Bombardier in trouble?

Two bits of news this morning are painting a not very good picture for Bombardier.

The first news was the Quebec government bought a 49.5% stake in the CSeries. That gives them the ability to hold production in place in the future.

Bombardier had been in talks with Airbus in an attempt to sell a stake to them, but talks broke down. The CSeries has much potential, proving to be the quietest aircraft in its class, with a 20% improvement in fuel consumption. But the market that it is in is almost flooded with good aircraft already, as it's competing against both the 737 and A320.

www.flightglobal.com...

The second but of news is the official cancelation of the Lear-85 program, with a $2.6B loss. The program was two years late, and the program was recently paused due to delays and market issues.

www.flightglobal.com...

a reply to: Zaphod58

I wonder if anyone's going to buy them or their headed for chapter 11?

a reply to: Sammamishman

I can see them being bought. They have several successful platforms, with a couple new ones in the works.

a reply to: Zaphod58

I think the 737X will kill it. Look at the advantages of the 737 platform - airlines already have maintenance shops/tools/A&Ps in place already to service them. Unless the C series can use the same A&Ps for the CRJ with minimal training - if airlines are using CRJs, I don't see the incentive to bail on 37s, The X will have a ~12% fuel savings over current models. Kinda hard to compete with that. Wooing Airbus is smart because they are the closest competitor, really.

a reply to: Zaphod58

Seems that the Russian sanctions are not only herting European farmers but " Bombardier's $3.4B Russian venture on hold amid sanctions
Profit falls by 50% on costs related to recent round of layoffs " www.cbc.ca...

Bombardier is suspending negotiations on a $3.4-billion proposal to assemble turboprop aircraft in Russia due to the country's political situation and weak economy.

"We're not moving ahead because the conditions are not right at this point in time for a joint venture in Russia," president and CEO Pierre Beaudoin said Thursday during a conference to discuss the company's third-quarter results.

The Montreal-based train and aerospace concern was hoping to conclude negotiations this year with Russian's Rostec for the assembly of 100 Q400 regional jets.


The decision comes after Canada slapped sanctions against Russian individuals and entities, including government agencies, over Moscow's involvement in unrest in Ukraine.

a reply to: HighDesertPatriot

That extra 8% in efficiency that the Cseries has over the 737 is still a HUGE number to airlines, especially once fuel costs start to go up again.

I see the Cseries selling the way the 737 did, slow at first, because it's an unknown entity, before sales start to snowball once carriers begin to realize how good of an aircraft it is. It also seems like there are plenty of carriers who are "meh" on their E-Jets and would happily jump ship to the Cseries after a year or two in service to prove itself.

JetBlue, for one, would be a perfect Cseries customer, and I know for a fact that they've been looking to ditch their Embraer fleet ASAP. I'm sure AA would also follow suit if JetBlue jumped the gun.

EDIT: I was right!

www.bloomberg.com...

If I were Bombardier, I'd move mountains to make that sale happen, even if it meant selling at a slight loss. The PR boost alone for the Cseries brand would be more than worth it.

a reply to: Barnalby

I agree, really. The C-series does not have the max capacity of the 737, so it's really not the same customer buying it. Regionals who are having trouble booking to capacity might find them very attractive.

Bombardier has 240+ firm orders for the C-Series, 61 of which came in 2014, with ZERO in 2015. There seems to have been a major loss in confidence over the C-Series when the testing delays hit this year. Though, it's not like delays are out if the ordinary in certifying a commercial airliner. Due to the fact that the majority of initial orders were with European carriers, I'd wager that Airbus has been telling tales out of school about the C-Series to potential customers while stringing Bombardier along...

a reply to: AtomicMod

It's a good plane just going by the numbers they have for range, noise, and fuel consumption. But it's a horrible market to try to break into. The narrow body mid range is never going to see a major player outside of Airbus and Boeing. Their aircraft have too much history, and are far too popular in that market.

In addition to the $1B from Quebec, Bombardier will inject an additional $2B over the next two years, and push the break even date to 2020. That means they have to get new orders. They currently only have 243 on the books, which is beyond the 2020 date.

www.flightglobal.com...

a reply to: Zaphod58

I'm sure a lot of carriers were looking at the CSeries as a gap filler until 737-Max was in full tilt - so, that year long delay has probably put them out of that gap.

a reply to: AtomicMod

Especially with the Max rolling right along. They got the wing to body join done, and power on completed. It still needs the vertical fin, elevators, tail cone, and engines, but they only got the first fuselage portion in August.

a reply to: Zaphod58

In the US, Jetblue and Spirit need to be their top priorities, as the Cseries seems to be a perfect E-Jet and A319 killer.

Unfortunately for Bombardier, Boeing suddenly has a lot more resources free to devote to 737MAX production, now that they don't have to worry about building any of those pesky stealth triangle bomber things

Too soon?

a reply to: Barnalby

Ouch!


By the way - Zaph sure has a cool new avatar.

a reply to: Zaphod58

The fantastic book "How to become millionaire - Guide for billionaires in trouble" - advices to invest in jets and yachts as the greatest and fastest cash burners.

The C Series is not flying too high right now.

This decision from the Provincial government was a huge one. A bit untactful since we have teachers striking this week because of budget cuts in the public schooling system.

However, this is an investment and some of the money will be recovered quickly through taxes, over one year this hardly makes a dent in the 1 b$, but I hope with that money they can manage to make the teachers happy later. Not to mention that if Bombardier succeeds then the stock will go up and I mean gain at least 17$ since it fell.

Let us see how this plays out.

a reply to: Zaphod58

The Province of Quebec may have just bailed out Bombardier. They took a $1.5 billion stake in the company: link.

a reply to: anzha

That's only a short term fix. Unless the CSeries sells they could be facing real trouble.

a reply to: the2ofusr1

Sorry, missed this one before. I had a feeling this would have happened either way. The Q400 is a good airplane, but it falls into an odd market, almost a niche market.

If you pack the seats on you can fit 86 passengers, although most operators go for a 78 seat configuration. Max range is around 1300 miles. So you can't carry enough passengers or go far enough to make it fit in most markets.

It's perfect for islands or areas that have a bunch of smaller airports grouped, or as a feeder from smaller airports, but it's never been wildly successful.

Bombardier has unveiled a five year recapitalization plan. They expect to see profits up to 7.8% by the end of it.

The plan includes working deals with suppliers promising higher volume for discounts, moving production of some components to Mexico, Morocco, and India, as well as other ideas.

There is very little room for error and it will depend in part on getting their credit rating upgraded.

www.flightglobal.com...