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Bombardier Vs. Estonian Air  
User currently offlinesmws From , joined Dec 1969, posts, RR:
Posted (2 years 2 months 1 day 16 hours ago) and read 3743 times:

It seems that Bombardier has started legal proceedings against Estonian Air because the latter picking Embraer in the end. Anyone have any more specifics on this issue?

Short article (in English, from an Estonian site): http://news.err.ee/economy/d4d4fd69-12d8-4937-8166-ac6ab4daa333

12 replies: All unread, jump to last
 
User currently offlinesmbukas From , joined Dec 1969, posts, RR:
Reply 1, posted (2 years 2 months 1 day 14 hours ago) and read 3515 times:

I think it should be interesting playground for the lawyers. I think, Bombardier lawyers have strong arguments to begin this battle, it will be interesting how it will come up to an end, but commercial law cases may run up to 3 years for being solved.

User currently offlinevoodoo From , joined Dec 1969, posts, RR:
Reply 2, posted (2 years 2 months 1 day 14 hours ago) and read 3482 times:

I blame it on the messy new livery.

User currently offlinesmws From , joined Dec 1969, posts, RR:
Reply 3, posted (2 years 2 months 1 day 13 hours ago) and read 3357 times:

For me, the whole move away from Bombardier to Embraer doesn't make that much sense. Apart from the financial gains that OV might get by actually getting the planes cheaper, the whole mess with re-training pilots and ground crew, having to change infrastructure (yet again, as the Bombardiers weren't that good a natural fit at TLL, for example) already cost a lot.

Smells more of a political decision. The current chairman of the supervisory board Joakim Helenius was let go at the end of June. The new chairman is tasked with analysing the current strategy set in place by Taskila and approved both by the supervisory board and the Ministry of Finance of Estonia. This "new strategy" is also what brought Embraers to the airline.

But regards the lawsuit, The Minister of Finance Juhan Parts has called the filed action completely unfounded and without basis. It's going to be interesting to see how this thing plays out, sometime in the distant future.

Quoting voodoo (Reply 2):
I blame it on the messy new livery.

That could indeed be one of the reasons for this!


User currently offlinesmbukas From , joined Dec 1969, posts, RR:
Reply 4, posted (2 years 2 months 1 day 12 hours ago) and read 3260 times:

Quoting smws (Reply 3):

For me, the whole move away from Bombardier to Embraer doesn't make that much sense. Apart from the financial gains that OV might get by actually getting the planes cheaper, the whole mess with re-training pilots and ground crew, having to change infrastructure (yet again, as the Bombardiers weren't that good a natural fit at TLL, for example) already cost a lot.

We will see. To go further back, the Bombardier came to the fleet also not naturally came to the fleet. The decision were taken by SAS, when they were a shareholder and had an option to cash-out discount they received from Bombardier. And the strategy was Estonian Air to be a small feeder airline for SAS and 737 was too big for them.

And then the "new strategy". As I see, the strategy was to expand really fast and they needed capacity in few months term. Commercially, I see good logic behind that: Bombardier believed Estonian will decide on them (because of the costs of retraining, etc.) and have an offer which were more expensive then Embraer's offer. It might be, that Estonian management evaluated all the related cost and decided on Embraer. Furthermore, they got a good deal from Finnair to lease few Embraer even for Summer 2012.

That's what I see from the press and it sounds logically. But this law battle is about the agreements what Estonian had with Bombardier about future orders. I think, we cannot have a clue what the agreement was.


User currently offlinesmbukas From , joined Dec 1969, posts, RR:
Reply 5, posted (2 years 2 months 1 day 12 hours ago) and read 3229 times:

Quoting smbukas (Reply 1):
The current chairman of the supervisory board Joakim Helenius was let go at the end of June. The new chairman is tasked with analysing the current strategy set in place by Taskila and approved both by the supervisory board and the Ministry of Finance of Estonia.

Do you see any prospects how it can go further? Is the shareholder (government) not happy with the current strategy?

What I see, Estonian Air is really expanding and increasing number of passengers, load factors and routes. But what is the price of that? I booked Business class ticket VNO-TLL-LGW-TLL-VNO for 170EUR roundtrip including everything. Half of the price they should pay for the lounges at VNO, TLL (twice) and LGW. Or 110EUR economy class VNO-TLL-TBS-TLL-VNO. They should loose a lot of money with such yields.

Anyway service is very good and TLL is great small airport were you can transfer gate to gate in 2 minutes.


User currently offlinesmws From , joined Dec 1969, posts, RR:
Reply 6, posted (2 years 2 months 1 day 11 hours ago) and read 3136 times:

There's been talk of OV attempting to expand to Asia and together with TLL to increase transit traffic. In theory, this is a sound idea, although competition for this is exceptionally tough, what with HEL and RIX being so close geographically.

And currently the state seems unhappy with the economic results of the current strategy. Helenius cited difficult market conditions why the successful implementation of the new strategy is currently failing badly.

Hopefully the airline will manage to starting turning a profit at some point. A fleet of 12 Embraers (and 3 Saabs) should be large enough to service the Estonian customer base with connections to Europe, as well as help TLL along in improving transit.

And 170 for business class tickets on that route.. someone got the short end of the stick and it wasn't you!  

[Edited 2012-07-03 05:20:53]

User currently offlineJoeCanuck From , joined Dec 1969, posts, RR:
Reply 7, posted (2 years 2 months 1 day 9 hours ago) and read 2919 times:

Wasn't the change made based solely on financing. From what I understand, Emb offered them terms that Bombardier wasn't willing to match, and were so good that the ejets made financial sense even with the cost of changing fleets.

It would be interesting to see the details of those terms. It seems like such a sudden and radical shift that it seems like there should be more to the story but financing is a huge part of aircraft cost so it is possible.


User currently offlinejfidler From , joined Dec 1969, posts, RR:
Reply 8, posted (2 years 1 month 3 weeks 4 days 10 hours ago) and read 2173 times:

Does anyone know where we can find more details on the lawsuit? I assume it was filed in Canada, perhaps in Quebec. Are court filings publicly available? It would be interesting to see how much damages Bombardier is claiming. In Estonian Air's 2011 annual report, they felt that Bombardier did not have a claim and thus did not make any provisions on their balance sheet.

User currently offlinesmws From , joined Dec 1969, posts, RR:
Reply 9, posted (2 years 1 month 3 weeks 2 days 12 hours ago) and read 1883 times:

Quoting jfidler (Reply 8):

Does anyone know where we can find more details on the lawsuit?

I'll try to keep this thread up-to-date with information on the lawsuit that gets to the Estonian press.

Information on it is currently rather scarce. The last news item on the lawsuit was from the 6th of July, where they stated that OV used its legal right to terminate the contract as Bombardier failed to fulfill certain preconditions. It also stated that the lawyers of OV are currently compiling a response and because of that, their statements and the extent of the claim cannot be disclosed.

Article in Estonian: http://majandus.delfi.ee/news/uudise...leping-bombardieriga.d?id=64645176

Also, OV hasn't found a buyer for the three Bombardier airliners it's currently operating.


User currently offlineCRJ900 From , joined Dec 1969, posts, RR:
Reply 10, posted (2 years 1 month 3 weeks 2 days 10 hours ago) and read 1805 times:
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Quoting smws (Reply 9):
Also, OV hasn't found a buyer for the three Bombardier airliners it's currently operating

Aren't they leased from Bombardier Capital?


User currently offlinesmws From , joined Dec 1969, posts, RR:
Reply 11, posted (2 years 1 month 3 weeks 2 days 10 hours ago) and read 1778 times:

Quoting CRJ900 (Reply 10):
Aren't they leased from Bombardier Capital?

The planes were taken on a 12 year financial lease agreement, according to the communications specialist at OV, Maris Talvar. She also stated that the three planes are owned by OV and OV has the right to sell them or lease them out without consent from Bombardier. The lessee just has to be accepted by Canada's export credit agency Export Development Canada, as they financed the purchase of the aircraft.

Full story (in Estonian): http://majandus.delfi.ee/news/uudise...idele-ostjat-leidnud.d?id=64663722


User currently offlineCRJ900 From , joined Dec 1969, posts, RR:
Reply 12, posted (2 years 1 month 3 weeks 2 days 10 hours ago) and read 1740 times:
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Quoting smws (Reply 11):
The planes were taken on a 12 year financial lease agreement, according to the communications specialist at OV, Maris Talvar

Cool, thanx for a quick answer  

I'll take them, along with the 13 ex-Pluna CRJ900NGs, and start my own airline   


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