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LockheedBBD
Posts: 582
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 4:31 pm

Flyingabout wrote:
I really hope that more US airlines buy the CSeries now.


It's a little too late for that. No airline is going to pay a 300% tariff for an aircraft.
 
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LAXintl
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Joined: Wed May 24, 2000 12:12 pm

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 4:50 pm

Again this is really a non story.

Sometimes these investments go bad - such as Boeing $50mil unsecured stock purchase in American Trans Air(ATA), which was wiped out, while other times they go great such as $400mil trust fund plus $185mil direct loan for Delta in 2004.

According to Crains Chicago 2015 report, Boeing Capital has nearly $10bil in loans and investments in the industry, of which only $.3.47Bil was directly secured by aircraft. The rest was more typical loan or investment activity any business makes.
From the desert to the sea, to all of Southern California
 
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tistpaa727
Posts: 170
Joined: Sat May 05, 2007 5:23 am

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 5:07 pm

mwhcvt wrote:
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


:checkmark:

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=


:checkmark:


Exactly and unfortunate this has to be repeated and yet people don't seem to understand. There is nothing odd about this and there is precedence set. There is no correlation to the c-series. United nor Delta threw a fit and vowed to never order Airbus when Airbus invested in US. You can question the soundness of the investment as KarelXWB has or question if it should be allowed but don't get all excited for the wrong reasons.

The question to be asked, is that 737 order worth that much to Boeing? Apparently they think so or they wouldn't have made the "investment."
Don't sweat the little things.
 
greenjet
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 5:21 pm

Anyone know if this $130m was just a reimbursement of PDPs already paid by Monarch/Greybull or affiliate thereof to Boeing? This is quite a common act by OEMs to assist customers with cash flow issues, e.g. GOL and its MAXs. Boeing will have no issue finding a replacement customer(s) for Monarch's slots so it's not too high risk. An investment or loan is a different story altogether.
 
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ual747den
Posts: 1604
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 6:03 pm

LewisNEO wrote:

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.


Are you kidding me? The deal was as public and disclosed as it needed to be. No one kept this a secret and there was nothing to hide, these types of deals happen all the time. Airlines have major cash fluctuations and aircraft manufacturers have major cash reserves so it only makes sense that they would help each other out.
Frontier Airlines - Low Fares Done Right
 
airzona11
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Joined: Wed Dec 17, 2014 5:44 am

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 6:55 pm

LewisNEO wrote:

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.


There looks to be nothing illegal or nefarious by Boeing. In general, companies do not publicize these cash injections/investments. Think about it, the last thing a struggling business like Monarch wants is more headlines saying "financial position so poor we are seeking more money from more sources." Greybull interference? You mean financial intermediaries? You have made a poor attempt to make this an A is better then B post. Or maybe you dont feel that way and this post if giving the transaction enough air time that you don't feel it is as shady anymore.
 
AirbusCanada
Posts: 647
Joined: Mon Nov 15, 2004 5:14 am

Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 9:21 pm

This might get much more attention after the Bombardier tariff issues.


UK opposition Labour part'y trade spokesman Barry Gardiner said he plans to ask European authorities to investigate whether there is an anti-dumping case to be made against Boeing over its contract to sell 30 of the latest 737 Max 8 jetliners to Monarch Airlines Ltd., which filed for insolvency this month.

The $3.1-billion order, originally placed in 2014, was last year restructured as a sale and leaseback, in which planes are typically purchased from a carrier and then rented back. The nature of the deal, which paved the way for Monarch owner Greybull Capital LLP to make a 165 million-pound ($220 million) capital injection, suggests Boeing sold the 737s “at less than cost price into the European market,” Gardiner said.

Boeing said it doesn’t publicly comment on the financial arrangements of its customers.

Link:
http://montrealgazette.com/g00/business ... FnTg%3D%3D
 
AirbusCanada
Posts: 647
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Re: Boeing provided Monarch with $130 million bailout

Wed Oct 11, 2017 9:38 pm

MIflyer12 wrote:

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.


Seems like you have a good legal understanding of the situation.

Questions:
Doesn't the U.S. Producer have to Produce/Manufacture/Market a competing product in the marketplace before accusing a foreign competitor of "dumping" something?
Does the court assumes Boeing is still producing shiny new 717, so they can have the exclusive right of dumping foreign manufactured used 100 seat aircraft on domestic airlines against their will?
 
VS11
Posts: 1652
Joined: Mon Jul 02, 2001 6:34 am

Re: Boeing provided Monarch with $130 million bailout

Thu Oct 12, 2017 8:21 am

VolvoBus wrote:
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.


According to this Financial Times article, what you describe is more or less what happened. Boeing split with Greybull the profits from the increased value of the MAX order:
https://www.ft.com/content/a2ee882c-adb ... 21c713abf4
 
Strato2
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Re: Boeing provided Monarch with $130 million bailout

Thu Oct 12, 2017 8:39 am

Other European Boeing customers must be mad that their business partner has been giving their aircraft money to their competition and distorting the competition.
 
Amiga500
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Re: Boeing provided Monarch with $130 million bailout

Thu Oct 12, 2017 8:56 am

Revelation 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, 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.


A private* corporation that receives BILLIONS in tax breaks - helping it to make highly speculative and now clearly unprofitable investments.


*I'll assume you didn't mean Boeing is a public body ;)
 
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Momo1435
Posts: 1150
Joined: Sat Aug 25, 2012 2:33 pm

Re: Boeing provided Monarch with $130 million bailout

Thu Oct 12, 2017 9:26 am

Strato2 wrote:
Other European Boeing customers must be mad that their business partner has been giving their aircraft money to their competition and distorting the competition.

Airlines are rational enough to not make an issue out of this.
 
WIederling
Posts: 9291
Joined: Sun Sep 13, 2015 2:15 pm

Re: Boeing provided Monarch with $130 million bailout

Thu Oct 12, 2017 10:14 am

Momo1435 wrote:
Strato2 wrote:
Other European Boeing customers must be mad that their business partner has been giving their aircraft money to their competition and distorting the competition.

Airlines are rational enough to not make an issue out of this.


The way Boeing starts an "issue" here this may change. ( I'd view Boeing's behavior as sniping?)

Afair the Airbus loan was an after sales had happened solution ( something about Chapter 11 ? or was that another US airline? )
Murphy is an optimist
 
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SheikhDjibouti
Posts: 2063
Joined: Sat Sep 30, 2017 4:59 pm

Re: Boeing provided Monarch with $130 million bailout

Thu Oct 12, 2017 10:51 am

Revelation wrote:
.....and this is a public corporation making a highly speculative and now clearly unprofitable investment in another corporation.

Amiga500 wrote:
A private* corporation that receives BILLIONS in tax breaks - helping it to make highly speculative and now clearly unprofitable investments.

*I'll assume you didn't mean Boeing is a public body ;)

Actually, Revelation got it right in the first place. And I know because I quoted him too, but for a different reason. ;)
Boeing is a PUBLIC COMPANY; a corporation whose ownership is dispersed among the general public in many shares of stock which are freely traded on a stock exchange
https://en.wikipedia.org/wiki/Public_company
Notice the first line under the heading
"Not to be confused with publicly owned company."
Unfortunately I think you fall into that category.
Nothing to see here; move along please.
 
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Momo1435
Posts: 1150
Joined: Sat Aug 25, 2012 2:33 pm

Re: Boeing provided Monarch with $130 million bailout

Thu Oct 12, 2017 11:08 am

WIederling wrote:
Momo1435 wrote:
Strato2 wrote:
Other European Boeing customers must be mad that their business partner has been giving their aircraft money to their competition and distorting the competition.

Airlines are rational enough to not make an issue out of this.


The way Boeing starts an "issue" here this may change. ( I'd view Boeing's behavior as sniping?)

Afair the Airbus loan was an after sales had happened solution ( something about Chapter 11 ? or was that another US airline? )

I think you confuse this unfortunate investment with the Bombardier C series case. This was just an unlucky investment to safe an order that was placed 2 years before.
 
727200
Posts: 633
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Re: Boeing provided Monarch with $130 million bailout

Thu Oct 12, 2017 1:43 pm

This isn't even a good try for the Airbus BB's to try and create a link or conspiricy back to Boeing. Manufactures provide some sort of financing all the time to get the sale. Airbus has admitted they paid bribes to get sales, not so here. Move on and close this thread.
 
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SheikhDjibouti
Posts: 2063
Joined: Sat Sep 30, 2017 4:59 pm

Re: Boeing provided Monarch with $130 million bailout

Thu Oct 12, 2017 2:01 pm

727200 wrote:
Manufactures provide some sort of financing all the time to get the sale.
"Some sort of financing" - what a truly delightful way to describe this situation. It makes it sound so...... utterly proper.

727200 wrote:
Airbus has admitted they paid bribes to get sales, not so here.
Let me see if I've got this right; we mustn't link this case back to the Boeing vs Bombardier situation, but you can introduce Airbus & bribery into the equation.
Yeah that's seems fair. That doesn't seem like mud-slinging at all. No Sir!

727200 wrote:
Move on and close this thread.
....so that the precious image of Boeing isn't tarnished with this unfortunate dose of reality.
Well of course, anything you say, Boss!
Nothing to see here; move along please.

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