Boriscenteno
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Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 1:26 pm

Why Airbus bombardier deal did not include all bombardier aircraft products? Surely according to latest news embraer-Boeing will include embraer all aircrafts covering from 50 seats to over 400 any thoughts ?
 
micstatic
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 1:41 pm

I don't think the rest of bombardier's commercial aircraft offerings were of any interest. Other than top off orders, who really wants a CRJ or Dash8 anymore.
S340,DH8,AT7,CR2/7,E135/45/170/190,319,320,717,732,733,734,735,737,738,744,752,762,763,764,772,M80,M90
 
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northstardc4m
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 1:53 pm

Boriscenteno wrote:
Why Airbus bombardier deal did not include all bombardier aircraft products? Surely according to latest news embraer-Boeing will include embraer all aircrafts covering from 50 seats to over 400 any thoughts ?
Well a few things...

Airbus already have a stake in ATR so getting the Q400 would be competing against itself and probably would of been legally blocked.

Bombardier is also a rail and transit manufacturer which is tied with aerospace in complicated ways.

And the biggest reason... Debt load...

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hOMSaR
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 2:01 pm

Because it wasn't a merger. It was a sale of the CSeries program.
The plural of Airbus is Airbuses. Airbii is not a word.
There is no 787-800, nor 787-900 or 747-800. It's 787-8, 787-9, and 747-8.
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oslmgm
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 2:47 pm

Because it would have cost them another dollar..?
 
seb76
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 2:59 pm

As homsar said, It is not a merger. Airbus only took over the complete CSeries program, other than this, Airbus and BBD still remain competitors on the other products.

Airbus is filling the gap in it's product offering between the ATR-72 and the A319 capacities. All sales for jets in this capacity now went to Embraer. With the CSeries in house, Airbus will have a competitive product to propose against it and have the broadest product portfolio (if you include their stake in ATR). Boeing is adopting a similar strategy with Embraer, although they went for a merger (but we all know who will eat who at the end, it's not Boeing's first merger).
The ATR is already doing quite well against the Q400 and the CRJs are a dying breed anyway, so it is useless to try to capture that part of BBD.
 
afgeneral
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 3:06 pm

Boeing - Embraer is not even confirmed as a merger, it's just a "partnership" so a lower level of cooperation than Airbus - CSeries which is an equity joint venture
 
cschleic
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 3:24 pm

As an interesting historical note, for a time, Boeing owned de Havilland Canada when it produced the Dash 7, 8 and other products. They sold it to Bombardier in 1992.
 
planecane
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 3:43 pm

afgeneral wrote:
Boeing - Embraer is not even confirmed as a merger, it's just a "partnership" so a lower level of cooperation than Airbus - CSeries which is an equity joint venture


Assuming the venture goes through, Boeing and Embraer are creating a company owned 80/20 in favor of Boeing that will own all of Embraer's commercial aircraft.
 
MIflyer12
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 4:57 pm

oslmgm wrote:
Because it would have cost them another dollar..?


You have a very dry sense of humor. One might think their rail transportation holdings would be worth more that that...

To the OP's question: So Canada and the Province of Quebec can point to a Canadian champion, not just subsidiaries of Airbus.
 
ExMilitaryEng
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 6:01 pm

MIflyer12 wrote:
To the OP's question: So Canada and the Province of Quebec can point to a Canadian champion, not just subsidiaries of Airbus.

I would suspect Canada & Quebec are most interrested in maintaining / expending the Montreal aerospace cluster. That R&D and manufacturing capacity are an integral part of the strategic industrial base - plus a considerable creator of wealth / jobs. The Airbus partnership achieves just that and presents the potential for much more for the area suppliers.

Now, combine that with our "friendly" southern neighbour's "America First" and that "let's bully our closest allies into total submission" policies, that Airbus partnership is possibly now elevated to strategic survival...

Canada must now diversify its commercial relations BIG TIME! (Well, anything away from that giant pumpkin)

As an ex Canadian Forces member that spent about 20% of my career closely related to the US military (and I enjoyed every minutes of that collaboration), I would never have expected such a disastrous destruction of an alliance.
 
golfradio
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 8:09 pm

Contrary to popular understanding, CSALP (C Series Aircraft Limited Partnership) was not created for Airbus. When the CSeries program slipped, it started burning a hole in the finances and toward the end of the flight test program, there was no cash flow to ramp up production and for sales. BBD was looking for investment in the program and Investissement Québec promised to help. In spite of what the fanboys for Boeing or Embraer would have you belief, this was niether a subsidy (via tax breaks, R&D grants, military contracts etc) nor a loan (launch aid). CSALP was carved out of BBD and Investissement Québec bought 49.5% equity stake in CSALP.

When Boeing launched the trade dispute with USITC, the proverbial doodoo hit the fan. BBD never expected to win due to Trumponomics. But the piper (Investissement Québec) had to be paid. They after all had 50mil warrants for class B shares of BBD. Boeing was offered the same deal before the dispute but they like BBD never expected to lose. They wanted a zero sum game. So that's how Airbus came in as the second profit sharing partner. In the case of Investissement Québec, they ponied up 1Billion in cash for now 31% of CSALP whereas Airbus is ponying up significant sales and financing support for 50.01% of CSALP. BBD retains 19% of CSALP.

The question is will Investissement Québec make more money from the diluted 31% of CSALP instead of their original 49.5%? Most likely a resounding yes.
CSeries forever. Bring back the old site.
 
ExMilitaryEng
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Re: Why Airbus did not get complete bombardier in merger

Tue Jul 17, 2018 11:53 pm

Thanks Golfradio for this great recap.

I had forgotten that Boeing was also offered a sweet deal, but they walked away, convinced there were going to win the case at the ITC.
 
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ODwyerPW
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Re: Why Airbus did not get complete bombardier in merger

Wed Jul 18, 2018 12:46 am

oslmgm wrote:
Because it would have cost them another dollar..?


Best comment on the boards today. Thanks for the moment of levity. :D
learning never stops.
 
GalaxyFlyer
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Re: Why Airbus did not get complete bombardier in merger

Wed Jul 18, 2018 1:06 am

AI could have bought the commercial aircraft side, but to what end? The CRJ/Q400 didn’t need the cash infusion. AI brings little to the Business Aircraft side—commercial aircraft sales is entirely different animal.

GF
 
Nean1
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Re: Why Airbus did not get complete bombardier in merger

Wed Jul 18, 2018 2:41 am

golfradio wrote:
Contrary to popular understanding, CSALP (C Series Aircraft Limited Partnership) was not created for Airbus. When the CSeries program slipped, it started burning a hole in the finances and toward the end of the flight test program, there was no cash flow to ramp up production and for sales. BBD was looking for investment in the program and Investissement Québec promised to help. In spite of what the fanboys for Boeing or Embraer would have you belief, this was niether a subsidy (via tax breaks, R&D grants, military contracts etc) nor a loan (launch aid). CSALP was carved out of BBD and Investissement Québec bought 49.5% equity stake in CSALP.

When Boeing launched the trade dispute with USITC, the proverbial doodoo hit the fan. BBD never expected to win due to Trumponomics. But the piper (Investissement Québec) had to be paid. They after all had 50mil warrants for class B shares of BBD. Boeing was offered the same deal before the dispute but they like BBD never expected to lose. They wanted a zero sum game. So that's how Airbus came in as the second profit sharing partner. In the case of Investissement Québec, they ponied up 1Billion in cash for now 31% of CSALP whereas Airbus is ponying up significant sales and financing support for 50.01% of CSALP. BBD retains 19% of CSALP.

The question is will Investissement Québec make more money from the diluted 31% of CSALP instead of their original 49.5%? Most likely a resounding yes.


golfradio,

Some informed people say that the BBD received subsidies up to USD 2.5 billion for the CS project, almost 150% of Embraer's entire budget for the three E2 aircraft!
 
Siddar
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Re: Why Airbus did not get complete bombardier in merger

Wed Jul 18, 2018 3:02 am

Because there is likely a lot of downsizing in BBD's near term future.

Airbus will sweep up the remains of BBD once those cuts have been made.
 
GalaxyFlyer
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Re: Why Airbus did not get complete bombardier in merger

Wed Jul 18, 2018 3:20 am

Where is the downsizing happening?

GF
 
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LockheedBBD
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Re: Why Airbus did not get complete bombardier in merger

Wed Jul 18, 2018 8:41 am

Relevant article: http://plus.lapresse.ca/screens/ea60797 ... ent=Screen

Translated:
Similarly, he [Alain Bellmare, CEO of Bombardier] also does not believe that Airbus is interested in Bombardier's remaining aircraft now that Boeing is about to embark on this niche. "It's unlikely, the value for them is in the 100 to 150 seats," he says.

It is still too early to embark on new projects, however, says Bellemare, who set in motion in 2015 a five-year recovery plan that has just passed the mid-term, with the blessing of the markets. "We have to complete what's already on our plate, which is huge, and make sure we're doing the right thing." The list of opportunities that will be available to the company when it manages to release cash already has some important entries, he said, however, including the reduction of debt and the redemption of the share of the Caisse de dépôt in the Transport division.

"It will be a matter of capital allocation," he warns. Bombardier will not make the mistake of embarking on major development programs at the same time, as it did with the C Series and Global 7000. These are very large expenditures. "It's very clear that we will not do anything that will put or increase the risk on the company. We will not do that again. "


As Mr. Bellmare says, they will not do anything that will increase the risk of Bombardier going further into debt. In my opinion, after Boeing acquires Embraer, continuing to compete in the regional jet market (50-100 seats) is going to be a big risk for a much smaller company like Bombardier.





Another article: https://www.cbc.ca/news/canada/montreal ... -1.4365849

Long-term future of Bombardier's other commercial aircraft unclear, analysts say.

So where does that leave the Q400 turboprop and aging CRJ regional jets? That's the question on everyone's minds, says Chris Murray of AltaCorp Capital. "I don't think that I'm expecting the program to fall apart... but at the same time I'm not expecting there to be this massive resurgence of regional jet orders or turbprop orders," he said in an interview.

Vincent worked on strategy at Bombardier during the period in the 1990s when it shook up the global aviation market by launching small regional jets that spawned new competitors like Brazil's Embraer. He sees Bombardier eventually selling the Q400 turboprop and CRJ jet programs, possibly to China. While the Q400 is "solid," he doubts Bombardier will redesign the CRJ, which will be at the end of its life in about a decade. "It might be a natural winding down point," he said.
Last edited by LockheedBBD on Wed Jul 18, 2018 9:06 am, edited 3 times in total.
 
mjoelnir
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Re: Why Airbus did not get complete bombardier in merger

Wed Jul 18, 2018 8:46 am

It does not matter really if Airbus would been interested in the whole set of airplanes at Bombardier. Airbus has invested in ATR. I would assume buying the complete line at Bombardier would wake the competition authorities.

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