product line that will compete with the aircraft coming online from China. Face it, the ac is brand new in every respect, not simply modifying a design from the mid 1970's (B737)
Last edited by underfire; 17th Oct 2017 at 03:57.
Boeing pulled the plug on the MD-95/717 after the MacDac merger because they didn't see it as a long term money maker.
Airbus has no skin in the game to keep the C-series going at a loss. If they don't see it turning around quickly and making significant money long term they only thing to stop them from pulling the plug is if someone was smart enough to put a huge penalty clause in the agreement.
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Boeing wrote off $2.1 Billion on the 748. The breakeven cost for development was 400 748....400! Sales to date have been 135.
Boeings accounting on the 787 vs reality:
While the production cost and sales price may be a break even or profit, (October 2015) the $32 Billion left from design cost still is outstanding.
"After losing about $25 million on each jet it delivered in the second quarter, Boeing projects a watershed moment for the plane by year-end: It expects to finally roll out a Dreamliner that brought in more money than it cost to build.
That’s when Boeing begins the slow climb out of a deep financial hole that already totals just shy of $32 billion and will increase further when Boeing reports quarterly financial results Wednesday.
"The most conservative of IISL’s models, the one most favorable to Boeing, projects that after delivering 2,000 Dreamliners, the jet-maker will still have “a total program loss of approximately $5 billion.”
ahh, the good old days of optiism when the 787 were selling....
To date, there are 1283 total sales of all variants of the 787... with 600 AFTER the breakeven point on cost of production. (with 683 selling at an average of $25 million loss ($1.7billion loss) hence the $2 billion loss recorded on the 787...see how accounting works.
https://www.seattletimes.com/busines...ore-skeptical/
Boeings accounting on the 787 vs reality:
While the production cost and sales price may be a break even or profit, (October 2015) the $32 Billion left from design cost still is outstanding.
"After losing about $25 million on each jet it delivered in the second quarter, Boeing projects a watershed moment for the plane by year-end: It expects to finally roll out a Dreamliner that brought in more money than it cost to build.
That’s when Boeing begins the slow climb out of a deep financial hole that already totals just shy of $32 billion and will increase further when Boeing reports quarterly financial results Wednesday.
"The most conservative of IISL’s models, the one most favorable to Boeing, projects that after delivering 2,000 Dreamliners, the jet-maker will still have “a total program loss of approximately $5 billion.”
ahh, the good old days of optiism when the 787 were selling....
To date, there are 1283 total sales of all variants of the 787... with 600 AFTER the breakeven point on cost of production. (with 683 selling at an average of $25 million loss ($1.7billion loss) hence the $2 billion loss recorded on the 787...see how accounting works.
https://www.seattletimes.com/busines...ore-skeptical/
Last edited by underfire; 17th Oct 2017 at 04:58.
Disaster for Boeing?
This is a potential disaster for Boeing. Their deadliest competitor has picked up a share of a fantastic design, for nothing. The design now has the backing of that major competitor, removing all doubt in the market place over the viability of the product. It will be mass produced, so it is now a safe purchasing option.
Outside the USA there are fewer and fewer reasons to buy a Boeing 737. This might even provoke a few cancellations.
The ridiculous thing is that Boeing could have done a deal with Bombardier themselves instead of trying to grind the design out of existence. They're in desperate need of a new design themselves, why not partner Bombardier? What possible reason that actually matters could they have had for not doing a deal with Bombardier?
Instead now they're clearly on the path to exiting the market and they have nothing to replace their current model to become competitive again.
Meanwhile Airbus has picked up a huge technological advantage for free. They can grow the C series design if they want, they can adapt the design; it's a major coup for Airbus.
I think Boeing's board has some explaining to do to its shareholders.
Outside the USA there are fewer and fewer reasons to buy a Boeing 737. This might even provoke a few cancellations.
The ridiculous thing is that Boeing could have done a deal with Bombardier themselves instead of trying to grind the design out of existence. They're in desperate need of a new design themselves, why not partner Bombardier? What possible reason that actually matters could they have had for not doing a deal with Bombardier?
Instead now they're clearly on the path to exiting the market and they have nothing to replace their current model to become competitive again.
Meanwhile Airbus has picked up a huge technological advantage for free. They can grow the C series design if they want, they can adapt the design; it's a major coup for Airbus.
I think Boeing's board has some explaining to do to its shareholders.
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Um, the 737 design project started in 1965 with an order from launch customer Lufthansa, first line service was in February of 1968. The fuselage is actually a shortened 707 from the 50s.
Ironically, Boeing considered selling the whole 737 project to Japan in 1970 when sales were slow, much as Bombardier has done now.
Last edited by BRE; 17th Oct 2017 at 07:18.
