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BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 4:11 pm
by Waterbomber2
BBD got out of the commercial aerospace sector, selling off all its programs in a very bold move and in a very short time span, right before this crisis hit.
Did they get lucky or was it just a smart business decision?

Will they get back in given that all the others are in trouble while they've got the cash?

Post your take here.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 4:16 pm
by davidjohnson6
Extremely unlikely that they will go back in again. The C series nearly killed the company

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 4:28 pm
by EddieDude
Perhaps a bit of both?

It will be interesting to see what Bombardier does going forward. Weren't they searching for a JV/merger partner for their rail business? Seems the European rail manufacturers + Bombardier are having a tough time competing against the Chinese.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 4:35 pm
by JHCRJ700
I can't see them getting back in anytime soon. After they just went though all the effort of selling off all their commercial programs. The CSeries seems to be a great airplane and it's a shame it nearly killed the company.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 4:48 pm
by MIflyer12
They got lucky. They didn't PLAN for a pandemic to cut 90% of passenger demand and years of new aircraft demand. Nobody did. They got lucky with the timing of their divestitures - good for them.

BBD doesn't have any near enough personnel or financial strength to undertake a $6 Billion (or $7 Billion, or $8 Billion...) program like a clean-sheet passenger jet. They didn't before, and now they're a shadow of what they used to be as the sale of the rail division plods to a close. They are headed for $5 Billion in debt on a marginally profitable $7 Billion business jet franchise.

https://www.bombardier.com/en/media/new ... ercom.html

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 5:27 pm
by FabDiva
EddieDude wrote:
Perhaps a bit of both?

It will be interesting to see what Bombardier does going forward. Weren't they searching for a JV/merger partner for their rail business? Seems the European rail manufacturers + Bombardier are having a tough time competing against the Chinese.


The rail business has been sold to Alstom subject to regulatory clearance.

It's been having issues with build quality for a while and are on the hook for a lot of penalties (ie New Subway stock pulled from service earlier this month, UK train orders currently running over a year behind schedule, bodyshell issues in the ICE4 in Germany as well as DB refusing to accept new BR147 locomotives because of faults etc)

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 5:38 pm
by Dominion301
MIflyer12 wrote:
They got lucky. They didn't PLAN for a pandemic to cut 90% of passenger demand and years of new aircraft demand. Nobody did. They got lucky with the timing of their divestitures - good for them.

BBD doesn't have any near enough personnel or financial strength to undertake a $6 Billion (or $7 Billion, or $8 Billion...) program like a clean-sheet passenger jet. They didn't before, and now they're a shadow of what they used to be as the sale of the rail division plods to a close. They are headed for $5 Billion in debt on a marginally profitable $7 Billion business jet franchise.

https://www.bombardier.com/en/media/new ... ercom.html


I wonder if they’d have been in better shape had they never divested their recreational products division?

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 5:39 pm
by DL747400
Totally luck. Although reasonable people knew that there WOULD someday be another global pandemic, no one knew the timing, so the timing of BBD's decisions was purely coincidence.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 5:39 pm
by Dominion301
FabDiva wrote:
EddieDude wrote:
Perhaps a bit of both?

It will be interesting to see what Bombardier does going forward. Weren't they searching for a JV/merger partner for their rail business? Seems the European rail manufacturers + Bombardier are having a tough time competing against the Chinese.


The rail business has been sold to Alstom subject to regulatory clearance.

It's been having issues with build quality for a while and are on the hook for a lot of penalties (ie New Subway stock pulled from service earlier this month, UK train orders currently running over a year behind schedule, bodyshell issues in the ICE4 in Germany as well as DB refusing to accept new BR147 locomotives because of faults etc)


Alstom have been garbage equipment for my city’s new light rail line.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 5:41 pm
by EddieDude
FabDiva wrote:
The rail business has been sold to Alstom subject to regulatory clearance.

Thanks. I am now reading about. Any news on how their antitrust formalities are going?

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 7:26 pm
by F9Animal
All I know is BBD has built some of the best product. I am saddened the C Series had to go, and it's too bad it wasn't a full blown success for them. Now the plane is crushing it since Airbus took it. I don't know if they will ever get back into the commercial side of things, but if they did, I hope they knock another one out of the park!

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sat Jun 13, 2020 10:32 pm
by JayinKitsap
A lot of their spinning off businesses could have been sold earlier for more, but they got these sales completed before the CV crisis hit.

Q400 - Longview in 2018 agreed to buy the Q400, sale closed in June '19 for $300M, $250 net. Besides for CV, Flybe a major customer went BK. Prospects for new sales look dim at the moment, the service business is OK, but a lot of the fleet is now parked in the desert, many never to return. Proceeds went to pay down debt.

Downsview Plant sale - June '18 - $650M, it certainly isn't worth that much today, further the Pension Board is in a worse position to invest at this time.

Business Jet Training - Sold to CAE in March '19 for $ 645M, net $500M for "The acquisition expands CAE’s portfolio of business aircraft training capabilities, with the addition of 12 full-flight simulators and several training devices covering Learjet, Challenger, and Global lines" (AIN Online). The CV crisis has certainly hurt the business jet training market.

BBD Aerostructures - Belfast and other locations - to Spirit for $1.09B (net $500M) Oct 19- Spirit would not be able to do that purchase today.

CRJ Program - sold to MHI in June 2019 for $930M (net $500M). Would MHI do this investment now with the Spacejet program basically on ice.

CS300 program - Sold 50% to Airbus in Oct 17 for $ one dollar, sold rest for $591M in Feb '20. Would or could Airbus do this acquisition today?


I am sure I missed a number of other sales, didn't look at the choo choo's and I am unsure if the sale to Alstrom will take hold.

If even two of the above noted transactions hadn't happened by March 2020, BBD would be in receivership today. As it is the remaining Business Aircraft business is like 1/6 of BBD as of 2016 and their debt load is crazy high, I would guess that receivership in the next 2 years is a strong possibility.

BBD's share price is down 91% from July 18, currently at $.47. Current debt is $ 9.3B (not adjusted for Alstrom sale, around $4B after the projected sale). Things do not look good, it will not be returning to Commercial aviation in the next decade.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 14, 2020 2:40 am
by kaneporta1
davidjohnson6 wrote:
Extremely unlikely that they will go back in again. The C series nearly killed the company


If anything killed the company, it was the Lear 85 running in parallel with the C Series, before getting canned. And then on top that, the Global 7000 and 8000 being launched while the 2 other major programs were still in development.

As far as the timing of exiting commercial aviation, this was pure "luck". It's just sad how mismanagement and the Bombardier family/shareholder structure got the company from the 3rd largest in the world, down to nothing in less than a decade.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 14, 2020 7:58 am
by workhorse
Also, it remains to be seen how the business jets branch will be viable. 4 aircraft families, 4 FALS in three different cities, crowded market (Gulfstream, Cessna, Dassault, Embraer...)...

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 14, 2020 8:13 am
by workhorse
F9Animal wrote:
All I know is BBD has built some of the best product. I am saddened the C Series had to go


It will be in better hands with Airbus.

F9Animal wrote:
I don't know if they will ever get back into the commercial side of things, but if they did, I hope they knock another one out of the park!


I think most people involved in the C-Series development are with Airbus now.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 14, 2020 2:32 pm
by GalaxyFlyer
kaneporta1 wrote:
davidjohnson6 wrote:
Extremely unlikely that they will go back in again. The C series nearly killed the company


If anything killed the company, it was the Lear 85 running in parallel with the C Series, before getting canned. And then on top that, the Global 7000 and 8000 being launched while the 2 other major programs were still in development.

As far as the timing of exiting commercial aviation, this was pure "luck". It's just sad how mismanagement and the Bombardier family/shareholder structure got the company from the 3rd largest in the world, down to nothing in less than a decade.


The Lear 85 didn’t have a market and the partnership with Grob ended when Grob went bust. When Grob went out, BBD should have immediately cancelled as they didn’t have the CRFP technology. The 7500 was much more derivative from the earlier Globals and the C-Series. The market for large jets is much surer.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 14, 2020 2:36 pm
by GalaxyFlyer
workhorse wrote:
Also, it remains to be seen how the business jets branch will be viable. 4 aircraft families, 4 FALS in three different cities, crowded market (Gulfstream, Cessna, Dassault, Embraer...)...


The only competition is Gulfstream for the BBD’s offerings excepting the tiny production numbers of the Lear 75. Dassault is much smaller part of the market, 1/4 of the annual deliveries and their offerings not as competitive as they’ve aged. Cessna and EMB are fighting out in the small jet arena—EMB 100 and 300 planes versus Citation, which are long in the tooth. The Latitude is pretty good. The Longitude is entering the CL350/G280 market with a smaller cabin.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 14, 2020 10:14 pm
by lightsaber
kaneporta1 wrote:
davidjohnson6 wrote:
Extremely unlikely that they will go back in again. The C series nearly killed the company


If anything killed the company, it was the Lear 85 running in parallel with the C Series, before getting canned. And then on top that, the Global 7000 and 8000 being launched while the 2 other major programs were still in development.

As far as the timing of exiting commercial aviation, this was pure "luck". It's just sad how mismanagement and the Bombardier family/shareholder structure got the company from the 3rd largest in the world, down to nothing in less than a decade.

C-series, Lear 85, and Global 7000/8000 (now 7500) in parallel was far too much for Bombardier.

The Lear 85 was a money suck, for a small market, that indeed did them in. But 3 at once was too much.

Airbus has a good product in the C-series/A220. I hope Bombardier survives.

Lightsaber

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 14, 2020 10:59 pm
by ikolkyo
Really unfortunate that they couldn't get the CSeries going themselves, it's a great aircraft.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 14, 2020 11:22 pm
by strfyr51
BBD bit off far more than they could chew or swallow, he Challemger was and Is a great airplane Maybe they should have stuck with building that.
They Had a successful train car business until they stretched the rubber band too thin.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Mon Jun 15, 2020 12:17 am
by GalaxyFlyer
strfyr51 wrote:
BBD bit off far more than they could chew or swallow, he Challemger was and Is a great airplane Maybe they should have stuck with building that.
They Had a successful train car business until they stretched the rubber band too thin.


They’re stilling building them (the 350 and 650, née 604 and 605) and the Globals. The 650 is getting long in the tooth and needs replacement, but still selling slowly. That’s a fleet of about 1600 deliveries.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Mon Jun 15, 2020 6:11 pm
by Noshow
So who exactly decided to overstretch the company this way back then? What was the plan behind it? Must have become some textbook example of how to not do it.
They had many successful divisions and now it is down to some firesale of everything? Sad to see. Used to be good solid engineering with customers all over the world.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 10:16 am
by workhorse
GalaxyFlyer wrote:
workhorse wrote:
Also, it remains to be seen how the business jets branch will be viable. 4 aircraft families, 4 FALS in three different cities, crowded market (Gulfstream, Cessna, Dassault, Embraer...)...


The only competition is Gulfstream for the BBD’s offerings excepting the tiny production numbers of the Lear 75. Dassault is much smaller part of the market, 1/4 of the annual deliveries and their offerings not as competitive as they’ve aged. Cessna and EMB are fighting out in the small jet arena—EMB 100 and 300 planes versus Citation, which are long in the tooth. The Latitude is pretty good. The Longitude is entering the CL350/G280 market with a smaller cabin.


I see. So, what you say means Lear/Wichita is in trouble, but Toronto/Global and Dorval/Ch.350 and 650 will do fine?

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 12:07 pm
by ExMilitaryEng
The Lear 75 competes in a market that has too many players. "Affordable" prices run the game. Lear/Wichita makes more from revenues from other activities (as opposed to building aircrafts...).

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 12:48 pm
by Polot
Noshow wrote:
So who exactly decided to overstretch the company this way back then? What was the plan behind it? Must have become some textbook example of how to not do it.
They had many successful divisions and now it is down to some firesale of everything? Sad to see. Used to be good solid engineering with customers all over the world.

Poor centralized leadership coupled with unrealistic cost and timeline projections. At C series launch BBD was expecting the plane to enter service in 2013 with a program cost less than $3 billion, of which a portion of which would be paid by partners. Of course the C series did not end up entering service until 2016 (3 years late) and cost BBD around $7 billion (about 3x more than they were expecting).

Ditto the Global 7000/8000. Launched in 2010 with the expectation that it will enter service in 2016/2017. Of course 5 years into the program (one year before original EIS) BBD designed your completely redesign the wing which pushed the whole program back (coupled with having to deal with C Series delays). At this point it is looking like we will never see the 8000.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 1:10 pm
by SwissCanuck
Dominion301 wrote:
FabDiva wrote:
EddieDude wrote:
Perhaps a bit of both?

It will be interesting to see what Bombardier does going forward. Weren't they searching for a JV/merger partner for their rail business? Seems the European rail manufacturers + Bombardier are having a tough time competing against the Chinese.


The rail business has been sold to Alstom subject to regulatory clearance.

It's been having issues with build quality for a while and are on the hook for a lot of penalties (ie New Subway stock pulled from service earlier this month, UK train orders currently running over a year behind schedule, bodyshell issues in the ICE4 in Germany as well as DB refusing to accept new BR147 locomotives because of faults etc)


Alstom have been garbage equipment for my city’s new light rail line.


How's the weather in Ottawa today? :)

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 1:14 pm
by amstone17
Waterbomber2 wrote:
BBD got out of the commercial aerospace sector, selling off all its programs in a very bold move and in a very short time span, right before this crisis hit.
Did they get lucky or was it just a smart business decision?

Will they get back in given that all the others are in trouble while they've got the cash?

Post your take here.



Nothing on the Bombardier floundering is smart business decision making. The reason they are in the position of having to sell everything off is a great many years of mismanagement have tarnished the brand to the point where even with a perfect product, customers are hesitant to even ask questions. The C-series program is amazing, truly great engineering, excellent aircraft that performs better than expected. The only thing holding it back was BBD management. Lousy post sale support, lousy supply chain management, lousy business practices and that's just their commercial aircraft division.

Rail division is being sold off after years of customers getting angry

Recreational products were shed a while back

All that's left is business jets and apparently they are trying to sell it as well. Really all that's left is a name, and that name lost a lot of clout in the manufacturing world.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 1:35 pm
by Dash9
Nothing on the Bombardier floundering is smart business decision making. The reason they are in the position of having to sell everything off is a great many years of mismanagement have tarnished the brand to the point where even with a perfect product, customers are hesitant to even ask questions. The C-series program is amazing, truly great engineering, excellent aircraft that performs better than expected. The only thing holding it back was BBD management. Lousy post sale support, lousy supply chain management, lousy business practices and that's just their commercial aircraft division.

Rail division is being sold off after years of customers getting angry

Recreational products were shed a while back

All that's left is business jets and apparently they are trying to sell it as well. Really all that's left is a name, and that name lost a lot of clout in the manufacturing world.


you have any sources in regards to business jets division being on sale?

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 1:40 pm
by GalaxyFlyer
Polot wrote:
Noshow wrote:
So who exactly decided to overstretch the company this way back then? What was the plan behind it? Must have become some textbook example of how to not do it.
They had many successful divisions and now it is down to some firesale of everything? Sad to see. Used to be good solid engineering with customers all over the world.

Poor centralized leadership coupled with unrealistic cost and timeline projections. At C series launch BBD was expecting the plane to enter service in 2013 with a program cost less than $3 billion, of which a portion of which would be paid by partners. Of course the C series did not end up entering service until 2016 (3 years late) and cost BBD around $7 billion (about 3x more than they were expecting).

Ditto the Global 7000/8000. Launched in 2010 with the expectation that it will enter service in 2016/2017. Of course 5 years into the program (one year before original EIS) BBD designed your completely redesign the wing which pushed the whole program back (coupled with having to deal with C Series delays). At this point it is looking like we will never see the 8000.


No need for the 8000, the 7500 can do those flights. The shorter 8000 fuselage might turn into the replacement for the 6000–FBW, great cabin, large windows, Pearl engines.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 4:27 pm
by AWACSooner
JayinKitsap wrote:
CS300 program - Sold 50% to Airbus in Oct 17 for $ one dollar, sold rest for $591M in Feb '20. Would or could Airbus do this acquisition today?

Still scratching my head on how this was even legal...oh well.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 5:41 pm
by GalaxyFlyer
Why wouldn’t it be legal—BBD was a private seller and Airbus a willing buyer/partner?

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 6:58 pm
by Dominion301
SwissCanuck wrote:
Dominion301 wrote:
FabDiva wrote:

The rail business has been sold to Alstom subject to regulatory clearance.

It's been having issues with build quality for a while and are on the hook for a lot of penalties (ie New Subway stock pulled from service earlier this month, UK train orders currently running over a year behind schedule, bodyshell issues in the ICE4 in Germany as well as DB refusing to accept new BR147 locomotives because of faults etc)


Alstom have been garbage equipment for my city’s new light rail line.


How's the weather in Ottawa today? :)


Hot! 30-34 for the next several days. :)

BBD did get lucky. If they hadn't sold everything but the biz jet sink, COVID-19 would have been the nail in the coffin.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 7:14 pm
by USAirKid
AWACSooner wrote:
JayinKitsap wrote:
CS300 program - Sold 50% to Airbus in Oct 17 for $ one dollar, sold rest for $591M in Feb '20. Would or could Airbus do this acquisition today?

Still scratching my head on how this was even legal...oh well.


There also was a whole lot of liabilities that went for that $1, and Airbus also brought its support and sales team to the A220, which also has worth.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Wed Jun 17, 2020 9:59 pm
by AirbusA6
If BBD HADN'T sold all those programmes, it would be in an appalling financial state at the moment...

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Thu Jun 18, 2020 8:54 pm
by Noshow
It was the other way around unfortunately. BECAUSE they were in an appealing financial state they had to sell all those programs.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Thu Jun 18, 2020 9:17 pm
by rampbro
SwissCanuck wrote:
Dominion301 wrote:
FabDiva wrote:

The rail business has been sold to Alstom subject to regulatory clearance.

It's been having issues with build quality for a while and are on the hook for a lot of penalties (ie New Subway stock pulled from service earlier this month, UK train orders currently running over a year behind schedule, bodyshell issues in the ICE4 in Germany as well as DB refusing to accept new BR147 locomotives because of faults etc)


Alstom have been garbage equipment for my city’s new light rail line.


How's the weather in Ottawa today? :)


I hold SNC responsible for the Ottawa fiasco. They decided on the Citadis vehicle for that system, which IMHO was the wrong decision. They also bunged the infrastructure.
That said I've worked extensively with Alstom Transport on other projects, and while Ottawa is certainly an outlier, the other projects were not a piece of cake either.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Fri Jun 19, 2020 2:56 am
by ExMilitaryEng
Ottawa specificly agreed for the Citadis - as they wanted to save money. And Alstom told them it would meet all the specs...

SNC was indeed late in the tunnelling of the western approach (Ottawa University side), but it ended up not impacting the overall schedule as Alstom was even more late - big time.
I work in Ottawa.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 21, 2020 12:11 am
by Dominion301
ExMilitaryEng wrote:
Ottawa specificly agreed for the Citadis - as they wanted to save money. And Alstom told them it would meet all the specs...

SNC was indeed late in the tunnelling of the western approach (Ottawa University side), but it ended up not impacting the overall schedule as Alstom was even more late - big time.
I work in Ottawa.


Yeah and now SNC is heavily involved in phase II, even though they scored lowest. I wonder how things would have turned out had they gone with Siemens? The city still had egg on their face with Siemens with the debacle of the cancelled rail project a few years prior. I think the end result with Bombardier would have been similar.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 21, 2020 12:17 am
by ZaphodHarkonnen
Dumb luck for getting out when they did. Just like Air NZ selling off the LHR slots a few months before all the COVID stuff hit.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 21, 2020 2:22 am
by ExMilitaryEng
Dominion301 wrote:
I think the end result with Bombardier would have been similar.

FWIW, while BBD's Toronto tramways were indeed late, but at least they now run perfectly and riders like them.

Alstom on the other end was also late in Ottawa, but its whole Citadis system is still a mess.

Re: BBD ejection strategy: got lucky or sound decision-making?

Posted: Sun Jun 21, 2020 10:47 pm
by Dominion301
ExMilitaryEng wrote:
Dominion301 wrote:
I think the end result with Bombardier would have been similar.

FWIW, while BBD's Toronto tramways were indeed late, but at least they now run perfectly and riders like them.

Alstom on the other end was also late in Ottawa, but its whole Citadis system is still a mess.


That’s true for Toronto. I was thinking more about NYC where they got so fed up they told Bombardier to stop delivering them.