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KarelXWB
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Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 9:50 am

Why would Boeing invest into a failing airline like Monarch?

Boeing (BOE, Chicago O'Hare) reportedly injected GBP100 million (USD131 million) into Monarch Airlines (ZB, London Luton) last year as part of a bailout that briefly kept the airline operational, reports The Financial Times. However, the cash payments, which were paid over a period of six months from October 2016 into Monarch's holding company, the Jersey-based Petrol Jersey Limited, weren't enough to stop the airline from collapsing last week.

According to The Sunday Times, the Boeing cash injection was part of a deal struck by Monarch's owner, Greybull Capital, which would see the British carrier purchase a total of forty-five aircraft from the US manufacturer, but Greybull denies there was anything shady about the deal.


Article
https://www.ch-aviation.com/portal/news ... ut-in-2016
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Egerton
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 9:55 am

I wonder what other Boeing customers think of their supplier funding a competitor? Does this together with the current Boeing attack upon Bombardier suggest that Boeing has lost the plot?
 
wezgulf3
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 9:59 am

I wonder how much the UK Government knew about this?

You also wonder how Airbus and at a lesser extent Embraer and Bombardier feel about this? From my untrained eye Boeing bought this order, is that normal practice?

Wes...
 
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Finn350
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 10:03 am

Airbus very likely assessed Monarch as a high credit risk customer and probably is only happy to see the competitor to waste money on a such lost cause.
 
downdata
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 10:15 am

The things that makes you (or in this case, other Boeing customers) go hmmmm....
 
mwhcvt
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 10:39 am

I very much doubt Airbus will have anything to say about this, a few years back when US was in trouble Airbus did the similar deal, providing a short term cash injection as part of a large refleet deal, same as a few years back in order to secure a deal with U2 to switch from 737 to 320 Airbus did a deal to cover the pilot retraining costs at U2
Must think up a new one soon, slow moving brain trying to get into gear ;)
 
Flyingabout
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 10:58 am

So Boeing struck an unfavourable deal just for market penetration in an all-Airbus airline? So many thoughts right now: Bombardier, tax, WTO, Belfast, tanker deal etc. Truly the pot calling the kettle black, I really hope that more US airlines buy the CSeries now.
 
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Polot
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:05 am

Nothing odd about it. Obviously Boeing wanted the airline to succeed so it could take on its rather large 737 order. Considering 737s are popular and in demand, and $135 million is basically pocket change to Boeing, it is a low risk deal for Boeing with a lot of potential reward if successful (which obviously it was not). As mentioned Airbus has done similar deals as well. They were an investor in the America West/US merger to help make sure US stayed afloat.

Won’t, of course, stop A.net from going into pearl clutching hysterics about the deal, and the OP starts things off on an odd tone when it should be completely obvious why Boeing invested in Monarch.
 
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JannEejit
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:08 am

So did Bombardier not just "invest" in Delta or are the rules different for non Boeing aircraft acquisition ? :-)
 
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KarelXWB
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:09 am

Polot wrote:
Won’t, of course, stop A.net from going into pearl clutching hysterics about the deal, and the OP starts things off on an odd tone when it should be completely obvious why Boeing invested in Monarch.


Nothing obvious at all, at least not for me. I never understood the a.net obsession for an airline like Monarch. It was a rather small airline, and a financial disaster.
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Polot
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:13 am

JannEejit wrote:
So did Bombardier not just "invest" in Delta or are the rules different for non Boeing aircraft acquisition ? :-)

How on earth can you even spin a significant aircraft discount as an investment from BBD into DL? That makes no sense.
 
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Revelation
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:15 am

Flyingabout wrote:
So Boeing struck an unfavourable deal just for market penetration in an all-Airbus airline? So many thoughts right now: Bombardier, tax, WTO, Belfast, tanker deal etc. Truly the pot calling the kettle black, I really hope that more US airlines buy the CSeries now.

I'm not seeing the correlation. You're talking about events involving governmental actions like giving loans and tax breaks to corporations, and this is a public corporation making a highly speculative and now clearly unprofitable investment in another corporation.
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Polot
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:16 am

KarelXWB wrote:
Polot wrote:
Won’t, of course, stop A.net from going into pearl clutching hysterics about the deal, and the OP starts things off on an odd tone when it should be completely obvious why Boeing invested in Monarch.


Nothing obvious at all, at least not for me. I never understood the a.net obsession for an airline like Monarch. It was a small airline, nothing special about it.

The obvious part is that Monarch was an Airbus customer who bought 45 737Maxs. Obviously Boeing would like to see Monarch succeed and take their order (and more). The investment only works at to be about $3 million a frame so it is not like it was costing Boeing all that much.
 
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KarelXWB
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:19 am

Polot wrote:
The obvious part is that Monarch was an Airbus customer who bought 45 737Maxs. Obviously Boeing would like to see Monarch succeed and take their order (and more).


The question still stands: why? Monarch was a financial disaster, so why investing into a failing airline, knowing the aircraft might get never delivered. It's not like Boeing really needed this order: 45 aircraft is a rather small amount when you have a backlog of close to 4,000 aircraft. Lot's of opportunities elsewhere.
What we leave behind is not as important as how we've lived.
 
dtw2hyd
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:19 am

Polot wrote:
How on earth can you even spin a significant aircraft discount as an investment from BBD into DL? That makes no sense.


Off-topic, Isn't every CA plane sold in the world discounted? What about some sales guy's statements to customers while negotiating a deal "We are giving away our planes at/below cost". What if BCA offered DL 737 below cost to win against BBD. Can those be used against aircraft manufacturer? I think BCA opened a can of worms by winning against BBD.
Last edited by dtw2hyd on Wed Oct 11, 2017 11:23 am, edited 3 times in total.
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scotron11
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:20 am

Polot wrote:
Nothing odd about it. Obviously Boeing wanted the airline to succeed so it could take on its rather large 737 order. Considering 737s are popular and in demand, and $135 million is basically pocket change to Boeing, it is a low risk deal for Boeing with a lot of potential reward if successful (which obviously it was not). As mentioned Airbus has done similar deals as well. They were an investor in the America West/US merger to help make sure US stayed afloat.

Won’t, of course, stop A.net from going into pearl clutching hysterics about the deal, and the OP starts things off on an odd tone when it should be completely obvious why Boeing invested in Monarch.


So why wasn't publicized at the time? Also the monies did not go to Monarch per se, it went to Greybull. All off-shore
 
RalXWB
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:25 am

In the end we all know why Monarch ordered Boeing...as if they had a choice :stirthepot:
 
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SheikhDjibouti
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 11:58 am

Flyingabout wrote:
So Boeing struck an unfavourable deal just for market penetration in an all-Airbus airline? So many thoughts right now: Bombardier, tax, WTO, Belfast, tanker deal etc. Truly the pot calling the kettle black.

Revelation wrote:
I'm not seeing the correlation. You're talking about events involving governmental actions like giving loans and tax breaks to corporations, and this is a public corporation making a highly speculative and now clearly unprofitable investment in another corporation.

Except....on the other thread ( ;) ), I was assured that the problem was NOT that BBD received loans and tax breaks, but that BBD ( a public corporation) made a "highly speculative and now clearly unprofitable investment in another corporation" i.e. DL
Those are your words, and I cannot help but see the correlation.
:lol:
Nothing to see here; move along please.
 
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Revelation
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 12:00 pm

SheikhDjibouti wrote:
Flyingabout wrote:
So Boeing struck an unfavourable deal just for market penetration in an all-Airbus airline? So many thoughts right now: Bombardier, tax, WTO, Belfast, tanker deal etc. Truly the pot calling the kettle black.

Revelation wrote:
I'm not seeing the correlation. You're talking about events involving governmental actions like giving loans and tax breaks to corporations, and this is a public corporation making a highly speculative and now clearly unprofitable investment in another corporation.

Except....on the other thread ( ;) ), I was assured that the problem was NOT that BBD received loans and tax breaks, but that BBD ( a public corporation) made a "highly speculative and now clearly unprofitable investment in another corporation" i.e. DL
Those are your words, and I cannot help but see the correlation.
:lol:

Actually I've avoided 'the other thread' so I don't think I can be quoted as saying anything like that.
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WIederling
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 12:26 pm

KarelXWB wrote:
Polot wrote:
The obvious part is that Monarch was an Airbus customer who bought 45 737Maxs. Obviously Boeing would like to see Monarch succeed and take their order (and more).


The question still stands: why? Monarch was a financial disaster, so why investing into a failing airline, knowing the aircraft might get never delivered. It's not like Boeing really needed this order: 45 aircraft is a rather small amount when you have a backlog of close to 4,000 aircraft. Lot's of opportunities elsewhere.


1: Turning around an Airbus customers carries lots of MOJO.

2: you don't know in how many other places Boeing "aided" their customers into placing an order for one of those 4000 frames backlog.
Murphy is an optimist
 
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SheikhDjibouti
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 12:27 pm

Flyingabout wrote:
So Boeing struck an unfavourable deal just for market penetration in an all-Airbus airline? .

Revelation wrote:
I'm not seeing the correlation. You're talking about events involving governmental actions like giving loans and tax breaks to corporations, and this is a public corporation making a highly speculative and now clearly unprofitable investment in another corporation.

SheikhDjibouti wrote:
Except....on the other thread ( ;) ), I was assured that the problem was NOT that BBD received loans and tax breaks, but that BBD ( a public corporation) made a "highly speculative and now clearly unprofitable investment in another corporation" i.e. DL
Those are your words...

Revelation wrote:
Actually I've avoided 'the other thread' so I don't think I can be quoted as saying anything like that.


My quote from you only includes the words within quotation marks (how odd is that?); I.e. "highly speculative and now clearly unprofitable investment in another corporation",
If I have left the impression that you were also the poster who assured me the problem was not the loans and tax breaks, then I apologise. I know for a fact it wasn't you, and I was not trying to pin that on you. But I was still hoping you might answer that point.
Nothing to see here; move along please.
 
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awschucks77
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 12:44 pm

Seriously - W.T.F?!? How ? I'm at an utter loss that I can't even type. This is SO SHADY! Especially right after Bombardier was slapped with such heavy duties. Should the same not be imposed on Boeing?
 
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Revelation
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 12:56 pm

SheikhDjibouti wrote:
Flyingabout wrote:
So Boeing struck an unfavourable deal just for market penetration in an all-Airbus airline? .

Revelation wrote:
I'm not seeing the correlation. You're talking about events involving governmental actions like giving loans and tax breaks to corporations, and this is a public corporation making a highly speculative and now clearly unprofitable investment in another corporation.

SheikhDjibouti wrote:
Except....on the other thread ( ;) ), I was assured that the problem was NOT that BBD received loans and tax breaks, but that BBD ( a public corporation) made a "highly speculative and now clearly unprofitable investment in another corporation" i.e. DL
Those are your words...

Revelation wrote:
Actually I've avoided 'the other thread' so I don't think I can be quoted as saying anything like that.


My quote from you only includes the words within quotation marks (how odd is that?); I.e. "highly speculative and now clearly unprofitable investment in another corporation",
If I have left the impression that you were also the poster who assured me the problem was not the loans and tax breaks, then I apologise. I know for a fact it wasn't you, and I was not trying to pin that on you. But I was still hoping you might answer that point.

Thank you for clarifying the context. Clearly I've called the Monarch investment a "highly speculative and now clearly unprofitable investment in another corporation". We don't know much about the terms of that investment. Hopefully more will be revealed. Trying to draw a parallel to BBD is perilous, IMHO. One feature of a.net is justifying one set of bad behaviors by trying to find another set of even worse behaviors. It's a poor argument technique, IMHO. I'm sure I've used it from time to time, but I try to avoid it.
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ikolkyo
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 12:56 pm

I’m pretty sure Airbus did the same back when US and HP merged, 250 million dollar loan and they lined up to be a customer for the original A350.

https://mobile.nytimes.com/2005/05/20/b ... l?referer=
Last edited by ikolkyo on Wed Oct 11, 2017 1:11 pm, edited 4 times in total.
 
TerminalD
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:02 pm

KarelXWB wrote:
Why would Boeing invest into a failing airline like Monarch?

Egerton wrote:
I wonder what other Boeing customers think of their supplier funding a competitor? Does this together with the current Boeing attack upon Bombardier suggest that Boeing has lost the plot?

awschucks77 wrote:
Seriously - W.T.F?!? How ? I'm at an utter loss that I can't even type. This is SO SHADY! Especially right after Bombardier was slapped with such heavy duties. Should the same not be imposed on Boeing?

This has been going on for decades. Boeing Capital has been involved in all sorts of financing for airlines in financial trouble. More airlines = lower fares. Lower fares = more passengers. More passengers = more planes. It's definitely pro-consumer, but so are Bombardier subsidies for Delta. I don't really care about C-Series subsidies except that DL is the biggest complainer about subsidies and also is taking huge subsidies. That sort of thing makes me nuts.
 
scotron11
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:17 pm

ikolkyo wrote:
I’m pretty sure Airbus did the same back when US and HP merged, 250 million dollar loan and they lined up to be a customer for the original A350.

https://mobile.nytimes.com/2005/05/20/b ... l?referer=


This was not a loan,,this was paid "off shore" to Greybull....
 
Flyglobal
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:20 pm

Some reasons
1) Boeing wants to catch up in the 737/ A320 Race and come back to 50/50 share.
2) Break out an Airbus customer is worth some 'investment' (or premium discount)
3) A costomer in Europe where the 737 does hard to compete is even worth 'double' Discount


Flyglobal
 
VolvoBus
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:37 pm

For the conspiracy theorists, try this for an alternative narrative.

Monarch announce an order for 30 Max at the 2014 Farnborough Air Show. This would have been a useful order for a newish aeroplane, from an airline with a long and relatively successful history and, probably most importantly, an Airbus operator. It seems probable that Monarch got a very competitive price.

Fast forward to 2016. Monarch is in trouble, and with it the order,plus the 15 options from the original order at probably a discounted price that have in the interim been exercised. Boeing Commercial 'sell' the aircraft to Monarch,at the contract price,who sells them on to Boeing Leasing at closer to the current market price for those delivery slots with an agreement to lease them back. Monarch receive USD 135m to keep them afloat. If it works, Boeing have the aircraft with a guaranteed lease, if not, they have aircraft with a relatively early delivery date to sell. As Boeing will have the figures, I would expect that they have calculated what options they had, and that this was the best, or least bad ,one at any rate.
 
mjoelnir
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:43 pm

scotron11 wrote:
ikolkyo wrote:
I’m pretty sure Airbus did the same back when US and HP merged, 250 million dollar loan and they lined up to be a customer for the original A350.

https://mobile.nytimes.com/2005/05/20/b ... l?referer=


This was not a loan,,this was paid "off shore" to Greybull....


In that case one could start thinking about corruption.
 
scotron11
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:48 pm

mjoelnir wrote:
scotron11 wrote:
ikolkyo wrote:
I’m pretty sure Airbus did the same back when US and HP merged, 250 million dollar loan and they lined up to be a customer for the original A350.

https://mobile.nytimes.com/2005/05/20/b ... l?referer=


This was not a loan,,this was paid "off shore" to Greybull....


In that case one could start thinking about corruption.


Havr a look

https://www.ft.com/content/a2ee882c-adb ... 21c713abf4
 
bennett123
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:48 pm

Fly global

On point 3. I assume you exclude FR.

However MOL did say he raped Boeing.
 
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mercure1
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:54 pm

First this was hardly secret - it well was known and publicized at the time. Here are some stories from 2016 making clear Boeing was a participant in Monarch recapitalization.

http://news.sky.com/story/boeing-flies- ... l-10609656
http://www.cityam.com/251023/boeing-swo ... fleet-deal
http://www.ibtimes.co.uk/boeing-bails-o ... al-1585454

Second such investment or financial participation is quite common by manufacturers. Just look at the large bankruptcies in the US and how manufacturers like Airbus have helped by participating in funding the restructuring.
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Momo1435
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:55 pm

scotron11 wrote:
mjoelnir wrote:
scotron11 wrote:

This was not a loan,,this was paid "off shore" to Greybull....


In that case one could start thinking about corruption.


Havr a look

https://www.ft.com/content/a2ee882c-adb ... 21c713abf4

Linking to articles behind a paywall isn't really effective.

at least state the title of such article in your post, so people can google it.

"Greybull eyes profit from Monarch collapse"


Seems like an open invitation for the Boeing legal team to go after this company and it's owners.


Oh, and if anyone wants to link this issue with other situations surrounding Boeing... just call it Karma, nothing more, nothing less.
 
golfradio
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 1:55 pm

mjoelnir wrote:
scotron11 wrote:
ikolkyo wrote:
I’m pretty sure Airbus did the same back when US and HP merged, 250 million dollar loan and they lined up to be a customer for the original A350.

https://mobile.nytimes.com/2005/05/20/b ... l?referer=


This was not a loan,,this was paid "off shore" to Greybull....


In that case one could start thinking about corruption.


Exactly. How is this not a kickback to Greybull Capital? It is a PE LLP and with this bankruptcy the partners are actually going to profit. Did BA pay a kickback to private individuals for buying its aircraft?

Greybull eyes profit from Monarch collapse
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Dominion301
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:02 pm

JannEejit wrote:
So did Bombardier not just "invest" in Delta or are the rules different for non Boeing aircraft acquisition ? :-)


Is that the whiff of hypocrisy or corruption that I smell wafting out of Chicago/Seattle? Actually it smells like a bit of both.
 
LewisNEO
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:09 pm

Polot wrote:
Nothing odd about it. Obviously Boeing wanted the airline to succeed so it could take on its rather large 737 order. Considering 737s are popular and in demand, and $135 million is basically pocket change to Boeing, it is a low risk deal for Boeing with a lot of potential reward if successful (which obviously it was not). As mentioned Airbus has done similar deals as well. They were an investor in the America West/US merger to help make sure US stayed afloat.

Won’t, of course, stop A.net from going into pearl clutching hysterics about the deal, and the OP starts things off on an odd tone when it should be completely obvious why Boeing invested in Monarch.


I don't agree with you at all and this remark is not fair to the A.netters. Obviously, who are you to judge?

They just discuss it like others discuss Bombardier or Airbus matters. To me this deal is not ""obvious".

It's not about the amount of money. It's about transparancy. The Airbus deal was in this case out in the open known, the Boeing deal wasn't. I agree that these deals happen and are necesarry, but these kind of deals should be mentioned on forehand out in the open. Pocket money or not, it's a matter of clear principles. Besides the interference of Greybull seems to tell a different story.
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MIflyer12
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:14 pm

JannEejit wrote:
So did Bombardier not just "invest" in Delta or are the rules different for non Boeing aircraft acquisition ? :-)


Wow, the lack of understanding of trade law here is just overwhelming.

Boeing has big financial transactions with dozens of carriers routinely. It may sell aircraft outright. It may lease aircraft. It may make loans. It's a firm with nearly $100 Billion in annual revenue. $160 million isn't much on that scale. Other carriers have their own transactions with Boeing, Airbus, lease companies, and others. They have little reason to care what Boeing did with Monarch. Do you really think sustaining Monarch did material harm to BA?

The trade case with a preliminary finding against Bombardier is over dumping - selling goods below cost. U.S. anti-dumping law isn't new, and it isn't confined to NAFTA - it goes back to 1930, in fact. Aircraft have a big (and deferred) R&D cost so there's room for debate over what 'below cost' can mean. There have been lots of anti-dumping cases filed, found with merit, and have countervailing duties imposed. There's a process. There are appeals under WTO rules. The whole thing is far from done. Here's a list of commodities where countervailing duties have been imposed on goods from Canada specifically:


Brass Sheet & Strip (A-122-601)
Carbon And Certain Alloy Steel Wire Rod (A-122-840)
Citric Acid And Citrate Salt (A-122-853)
Iron Construction Castings (A-122-503)
Polyethylene Terephthalate Resin (A-122-855)
Pure Magnesium (C-122-815)
Supercalendered Paper (C-122-854)

Here's a link to all countervailing duties from the U.S. Dept of Commerce. http://web.ita.doc.gov/ia/CaseM.nsf/136 ... 2?OpenView

Arguing about Bombardier's dumping case in the same context as Boeing's investment in Monarch makes absolutely no sense at all.
 
yyztpa
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:14 pm

Flyglobal wrote:
Some reasons
1) Boeing wants to catch up in the 737/ A320 Race and come back to 50/50 share.
2) Break out an Airbus customer is worth some 'investment' (or premium discount)
3) A costomer in Europe where the 737 does hard to compete is even worth 'double' Discount


Flyglobal

Now extend that thinking to any other manufacturer trying to sell their aircraft into any market in the world (except into the US).
 
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Polot
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:16 pm

LewisNEO wrote:
Polot wrote:
Nothing odd about it. Obviously Boeing wanted the airline to succeed so it could take on its rather large 737 order. Considering 737s are popular and in demand, and $135 million is basically pocket change to Boeing, it is a low risk deal for Boeing with a lot of potential reward if successful (which obviously it was not). As mentioned Airbus has done similar deals as well. They were an investor in the America West/US merger to help make sure US stayed afloat.

Won’t, of course, stop A.net from going into pearl clutching hysterics about the deal, and the OP starts things off on an odd tone when it should be completely obvious why Boeing invested in Monarch.


I don't agree with you at all and this remark is not fair to the A.netters. Obviously, who are you to judge?

They just discuss it like others discuss Bombardier or Airbus matters. To me this deal is not ""obvious".

It's not about the amount of money. It's about transparancy. The Airbus deal was in this case out in the open known, the Boeing deal wasn't. I agree that these deals happen and are necesarry, but these kind of deals should be mentioned on forehand out in the open. Pocket money or not, it's a matter of clear principles. Besides the interference of Greybull seems to tell a different story.


Except the Boeing deal, as highlighted by Mercure1, was out in the open. Just because it didn't generate a lot of press or discussion here and you personally was unaware about it doesn't mean it wasn't transparent. Monarch was a private company, US was a public company. That alone means we would always know more details about the Airbus deal mentioned than the Boeing one.
 
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LAXintl
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:18 pm

Where have you guys been?

Manufacturer loans, financing, and equity participation into airlines, particularly distressed ones is quite common.

In US alone manufacturers like Airbus, Boeing, Bombardier and Embraer have participated easily in dozen plus such deals. I dont think there has been a single recent bankruptcy that manufactures have not participated in helping.
From the desert to the sea, to all of Southern California
 
washingtonflyer
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Joined: Sun Sep 08, 2013 9:45 pm

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:28 pm

MIflyer12 wrote:
JannEejit wrote:
So did Bombardier not just "invest" in Delta or are the rules different for non Boeing aircraft acquisition ? :-)



The trade case with a preliminary finding against Bombardier is over dumping - selling goods below cost. U.S. anti-dumping law isn't new, and it isn't confined to NAFTA - it goes back to 1930, in fact. Aircraft have a big (and deferred) R&D cost so there's room for debate over what 'below cost' can mean. There have been lots of anti-dumping cases filed, found with merit, and have countervailing duties imposed. There's a process. There are appeals under WTO rules. The whole thing is far from done. Here's a list of commodities where countervailing duties have been imposed on goods from Canada specifically:


Brass Sheet & Strip (A-122-601)
Carbon And Certain Alloy Steel Wire Rod (A-122-840)
Citric Acid And Citrate Salt (A-122-853)
Iron Construction Castings (A-122-503)
Polyethylene Terephthalate Resin (A-122-855)
Pure Magnesium (C-122-815)
Supercalendered Paper (C-122-854)

Here's a link to all countervailing duties from the U.S. Dept of Commerce. http://web.ita.doc.gov/ia/CaseM.nsf/136 ... 2?OpenView

Arguing about Bombardier's dumping case in the same context as Boeing's investment in Monarch makes absolutely no sense at all.


I agree with your sentiments, but you've got the wrong case numbers. A case with an "A" is antidumping, an case with a "C" is a subsidy cases.

The point is - as you've aluded - is that companies invest in other companies all the time. The issue of the government investing in companies is a different matter.
 
Northwest1988
Posts: 371
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:29 pm

Boeing sold the 737 MAX to Air Canada. Would you consider that swaying an Airbus operator?
 
mjoelnir
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:31 pm

LAXintl wrote:
Where have you guys been?

Manufacturer loans, financing, and equity participation into airlines, particularly distressed ones is quite common.

In US alone manufacturers like Airbus, Boeing, Bombardier and Embraer have participated easily in dozen plus such deals. I dont think there has been a single recent bankruptcy that manufactures have not participated in helping.


The investment or loan was not into or to the airline.
 
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Richard28
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:44 pm

mercure1 wrote:
Second such investment or financial participation is quite common by manufacturers. Just look at the large bankruptcies in the US and how manufacturers like Airbus have helped by participating in funding the restructuring.


sale and leasebacks are common practice, but if I am reading this correctly, here we are talking about:

1) sale and leaseback on frames that have not even been built or paid for i.e. giving you the cashback upfront before payment.
2) the capital/cashback has gone back through a different company to that which was organising the purchase/leaseback of the 737's

I'm sure the legal teams on both sides have done their due diligence, but from an ethical standpoint, especially in light of the recent bombardier trade tariffs, it is an eye opener to say the least.
 
mjoelnir
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Joined: Sun Feb 03, 2013 11:06 pm

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:49 pm

Giving money to the owner of a company you sell your products to, is usually called a kick back. If Greybull themselves would have ordered the 737MAX, the situation would be different.
 
jbs2886
Posts: 2315
Joined: Wed Apr 01, 2015 9:07 pm

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 2:57 pm

mjoelnir wrote:
LAXintl wrote:
Where have you guys been?

Manufacturer loans, financing, and equity participation into airlines, particularly distressed ones is quite common.

In US alone manufacturers like Airbus, Boeing, Bombardier and Embraer have participated easily in dozen plus such deals. I dont think there has been a single recent bankruptcy that manufactures have not participated in helping.


The investment or loan was not into or to the airline.


Just because it might have used a different vehicle to invest doesn't mean it wasn't into the airline. Its very common in PE and other investments to go through the owner of the entity. In fact, if Boeing's capital infusion is through the PE owner, its actually far more secure for Boeing because now the money is also secured by the owner and not just the airline. This is all simple financial and investment law.

Too many people on this thread are pretending to know how investment structures work. :lol:
 
scotron11
Posts: 1432
Joined: Tue Feb 10, 2004 4:54 pm

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 3:40 pm

jbs2886 wrote:
mjoelnir wrote:
LAXintl wrote:
Where have you guys been?

Manufacturer loans, financing, and equity participation into airlines, particularly distressed ones is quite common.

In US alone manufacturers like Airbus, Boeing, Bombardier and Embraer have participated easily in dozen plus such deals. I dont think there has been a single recent bankruptcy that manufactures have not participated in helping.


The investment or loan was not into or to the airline.


Just because it might have used a different vehicle to invest doesn't mean it wasn't into the airline. Its very common in PE and other investments to go through the owner of the entity. In fact, if Boeing's capital infusion is through the PE owner, its actually far more secure for Boeing because now the money is also secured by the owner and not just the airline. This is all simple financial and investment law.

Too many people on this thread are pretending to know how investment structures work. :lol:


To the uninformed, please explain where and when Boeing will get their $165m back?
 
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Polot
Posts: 10470
Joined: Thu Jul 28, 2011 3:01 pm

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 3:45 pm

scotron11 wrote:
To the uninformed, please explain where and when Boeing will get their $165m back?

Boeing would have presumably gotten their money back through Greybull assuming Monarch had survived and become profitable.
 
jbs2886
Posts: 2315
Joined: Wed Apr 01, 2015 9:07 pm

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 3:50 pm

scotron11 wrote:
jbs2886 wrote:
mjoelnir wrote:

The investment or loan was not into or to the airline.


Just because it might have used a different vehicle to invest doesn't mean it wasn't into the airline. Its very common in PE and other investments to go through the owner of the entity. In fact, if Boeing's capital infusion is through the PE owner, its actually far more secure for Boeing because now the money is also secured by the owner and not just the airline. This is all simple financial and investment law.

Too many people on this thread are pretending to know how investment structures work. :lol:


To the uninformed, please explain where and when Boeing will get their $165m back?


Without seeing the contracts, its impossible to know. Its possible that Boeing's loan and/or capital infusion was secured by the PE firm itself (in addition or in lieu of Monarch), in which case, Boeing probably gets most if not all of its money back (unless of course the PE firm goes down). If Boeing is secured only by Monarch, it depends on what level of security it has on where it "stands in line". Just all depends on how the investment was structure - but it is very common for the investment to go through the PE firm so that the PE firm retains 100% of the ownership, but part of that investment vehicle is owned by the investor. Other times, investors demand to take an actual ownership interest in the company and shares ownership with the PE firm.
 
wingman
Posts: 3908
Joined: Thu May 27, 1999 4:25 am

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 4:21 pm

[url][/url]
mjoelnir wrote:
Giving money to the owner of a company you sell your products to, is usually called a kick back. If Greybull themselves would have ordered the 737MAX, the situation would be different.


You're not understanding much here in your attempt to toss Boeing into Airbus' current mess. While this investment may have been very risky, and in hindsight quite stupid, it was and is LEGAL. It was all spelled out and Greybull looks to be a legitimate financial entity, one of tens of thousands plying their trade in global financial markets. Maybe in Norway when you take a home loan the Oil Fund people drop off buckets of cash in your front yard so you can carry it to seller of your new place..I don't know. In most places though cash goes through a series of transfers via thingies called banks and financial cos like Greybull.

Personally I think you're being deliberately obtuse in your eagerness to paint Boeing in the same colors. I wouldn't worry too much chief, Boeing has done many bad things they've been caught for and they will do so again. But today the honors go to EADS.

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