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Revelation
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 5:49 pm

It'd be very cool to know how Airbus really feels about the current situation.

They looked at CS twice and only bought in when it was offered to them for $1. That was a relatively easy decision since BBD was going to be financing the ramp up and only would need to be bought out once the program was far enough along to have a clear vision of its strengths and weaknesses.

All it would be costing Airbus in the tangible sense was $1 and access to its marketing and supply chain operations. The intangible investment was putting Airbus's name on the plane. That helped potential customers feel that Airbus would need to stick with the program whatever came next.

What came next is BBD fading faster than planned due to ongoing trouble in its rail and bizjet divisions. To Airbus this could be an inconvenient situation that is forcing it to put more cash and other resources into the operation than it planned and take more responsibility for the future of the program and be more committed earlier than planned. Or it could mean Airbus is going to gain control sooner than planned and presumably at a better price than planned, merely an escalation of the timeline.

I don't think we have the information needed to tell these two cases apart. Basically BBD's troubles are advancing the timeline on a decision Airbus was going to have to make one way or the other in the future. Airbus may end up sacrificing future flexibility in exchange for a better purchase price.

frmrCapCadet wrote:
The 220 is a good plane, we all know that. Whether or not it will be a great seller is still, excuse the phrase, up in the air.

I think we have the evidence to see it is a good seller. We also know many of the early big deals were made when BBD was desperate for sales so we can presume there is little/no profit in them.

What we don't know is what are the projected program break even points assuming the existing structure vs one after BBD sells its share to Airbus. Airbus has been saying it would not invest more in the program till it was economically viable. BBD's troubles are forcing them to make that decision now rather than watching BBD try to carry the program forward. An interesting point is BBD is saying the ramp up is costing more than planned and the partnership has less value than they thought it would.

I think Airbus will justify making the investment to buy BBD's stake but in doing so they are taking on the risk of the program becoming economically viable all on themselves which is something they were saying they were going to avoid. I think this shows confidence the program will eventually be economically viable, but it could also be a small sign that they are already in too deep to pull out.
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mjoelnir
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 6:18 pm

MSPNWA wrote:
WayexTDI wrote:
Airbus got 50.01% of the program for free (sorry, I think it was 1 euro).
If they didn't see a future for the plane, they could have just shut it down then and there; with no money invested or lost.
Instead, they viewed the value the program could bring to Airbus and decided to invest to make said program even better; so far, Airbus is laughing at Boeing's incompetence.

Now, you want to talk about an aircraft manufacturer dumping its jets? How about Boeing with the UAL 73G deal? Wasn't that dumping?
Because it does not comply to the definition of dumping (since it didn't come from a foreign entity), it doesn't mean that what Boeing did in this deal didn't have the same effect: sell your product at an unsustainable cost (or even below cost) to undercut a competitor.

Listen, I understand you're disappointed it didn't turn out the way you wanted, and that DL loves the plane and ordered more; but just admit that Airbus got a great deal out of it. It could have been Boeing, in which case you'd sing a different tone.


Ever bought something, even really cheap, and in the end it didn't turn out like you had hoped? Ever simply make a bad purchase? I see a belief at work here that as long as something was bought cheaply and/or is still retained in ownership, it must be a good deal. It's not reality. You're simply guessing at things, such as Airbus's thoughts on the matter.

Dumping is only an international trade scenario. Your attempt to extrapolate that to a domestic purchase (that was also widely viewed as not below cost) isn't valid and is grasping at straws to justify a unethical practice by Bombardier.

They only good answer to the question of whether this has been a good deal for Airbus is "we don't know". We're not to an answer yet. Those saying that it unequivocally is or isn't aren't thinking through it.

Now that you've turned this discussion into a personal matter, I accept your white flag. You must not be able to debate on the facts.


The dumping rules in the USA are to protect USA companies from foreign companies. The problem with the dumping rules are, that every airframe producer sell the first frames in a new family below production cost.
Boeing sold the first 450 787, or about that number, below production cost, was that dumping? Should the EU and Canada have brought dumping charges against Boeing for sales outside the USA?

The claims and decisions Boeing made, brought simply a fiasco for Boeing, they did not win their case against Bombardier and Canada. They mist the opportunity to buy a new single aisle frame below the development cost. Now they sit with a old worn out frame, grounded because of decisions made in greed and when that frame has it's RTS, it will still be second rate against the more modern frames.
Last edited by mjoelnir on Sat Feb 08, 2020 6:34 pm, edited 1 time in total.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 6:19 pm

MIflyer12 wrote:
RalXWB wrote:
A failed program? You are right, only 600 Sold so far. Boeing is the winner? If it makes you feel better.


The program isn't making money nearly four years after the (3 years late) first delivery, and BBD has announced that further investments are needed and margins are lower than expected. Programs that don't make money, yes, are loser programs, irrespective of backlog.

We're going to see just how big a loser it is for BBD's $6+ Billion in development costs when BBD or IQ sell and the market value of their shares is made known.


New aircraft programs are never profitable during the first years of production, that’s just basic aerospace economics.
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 6:25 pm

Revelation wrote:
What we don't know is what are the projected program break even points assuming the existing structure vs one after BBD sells its share to Airbus. Airbus has been saying it would not invest more in the program till it was economically viable. BBD's troubles are forcing them to make that decision now rather than watching BBD try to carry the program forward. An interesting point is BBD is saying the ramp up is costing more than planned and the partnership has less value than they thought it would.

I think Airbus will justify making the investment to buy BBD's stake but in doing so they are taking on the risk of the program becoming economically viable all on themselves which is something they were saying they were going to avoid. I think this shows confidence the program will eventually be economically viable, but it could also be a small sign that they are already in too deep to pull out.


Spirit Aerosystems has recently splashed a substantial amount of dollars to take over Bombardier-Belfast, heavily involved in the A220 production. This is another show of confidence in the potential of the A220.

As for the ramp up costing more than planned, it may just be because Airbus is now planning a higher delivery rate than what was originally planned by BBD (target was set at 10 AC/month if my memory serves me well). One thing is certain: since Airbus joined the program, a few hundreds A220 have been sold. They'll have to be delivered, whatever the extent of BBD support is. That's maybe the only area where BBD has some leverage on Airbus. I mean there is no practical way back for Airbus: they have to deliver the A220s on time, the alternative being delivering A32-whatever at a probably much later date, or handing over the market to the E2 and the MAX.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 7:01 pm

Gremlinzzzz wrote:
All of this would make sense if Boeing was not trying to buy a stake in Embraer to somewhat have a challenger to the A220.


Complete non sequitur.

Francoflier wrote:
.


Sorry, not giving an on-topic response to one who hypocritically uses a inaccurate personal attack of bias in an apparent attempt to deflect from an inability to debate on merit.

eisenbach wrote:
This is what puzzles me ... why should it be unethical? And why is it only unethical when a foreign corporation is doing it, but not an US company?

In Europe we have a lot of foreign companies (even outside the EU) selling products and services to very low prices, or trying to get marked share by selling below costs. It's a pure business decision and financial risk of the respective corporation. It's called competition and free marked.


It's not U.S. trade law. It's worldwide trade laws. Do you think it's ethical for an entity to use the advantages it receives in its home country to undermine the businesses of another country who doesn't have the same advantages? Is that fair to the domestic businesses of the importing country? You may think the practice is okay, but the WTO and numerous governments (including the EU) do not.

Sokes wrote:
Do you think Boeing should be fined by all foreign governments to whose countries B787s were sold?


Absolutely if dumping occurred in a nation with a domestic competitor and that nation successfully goes through the process for corrective action.

But that hasn't happened. You're simply deflecting with red herrings.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 7:16 pm

MSPNWA wrote:
Sokes wrote:
Do you think Boeing should be fined by all foreign governments to whose countries B787s were sold?


Absolutely if dumping occurred in a nation with a domestic competitor and that nation successfully goes through the process for corrective action.

But that hasn't happened. You're simply deflecting with red herrings.


I'm not sure if I should find this answer annoying or if I should admire you for your arguing skill.
Let's say I admit you win the argument. Does that mean I'm convinced?
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 7:17 pm

MSPNWA wrote:
eisenbach wrote:
Does this mean, Airbus sees a bright future in the A220 program?


The only sign here is that Bombardier wasn't joking when it said it wanted to offload its stake. Airbus doesn't have much choice here. Bombardier wasn't going to be able to pay for the future losses. If they're not going to pay the future losses for the so-far failed program, Airbus might as well own the revenue side of the ledger as well.

It really is classic A.net in that buying a loss-leader is spun into a great deal.

WayexTDI wrote:
But it was so much easier for Boeing to go cry to the US government. It backfired on them, extremely badly.


Childish language aside, not at all accurate. It worked out for Boeing's benefit, but so far likely not as much as they were hoping. Bombardier was caught dumping jets in the U.S. That's not cool and should be universally condemned (it's not of course because you have to align yourself with Boeing). More A220 orders were put into question. Is the expensive and inefficient 2nd FAL in Mobile built without the tariff threat? If not, which seems to be the case, it was a big win for Boeing as it helped cripple Bombardier's airliner dreams and has subjected Airbus to higher program costs. It's called competition, and since Bombardier couldn't sell the jets the correct way, they deserved to pay for that. Now Airbus is paying for it. Boeing is so far the winner.


Only that is not what happened. Boeing lost their case in front of the US International Trade Commission thus overturning the US Commerce Dept ruling.. Don't peddle revisionist history:
https://www.washingtonpost.com/news/mon ... d-to-know/

I experience a great feeling of schadenfreude for Boeing over the whole 737 Max8 fiasco. Hot on the heels of their bogus complaint against BBD they were exposed as a morally bankrupt and incompetent company.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 7:31 pm

multimark wrote:
Only that is not what happened. Boeing lost their case in front of the US International Trade Commission thus overturning the US Commerce Dept ruling.. Don't peddle revisionist history:
https://www.washingtonpost.com/news/mon ... d-to-know/

I experience a great feeling of schadenfreude for Boeing over the whole 737 Max8 fiasco. Hot on the heels of their bogus complaint against BBD they were exposed as a morally bankrupt and incompetent company.


That it is not the whole story, and you're only exhibiting a strong bias with your final two sentences. You know, I don't get the desire to dislike an an aviation company so much. I appreciate them all as I love aviation. It's telling that Boeing was immediately brought into this thread when they're at most a minor player to the situation Bombardier is in today.

In the ITC case, it was proven that Bombardier was selling the jets below production cost (dumping). Where they won the case was not having to pay penalties because of the subjective ruling that they didn't cause harm to Boeing. But the fact remains Bombardier willingly engaged in behavior that they know could have been determined in violation of trade law.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 7:38 pm

eisenbach wrote:
In Europe we have a lot of foreign companies (even outside the EU) selling products and services to very low prices, or trying to get marked share by selling below costs. It's a pure business decision and financial risk of the respective corporation. It's called competition and free marked. .


Dumping is illegal in the EU, both by EU companies and foreign companies.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 7:55 pm

lightsaber wrote:
frmrCapCadet wrote:
The 220 is a good plane, we all know that. Whether or not it will be a great seller is still, excuse the phrase, up in the air.


IQ has a non-dilutable share, per my understanding. So that complicates ROI decisions.


How would IQ's investment be impacted if Airbus chose to build the speculated A225 only in Mobile? I suspect everything is negotiable and it's too soon to know how ownership of the program would look like after a potential exit by Bombardier.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 8:17 pm

MSPNWA wrote:
Gremlinzzzz wrote:
All of this would make sense if Boeing was not trying to buy a stake in Embraer to somewhat have a challenger to the A220.


Complete non sequitur.


1. There is no tariff threat on the A220 or penalty. If anything, there was a ruling bu the United States International Trade Commission (USITC) to that same effect.

"The United States International Trade Commission (USITC) today determined that a U.S. industry is not materially injured or threatened with material injury by reason of imports of 100- to 150-seat large civil aircraft from Canada that the U.S. Department of Commerce (Commerce) has determined are subsidized and sold at less than fair value,"

"As a result of the USITC’s negative determinations, no antidumping or countervailing duty orders will be issued,"


https://www.businessinsider.com/itc-vote-us-government-bombardier-delta-over-boeing-2018-1?IR=T

2. Some time after this ruling was delivered, Boeing stated that they would not be appealing this decision.

Boeing Co (BA.N) will not appeal against the U.S. trade commission ruling that allows Canada’s Bombardier Inc (BBDb.TO) to sell its newest jets to U.S. airlines without heavy duties, a Boeing spokesman said on Thursday.

https://www.reuters.com/article/us-boeing-bombardier/boeing-will-not-appeal-trade-case-against-bombardier-spokesman-idUSKBN1GZ09V

This is the reason why I stated that the initial comments you made (and you were debating that there might be added costs due to penalties) would only make sense if Boeing was not looking to get a stake in Embraer to compete with the A220.

As is, Airbus get majority stake in a program for nothing, and it looks like they will be getting another 34% of the program as a depressed asset sale from Bombardier. That said, BBD always wanted an order from one US airline to somewhat give the program legitimacy and this is why they targeted Delta. There have been orders from JetBlue and Moxy, and if the jet outperforms, you will see other orders coming in and a potential stretch.

I really fail to see how this could ever be spun as a negative for Airbus even from the most ardent Boeing fan.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 8:37 pm

MSPNWA wrote:

Sokes wrote:
Do you think Boeing should be fined by all foreign governments to whose countries B787s were sold?


Absolutely if dumping occurred in a nation with a domestic competitor and that nation successfully goes through the process for corrective action.

But that hasn't happened. You're simply deflecting with red herrings.


It is no red herring. It is actually the right question. Nobody has accused anybody of dumping when a new frame was introduced into the market and the first frames were sold below production cost until the production cost came down. Common practice.
But than Boeing tried to get rid of a coming competitor and assumed it would be better to use the courts instead of upping their own technology.
Result is a disaster for Boeing. Competition alive while sitting on a dude.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 9:30 pm

International trade 101. Dumping is selling a product in a foreign country for less than you sell it for at home. It doesn’t have to do with profit or loss per se. Boeing won at the WTO, but the U.S. government declined to place a punitive tariff on the C Series. The factory in Mobile was an attempt to get around a tariff that was never imposed. The Mobile site has the advantage of being located in a right to work state not subject to Canadian labor laws. The A220 competes directly with the A319, whereas the 737-7 has a significant backlog once the Max gets back in the air.
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 9:38 pm

Skywatcher wrote:
I suspect that Airbus has far better knowledge of the economics of the A-220 program than any of us. Like any investment it is the future projections of profitability and enterprise cost sharing that really count. The true value of this aircraft is the next 20+ years of cost (including efficiency/overhead sharing with other Airbus entities) and revenue projections. That value is not shared with us unfortunately. The very complex number crunching has greatly advanced since the initial deal for sure.
Probably Airbus will pick up Bombardier's future capital investment obligations in return for their 34% ownership stake. Quebec (IQ) will hang in for the long haul and possibly end up with a pretty good return.
This is a very long term game with massive bucks involved.
Would you rather own a share of the A-220 or Boeing stock at this point?


The other point that a lot of people seem to miss is the value proposition for the A220 is very different as a Bombardier program competing with Airbus and Boeing than as part of the Airbus family.

Airbus effectively got several billion dollars worth of R&D and Infrastructure gift wrapped by Bombardier and the taxpayers of Quebec. They aren't going to pass this up. It costs less for them to build on it than trying to build a competing family from scratch. And unlike when Bombardier owned the program, Airbus doesn't have to discount A220 sales as heavily. As much as it pains me to say this, it's an order of magnitude easier to make a business case for Airbus owning the A220 than it is for Bombardier to own the CSeries.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 9:44 pm

nikeherc wrote:
International trade 101. Dumping is selling a product in a foreign country for less than you sell it for at home. It doesn’t have to do with profit or loss per se. Boeing won at the WTO, but the U.S. government declined to place a punitive tariff on the C Series. The factory in Mobile was an attempt to get around a tariff that was never imposed. The Mobile site has the advantage of being located in a right to work state not subject to Canadian labor laws. The A220 competes directly with the A319, whereas the 737-7 has a significant backlog once the Max gets back in the air.
Did Boeing really go to the WTO about this case?

That was Embraer if I remember correctly.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 9:49 pm

Forget "dumping". Bombardier got the Canadian government to massively subsidize the Delta order, which is the one and only reason Delta is flying this airplane right now.

I'd love to see the WTO scrutinize the documents in the Delta sale.
Last edited by PPVRA on Sat Feb 08, 2020 9:50 pm, edited 1 time in total.
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 9:49 pm

The bizjet side produced 7% EBIT last year, delivered 175 planes the year’s guidance predicted
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sat Feb 08, 2020 10:17 pm

So, after reading page after page of "Gedöns" about old stories of the C-Series being dumped (not...): What do we know?

My take on the whole story

- Airbus knows fairly well what the potential of the program is
- 600 sales and Spirit buying into the supply chain are votes of confidence
- IQ is not only protecting influence and jobs, they also know there is money to be earned in the mid-to-long term
- Bombardier tries to capitalize short term
- Next large tranche of debt for Bombardier is due 2021 and I see no reason, why they shouldn't be able to refinance

Hence, in my view
- Either Airbus is pushing the move to enable earlier process integration/streamlining where the partnership "might" be in the way
- or Bombardier is pushing in order to create "more" short term breathing space and investment in Transportation even if that costs a couple of hundred million mid of the decade

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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 1:21 am

LJ wrote:
eisenbach wrote:
In Europe we have a lot of foreign companies (even outside the EU) selling products and services to very low prices, or trying to get marked share by selling below costs. It's a pure business decision and financial risk of the respective corporation. It's called competition and free marked. .


Dumping is illegal in the EU, both by EU companies and foreign companies.


Ok, thanks, I didn't know that and at least in my business no company seems to use this law, as dumping is common :-)
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 1:52 am

At this stage of the life cycle, costs to increase production, product improvement, and new model development are greater than the Canadian shareholders expected. They just don't have deep enough pockets.

Negotiate an in perpetuity royalty, and bail before you get in any deeper.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 9:06 am

LJ wrote:
eisenbach wrote:
In Europe we have a lot of foreign companies (even outside the EU) selling products and services to very low prices, or trying to get marked share by selling below costs. It's a pure business decision and financial risk of the respective corporation. It's called competition and free marked. .


Dumping is illegal in the EU, both by EU companies and foreign companies.


No. "Dumping" is an American term used in the USA, mostly against entrant foreign companies in a market dominated by American manufacturers.

In Europe we have laws against abuse of dominant market position. That is, the dominant player must not sell below production (average or additional) costs to outsell the minor players, particularly the market entrant.

We have also laws about illegal government aid. See e.g. the Alitalia thread to find out how strictly and timely they are applied.

Otherwise market entrants are allowed to sell as cheap as they want as long as they remain subdominant.

(The actual rules are very complicated and require a legion of lawyers to make any solution.)
 
SteelChair
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 11:23 am

Actions speak louder than words. The program is still collecting orders and still ramping up production rate. The 500 is still on the horizon. Airbus will speak with their next action.

There is so much biased blather on this thread.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 11:25 am

From what I figured:
Dumping charges in Europe are meant to protect the consumer. A dominant company mustn't bankrupt the competition to later enjoy even stronger pricing power. It is not about a company being foreign or domestic.
Dumping charges in the US are about protecting domestic manufacturer from foreign competition.
Please correct if i'm wrong.
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 1:05 pm

nikeherc wrote:
International trade 101. Dumping is selling a product in a foreign country for less than you sell it for at home. It doesn’t have to do with profit or loss per se. Boeing won at the WTO, but the U.S. government declined to place a punitive tariff on the C Series. The factory in Mobile was an attempt to get around a tariff that was never imposed. The Mobile site has the advantage of being located in a right to work state not subject to Canadian labor laws. The A220 competes directly with the A319, whereas the 737-7 has a significant backlog once the Max gets back in the air.


The case against Bombardier in regards to the CS series did not go to the WTO, it was dealt with by the USA authorities and justice system. Boeing could not point to damages resulting. The CS100 was outside the range Boeing could offer an alternative.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 1:55 pm

MSPNWA wrote:
In the ITC case, it was proven that Bombardier was selling the jets below production cost (dumping). Where they won the case was not having to pay penalties because of the subjective ruling that they didn't cause harm to Boeing. But the fact remains Bombardier willingly engaged in behavior that they know could have been determined in violation of trade law.


Too what extent was that "below production cost" part of "normal" production ramp up costs (where large cost come up early in the production run)?

Using those same rules, would the first couple of hundred produced 787 also be considered as "below production cost" and thus dumping?

Just for the record, this is an honest question.
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 2:53 pm

PW100 wrote:
MSPNWA wrote:
In the ITC case, it was proven that Bombardier was selling the jets below production cost (dumping). Where they won the case was not having to pay penalties because of the subjective ruling that they didn't cause harm to Boeing. But the fact remains Bombardier willingly engaged in behavior that they know could have been determined in violation of trade law.


Too what extent was that "below production cost" part of "normal" production ramp up costs (where large cost come up early in the production run)?

Using those same rules, would the first couple of hundred produced 787 also be considered as "below production cost" and thus dumping?

Just for the record, this is an honest question.

https://en.wikipedia.org/wiki/CSeries_d ... g_petition
$19.6m per item below their $33.2m production cost. ( however they established those numbers )
List price was somewhere around the $65m mark.

nonentheless: Lawyers at work.

Assume the most convoluted and unfair argument chain thinkable ( by deformed minds ).

Fun on the side: in Larry Niven/Jerry Pournelle's book "Second Inferno" lawyers have established a parasitic existence in hell funishing an intermediary layer to help satan manage hell. :-)
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 3:11 pm

SteelChair wrote:
There is so much biased blather on this thread.

At least it's on topic, as opposed to the blather about a WTC case that was settled two years ago and is fading into history.

I guess we're doomed to rehash that case every time someone starts a thread on A220.

It'd be nice if we could just point to https://en.wikipedia.org/wiki/CSeries_d ... g_petition and some of the older threads and have people relive 2018 over there.
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SteelChair
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 4:30 pm

Revelation wrote:
SteelChair wrote:
There is so much biased blather on this thread.

At least it's on topic, as opposed to the blather about a WTC case that was settled two years ago and is fading into history.

I guess we're doomed to rehash that case every time someone starts a thread on A220.

It'd be nice if we could just point to https://en.wikipedia.org/wiki/CSeries_d ... g_petition and some of the older threads and have people relive 2018 over there.


Airbus is about to secure the future of this airplane for the next 30 years. The future is bright for the A220.
 
VV
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 4:33 pm

SteelChair wrote:
Revelation wrote:
SteelChair wrote:
There is so much biased blather on this thread.

At least it's on topic, as opposed to the blather about a WTC case that was settled two years ago and is fading into history.

I guess we're doomed to rehash that case every time someone starts a thread on A220.

It'd be nice if we could just point to https://en.wikipedia.org/wiki/CSeries_d ... g_petition and some of the older threads and have people relive 2018 over there.


Airbus is about to secure the future of this airplane for the next 30 years. The future is bright for the A220.


Your optimism is very admirable.
 
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Revelation
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 6:30 pm

VV wrote:
SteelChair wrote:
Revelation wrote:
At least it's on topic, as opposed to the blather about a WTC case that was settled two years ago and is fading into history.

I guess we're doomed to rehash that case every time someone starts a thread on A220.

It'd be nice if we could just point to https://en.wikipedia.org/wiki/CSeries_d ... g_petition and some of the older threads and have people relive 2018 over there.


Airbus is about to secure the future of this airplane for the next 30 years. The future is bright for the A220.


Your optimism is very admirable.

Why not be optimistic?

It's pretty likely that Airbus will be buying BBD's share, Airbus has already put its name on the product and is integrating it into its marketing, supply chain and support operations, Spirit has bought out key parts of the supply chain. Blue chip customers such as DL, AF, B6, AC, etc are buying in, next wave operators such as Breeze are also in.

What would you like to see happening that isn't already happening?
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
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DL747400
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 6:54 pm

It is clear what needs to happen. Quebec (IQ) and Bombardier should divest themselves of their stakes. Between them, they have neither the funds nor the stomach to continue investing in the A220 program. Airbus has both.

The A220 needs continued investment so that the program can continue to evolve. It is essential that production capacity can continue to be increased and Airbus can proceed with plans to lower production costs in order to make the program a stronger competitor. It is vital that there be no lingering questions regarding the future and security of the A220 program so that airline customers can sign new orders with complete confidence. This can only happen with Airbus in a full ownership stake and having complete control. Airbus possesses the desire, the vision and the deep pockets required to grow the A220 into a true family of jetliners, something that the market is increasingly demanding. The A220 has a long and bright future as long as Airbus is allowed to run the show.

DELTA will no doubt place additional orders for the A220 and will seek to be an early customer for the proposed A220-500.
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LAX772LR
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 10:05 pm

MIflyer12 wrote:
RalXWB wrote:
A failed program? You are right, only 600 Sold so far. Boeing is the winner? If it makes you feel better.

The program isn't making money nearly four years after the (3 years late) first delivery, and BBD has announced that further investments are needed and margins are lower than expected. Programs that don't make money, yes, are loser programs, irrespective of backlog.

Sure, but then again, it's possible to make that same argument concerning the 787...
I myself, suspect a more prosaic motive... ~Thranduil
 
MIflyer12
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 10:30 pm

No, I don't think you can. Boeing's 4q19 and full year '19 earnings statements show losses for the Commercial Airplane segment but something had to be making money while MAXs were built and not delivered, and it wasn't the two 747-8s delivered 4q that carried the company. 57% of the frames delivered 4q were 787s.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 10:47 pm

MIflyer12 wrote:
No, I don't think you can. Boeing's 4q19 and full year '19 earnings statements show losses for the Commercial Airplane segment but something had to be making money while MAXs were built and not delivered, and it wasn't the two 747-8s delivered 4q that carried the company. 57% of the frames delivered 4q were 787s.

2019 was year 8 of the 787 commercial history (EIS: Cctober 2011). You really want to compare the 787 at year 8 with the A220 at year 3 (EIS: July 2016)??? Talk about dishonesty.
 
oldJoe
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Sun Feb 09, 2020 11:57 pm

I`m in the camp with "Revalution" Airbus has invested ( not the $1 contract ) too much to step out of this. Say Airbus pays a vew billion for the stake of BBD. In the future they have what ? The possibility to force the competition into a clean sheed program, even if their 32x Series get in trouble by this. It will be much faster and cheaper to respond. I hope Airbus do their acts right and make the program very succesfull. At the end of the the day they have a good program and secure alot of jobs in Canada and elsewhere ( Mobile )
 
SteelChair
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Mon Feb 10, 2020 12:55 am

DL747400 wrote:
It is clear what needs to happen. Quebec (IQ) and Bombardier should divest themselves of their stakes. Between them, they have neither the funds nor the stomach to continue investing in the A220 program. Airbus has both.

The A220 needs continued investment so that the program can continue to evolve. It is essential that production capacity can continue to be increased and Airbus can proceed with plans to lower production costs in order to make the program a stronger competitor. It is vital that there be no lingering questions regarding the future and security of the A220 program so that airline customers can sign new orders with complete confidence. This can only happen with Airbus in a full ownership stake and having complete control. Airbus possesses the desire, the vision and the deep pockets required to grow the A220 into a true family of jetliners, something that the market is increasingly demanding. The A220 has a long and bright future as long as Airbus is allowed to run the show.

DELTA will no doubt place additional orders for the A220 and will seek to be an early customer for the proposed A220-500.


It is not hard to imagine the sequence of events when the 500 is launched. Previously reticent airlines are now interested, in fact, they will become increasingly desperate for the only truly optimized 150 seat 1,800-2,000nm airplane available. All of the sudden, it becomes a seller's market. Airbus will then be able to command a price sufficient cover the cost of program development and then some, all the while production continues to ramp up at the two factories, further driving down production costs through economies of scale. One must think that the early customers will get first rights on production slots, but prices won't be cheap this time around.

976 DC9's and 1,181 MD80's were made, for a much smaller airliner market many years ago. 1,832 727's were made. It's not hard at all to imagine 5,000 A220's, perhaps many, many more, being manufactured. Especially since the MAX (if it ever flies again) and the A320 series are really optimized for a larger/longer payload range mission due to their 10% larger wing and heavier engines.
 
astuteman
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Mon Feb 10, 2020 5:06 am

MIflyer12 wrote:
No, I don't think you can. Boeing's 4q19 and full year '19 earnings statements show losses for the Commercial Airplane segment but something had to be making money while MAXs were built and not delivered, and it wasn't the two 747-8s delivered 4q that carried the company. 57% of the frames delivered 4q were 787s.


I think that makes the point perfectly regarding the A220.
And the 787 appears to be a good analogy for it

How much money was the 787 making in year 3 of production?
How much money is it making now?

Airbus have paid $1 to receive a 50.01% share of a programme that cost $6Bn - $7Bn to develop - money they didn't have to find.
They get another $1Bn investment over 3 years from Bombardier.
They did not inherit any debt

They get "ownership" of what to me looks like a spectacularly good aircraft, that currently is not being produced quickly enough to make money, but will be very shortly.
Airinsight predict 3000+ A220 sales

https://airinsight.com/re-examining-pot ... t-cseries/

a forecast that Airbus echo

So for $1 Airbus got a market leading aircraft (like the 787)
that is still loss making in year 3 (like the 787)
but will be making strong profits by year 8 (like the 787).

What they don't get is the $6Bn-$7Bn development cost which has to be repaid.(unlike the 787)
Nor do they get the cost of the initial production cost overruns.(unlike the 787)
They do get an aircraft that is virtually unchallenged in its class (the larger E2's are a good match for the A220-100, but don't come anywhere near the A220-300)

I'm struggling to see the A220 as anything other than a stunning opportunistic business move by Airbus.
And one that will serve them extremely well over the next 20 years

Rgds
 
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Taxi645
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Mon Feb 10, 2020 7:00 am

This could fit into a pattern of Airbus choosing to invest in getting their house cleaned up in order to be in a stronger long term position without triggering more protective measures from the government of their main competitor now.

They know they have a strong upper hand now with Boeing's MAX problems. Better to invest in stuff that let's them focus and invest in long term competitiveness. Taking a bigger share in the A220 program reduces liabilities and secures enough resources for a strong development of the program while saving them cash later.

The corruption settlement might fit into that pattern as well, taking a hit now (knowing your competitor got a much harder hit). Getting that gremlin out of the way so the company can focus on long term development without distractions. That said, it could just as well be already decided beforehand.
Innovation is seeing opportunity before obstacle.
 
YULobserver
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Mon Feb 10, 2020 4:21 pm

this should read as Bombardier selling it's stake to Airbus.

It is clear that this comes from BBD at this point: more cash is needed to ramp up above the 350M they are already liable for, and they are cash strapped.
Also, in order to not give it away dirt cheap, they are playing Airbus against Textron bidding on the Aviation division, as well as Alstom looking at BBD's train portfolio.
This should help keeping AIrbus at least vaguely honest about the value of the A220 program as they are not the only way BBD could raise liquidity, although divesting of the CSALP stake is the most logical.
 
WaywardMemphian
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Mon Feb 10, 2020 5:51 pm

VV wrote:
Will it be another dollar?

Canadian or 6 bits US?
 
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eisenbach
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Mon Feb 10, 2020 9:10 pm

Sokes wrote:
From what I figured:
Dumping charges in Europe are meant to protect the consumer. A dominant company mustn't bankrupt the competition to later enjoy even stronger pricing power. It is not about a company being foreign or domestic.
Dumping charges in the US are about protecting domestic manufacturer from foreign competition.
Please correct if i'm wrong.


I had some research, you are right. Compared to the US, there is no law in Europe forbidding dumbing* (as the customer would benefit). There are just customer protection laws, if large corporations use there power to dictate high prices for customers ... and for sure state subsidies (but there are workarounds, as Alitalia is an good example).

So Europe seems to have a more customer related legislation, whereas the US focuses more on protection their industry (I say this without judgement).

I learned much from this thread, thanks to all contributions!

*P.S. There are only discussions in some countries, that airlines should be not allowed to sell tickets below the costs of fees and taxes ... but this is more an environmental topic, trying to reduce leisure flying. But I think, such a law would not pass the parliaments.
DC-6, DC9, Do228, Saab340, Twin-Otter, C212, Fokker50, AN24, MD90, MD83, EMB120, A380, A300, A343, A346, B721, B742, B744, B748...
 
VV
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Tue Feb 11, 2020 7:33 am

WaywardMemphian wrote:
VV wrote:
Will it be another dollar?

Canadian or 6 bits US?


Since the first 50% was obtained using CA$ 1.00. So perhaps the remaining half is also worth CA$ 1.00 too.
If you count the stake of Investissement Québec then the remaining Bombardier's stake might be worth CA$ 0.70 or so.

I am not sure it works that way.
 
afgeneral
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Tue Feb 11, 2020 9:19 am

MIflyer12 wrote:
RalXWB wrote:
A failed program? You are right, only 600 Sold so far. Boeing is the winner? If it makes you feel better.

Programs that don't make money, yes, are loser programs, irrespective of backlog.


You mean like B787 and B737 MAX?
 
Jomar777
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Tue Feb 11, 2020 9:45 am

In this particular instance, it might not really matter what Airbus sees on the A220/C-Series project. It iseems clearly (given other events) that BBD is gone. If they go ahead and tie up with Alstom in regards to their train division, I will be a mistery what they will be involved with in near future. They are selling all divisions.
From Airbus's perspective, either they buy it/execute BBD's debts by taking equity or they are in risk to end up with either a colapse of the whole project or (maybe worse...) a partner with a significant amount of control on the JV which they may not want to work with.
IQ's share was always intended to be what it is - a silent partner only turning up for the dividends towards recoup and profit on what it had invested before. However, in the extremely hypotetical event that BBD went under that their shares ended up in the market, who could guarantee that a new investor would not come onboard for it with enough cash to also tempt IQ's to divest themselves too? Dos not need to be another aircraft industry - can be anyone.
So for Airbus, with the present order backlog it has - which cannot deliver soon enough because of lack of facilities) - and with the present investiment it put into it (not on the shares but on development and sales - AF's order would certainly NOT happen if Airbus was not involved - it has no choice but to caugh up and take the shares.
At least is a very good program which can make them good money.
Whatever you may say, Boeing's participation on this was to effectivelly kill BBD. BBD was always heavily subsidised by the Canadian/Quebec and also by the UK Government (Belfast Factory - now sold too...). Some may point out that - quite correclty - it might have dumped B737s on to the market but it did mainly at their own expense rather than BBD's with DL's order (done to save the C-Series program at that time having already been saddled with loans and incentives).
In a way, the C-Series was not profitable at all if you take this all in consideration - it killed BBD, lost money and di dnot achieve many orders. A real dog of a project although the aircraft itself was good. As an A220 - and Airbus support - it you offset what happened with BBD, it is a promising and potentially very profitable program.

Airbus needs to get these shares now before they end up somewhere else. It can then develop the program with further integration with their A320 family.

By the way - as of now and near future - there will be NO A220-500. Forget it.
 
SteelChair
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Tue Feb 11, 2020 2:22 pm

Jomar777 wrote:

By the way - as of now and near future - there will be NO A220-500. Forget it.


By the way, you should label your opinions as such.

What is the near future?

I don't think the 500 will be launched next week, but I believe (my opinion) is that it will be launched within the next 12-18 months for a 2025 delivery.

Unless you've got something firm, we're all just enthusiasts and we've just got opinions.
 
Jomar777
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Wed Feb 12, 2020 9:26 am

SteelChair wrote:
Jomar777 wrote:

By the way - as of now and near future - there will be NO A220-500. Forget it.


By the way, you should label your opinions as such.

What is the near future?

I don't think the 500 will be launched next week, but I believe (my opinion) is that it will be launched within the next 12-18 months for a 2025 delivery.

Unless you've got something firm, we're all just enthusiasts and we've just got opinions.


Sorry, you are right... carried away on the post... it is my opinion but I think it will be as such. A bit off topic here but I give ou my brief reasoning which of course you are more than entitled to disagree and I would understand.

To stretch the A220 to a 500 is to simply create a direct competitor to the A320. By buying the C-Series program as it stands, Airbus effectivelly canned the A319 - fair point. But to risk their A320 is a bit too far. Even more when you consider that Airbus seems not to be able to deliver their orders (A320 and A220) fast enough.

I think the future of the program lies on Airbus - in near or not so near future - effectivelly delivering a new Program which would synergize and unify te A220 and A320 family with commonality across the board. So you would see indeed a A220-300, A220-500, A320... even some sort of A321 but all under - let's hypotetically say - an A370 family (sorry... I am keeping the A360 fo something else... again, my opinion...).
This is actually similar to somethng that Boeing might be considering once it integrates Embraer - it is the only way forward.
 
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Wed Feb 12, 2020 9:40 am

astuteman wrote:
I'm struggling to see the A220 as anything other than a stunning opportunistic business move by Airbus.
And one that will serve them extremely well over the next 20 years


The difference is in actually making something out of that opportunity.

What would Boeing have done with the same opportunity?
( did B have a comparable $1 offer? )
My expectation would have been to crash the programm fully.
Keep away competition to the 737. C-Series was a danger
to Airbus only anyway.

Watching Boeing/Embraer will be interesting and telling.
Murphy is an optimist
 
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keesje
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Wed Feb 12, 2020 10:02 am

I think Airbus did have the advantage of having the long term strategy, instead of a short term share holder, bonus value targets, to be bolstered by dividends.
The CSeries made the A318, A319 uncompetitive. That was fully acknowledged, not denied, fought.
Vision makes it more feasible to close any business case.


I can see the A319NEO program beeing skipped for efficiency reasons.
A319 customers being offered A320s/A223s and ACJ319 customers moved to ACJ320s.
That will cost Airbus money, customers won't be willing to pay extra. But save costs longer term.

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Last edited by keesje on Wed Feb 12, 2020 10:08 am, edited 3 times in total.
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LCDFlight
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Wed Feb 12, 2020 10:03 am

The A220’s future is secure. The poorly designed Boeing 737 Max does not have a secure future. That is not just irresponsible commentary on my part; it is a fact at this moment! Boeing has behaved like an incompetent, corrupt monopolist in the narrow body space. Truth! And I give Boeing respect when it earns it!
 
JoergAtADN
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Re: WSJ: Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program

Wed Feb 12, 2020 10:15 am

keesje wrote:
I can see the A319NEO program beeing skipped for efficiency reasons.

A319 customers being offered A320s/A223s and ACJ319 customers moved to ACJ320s.


I think this is very unlikely in the foreseeable, because:
-The A319NEO can be build on the same final assembly lines as the A320NEO/A321NEO - maybe future FALs will be simplified, but the existing FALs have more the enough capacity for the A319NEO demand
-Airbus makes profit with every A32XNEO plane, but a loss with every A220 plane they build
-Airbus said, that they could sell more A220 than they can build - converting existing A319NEO orders to the A220, would therefore mean less sales overall

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