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MIflyer12
Topic Author
Posts: 10200
Joined: Mon Feb 18, 2013 11:58 pm

'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 11:24 am

Airbus’s A220 ‘success’ is built on Canadian failure

Some highlights:

If the A220 is the “quintessence” of anything, it is the failure of Canadian innovators to translate ground-breaking technology into commercial success. It is another example of intellectual property, developed by Canadians with Canadian tax dollars, fleeing the country.

...

Such hardball tactics were nevertheless foreseeable when Conservative prime minister Stephen Harper’s government invested $350-million in the C Series in 2008. They became inevitable when Prime Minister Justin Trudeau’s Liberals stepped up in early 2017 with a $372-million loan for Bombardier’s C Series and Global 7000 business jet programs. That investment followed the Quebec government’s 2015 move to inject US$1-billion into the C Series program.

The direct government aid was on top of the lucrative research tax credits Bombardier was able to claim on the $6-billion it cost to develop the C Series.

...

After all, Airbus is slated to own 100 per cent of the A220 program by 2026, when it is set to buy the Quebec government’s stake “at fair market value.” That stake is currently worthless, since Airbus loses about US$400-million a year on the plane, according to analyst estimates cited by Leeham News.

The author doesn't propose an alternative that could yield better value for the government aid provided, nor does he demand free market solutions (where shareholders and bondholders finance new projects, not governments).

https://www.theglobeandmail.com/busines ... n-failure/
 
TerminalD
Posts: 435
Joined: Wed Apr 26, 2017 7:32 pm

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 1:15 pm

MIflyer12 wrote:
Airbus’s A220 ‘success’ is built on Canadian failure

Some highlights:

If the A220 is the “quintessence” of anything, it is the failure of Canadian innovators to translate ground-breaking technology into commercial success. It is another example of intellectual property, developed by Canadians with Canadian tax dollars, fleeing the country.

After all, Airbus is slated to own 100 per cent of the A220 program by 2026, when it is set to buy the Quebec government’s stake “at fair market value.” That stake is currently worthless, since Airbus loses about US$400-million a year on the plane, according to analyst estimates cited by Leeham News.

While I very much enjoy the song “Blame Canada”, it doesn’t sound like Airbus is doing much better losing $400m per year, lol. Maybe they are doing worse than Canada would have done.
 
docmtl
Posts: 72
Joined: Sun Feb 25, 2018 12:04 pm

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 1:32 pm

Bombardier was going through a fire sale of its assets to avoid bankruptcy at that time (Trains division sold to Alstom, aerostructures sold to Spirit Aerosystems, CRJ line and post-market services sold to MHI, Dash-8 line sold to Viking, Real Estate in Ontario sold).

What critics say about the C-series deal is the fact that Québec's provincial government invested Cnd$1 billion in the C-series program, which was divested from Bombardier itself for that sole purpose. Had they invested the same amount of money in the company instead, they could now sell their shares on the Bombardier Business Jets company, which is doing fine in 2021, and get taxpayers money back...

But the majority owners of BBD didn't like the idea, I presume...

And the rest is history.

docmtl
 
aviatorcraig
Posts: 582
Joined: Sun Mar 21, 2010 12:14 pm

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 2:15 pm

While I very much enjoy the song “Blame Canada”, it doesn’t sound like Airbus is doing much better losing $400m per year, lol. Maybe they are doing worse than Canada would have done.


$400m per year? How many A321 sales does that equate to?
For that, Airbus gets to absolutely control what potentially could have become a major competitor and threat to their cash cows. Their competitor Boeing tried a different route through the courts with US Govt help. A route that could be argued to have cost them more than $400m per year in sales to Delta alone.
Sounds like good business to me.
 
GalaxyFlyer
Posts: 8593
Joined: Fri Jan 01, 2016 4:44 am

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 2:47 pm

docmtl wrote:
Bombardier was going through a fire sale of its assets to avoid bankruptcy at that time (Trains division sold to Alstom, aerostructures sold to Spirit Aerosystems, CRJ line and post-market services sold to MHI, Dash-8 line sold to Viking, Real Estate in Ontario sold).

What critics say about the C-series deal is the fact that Québec's provincial government invested Cnd$1 billion in the C-series program, which was divested from Bombardier itself for that sole purpose. Had they invested the same amount of money in the company instead, they could now sell their shares on the Bombardier Business Jets company, which is doing fine in 2021, and get taxpayers money back...

But the majority owners of BBD didn't like the idea, I presume...

And the rest is history.

docmtl


Majority owners of a certain, exclusive class of BBD stock didn’t like it.
 
Bingo1
Posts: 241
Joined: Sat Dec 05, 2009 5:12 pm

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 3:55 pm

MIflyer12 wrote:
Airbus’s A220 ‘success’ is built on Canadian failure

Some highlights:

If the A220 is the “quintessence” of anything, it is the failure of Canadian innovators to translate ground-breaking technology into commercial success. It is another example of intellectual property, developed by Canadians with Canadian tax dollars, fleeing the country.

...

Such hardball tactics were nevertheless foreseeable when Conservative prime minister Stephen Harper’s government invested $350-million in the C Series in 2008. They became inevitable when Prime Minister Justin Trudeau’s Liberals stepped up in early 2017 with a $372-million loan for Bombardier’s C Series and Global 7000 business jet programs. That investment followed the Quebec government’s 2015 move to inject US$1-billion into the C Series program.

The direct government aid was on top of the lucrative research tax credits Bombardier was able to claim on the $6-billion it cost to develop the C Series.

...

After all, Airbus is slated to own 100 per cent of the A220 program by 2026, when it is set to buy the Quebec government’s stake “at fair market value.” That stake is currently worthless, since Airbus loses about US$400-million a year on the plane, according to analyst estimates cited by Leeham News.

The author doesn't propose an alternative that could yield better value for the government aid provided, nor does he demand free market solutions (where shareholders and bondholders finance new projects, not governments).

https://www.theglobeandmail.com/busines ... n-failure/


IMHO, the reason that the author didn't propose an alternative involving "free market" options is because The Globe loves big government and tends to ignore or down play any successes that "free market forces" have.

I partially blame the Avro Arrow for the C Series. The fact that the Arrow was shut down (possibly at the urging of the USA government) was brought up a lot when Boeing started playing hardball (737 style) with BBD. The Harper Conservatives didn't want the failure of that plane on their record and furthermore they needed Quebec votes in the upcoming election. It was easiest to give BBD a loan.

Then bring in Trudeau, his love of Quebec, big government, his ties to the Laurentien elite, and his fear of the BQ undermining his support base and it the loans and subsidies go much, much further.

Looking back I sometimes wonder if the brass at BBD realized all of this and concentrated on building a nationalistic symbol (that no government would dare let fail) instead of building a program they could actually handle.
Last edited by Bingo1 on Thu Oct 07, 2021 4:13 pm, edited 1 time in total.
 
Skywatcher
Posts: 982
Joined: Sat Sep 14, 2002 11:19 am

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 4:13 pm

The Globe & Mail (theoretically Canada's national newspaper with a heavy Toronto focus) just can't stop gnawing on this bone.
For sure the government money was debatably wasted but what about the fact that far more billions of taxpayer funds are squandered on other businesses every year in Canada, particularly the auto business in the GTA area. Crickets.......

For some reason Bombardier became the "poster boy" of government business subsidy largess even though they were a relatively small part of the overall issue.
Now that they're gone, instead of focusing on the remaining companies at the pig trough they still beat up on on a no longer existent Bombardier.

Why don't they deal with the present problem and not the hackneyed past?
 
GalaxyFlyer
Posts: 8593
Joined: Fri Jan 01, 2016 4:44 am

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 4:25 pm

No longer existent, that’s news to the BBD employees in Dorval and Downsview turning out a new plane every second working day. 120 in 2021.

https://www.globenewswire.com/news-rele ... sults.html
 
casperCA
Posts: 56
Joined: Tue Mar 03, 2020 9:38 pm

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 4:43 pm

Skywatcher wrote:
The Globe & Mail (theoretically Canada's national newspaper with a heavy Toronto focus) just can't stop gnawing on this bone.
For sure the government money was debatably wasted but what about the fact that far more billions of taxpayer funds are squandered on other businesses every year in Canada, particularly the auto business in the GTA area. Crickets.......

For some reason Bombardier became the "poster boy" of government business subsidy largess even though they were a relatively small part of the overall issue.
Now that they're gone, instead of focusing on the remaining companies at the pig trough they still beat up on on a no longer existent Bombardier.

Why don't they deal with the present problem and not the hackneyed past?


If your government you also need to take into account the tax revenue from having these industries active in the economy. All the C-series export from Canada directly contribute to GDP. The government is going to recover a fair bit of what it investing just in taxes on direct and in-direct workers who support these programs.

The "problem" with government interference with the free market domestically is it distorts the economy and discourages private investments if your investment is at risk due to government interference.

The "problem" with government interference with what amounts to an export market is the political goodwill that is lost with the governments of the countries your competing with. In this case it would be the EU, Brazil and US. All three are doing exactly the same thing.
 
FlapOperator
Posts: 439
Joined: Tue Jun 29, 2021 4:07 pm

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 6:01 pm

Bingo1 wrote:
I partially blame the Avro Arrow for the C Series.


FlapOperator's Law of any discussion of Canadian aviation.

If the discussion lasts long enough, the probability of the Arrow being mentioned and the US being blamed approaches 1.
 
FlapOperator
Posts: 439
Joined: Tue Jun 29, 2021 4:07 pm

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 6:03 pm

I, for one, am incredulous that Airbus would pursue policies that would undercut the value of the remaining outstanding stake in order to make the purchase as cheap as possible.

Impossible!
 
User avatar
zeke
Posts: 16451
Joined: Thu Dec 14, 2006 1:42 pm

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 9:04 pm

FlapOperator wrote:
I, for one, am incredulous that Airbus would pursue policies that would undercut the value of the remaining outstanding stake in order to make the purchase as cheap as possible.

Impossible!


Yes that is totally opposite of any company the world over, they are always looking at ways to overstate the value of a company they want to buy to pay higher than market value. :sarcasm:

Non tangible items are not valued highly during sale, especially when the company is under financial duress.
 
Skywatcher
Posts: 982
Joined: Sat Sep 14, 2002 11:19 am

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 9:09 pm

GalaxyFlyer wrote:
No longer existent, that’s news to the BBD employees in Dorval and Downsview turning out a new plane every second working day. 120 in 2021.

https://www.globenewswire.com/news-rele ... sults.html


Hair splitting. The vast majority of the empire is gone forever.

Why doesn't the Globe do some actual reporting and list who gets what all over Canada from government subsidies? BBD was just a drop in the bucker federally at least. Much of that went to the dash 8 in Toronto and the 2 train plants in Kingston and Thunder Bay which the Globe always ignores.
 
User avatar
zkojq
Posts: 4743
Joined: Fri Sep 02, 2011 12:42 am

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 9:57 pm

How many Canadian jobs were supported by that spending?
 
GalaxyFlyer
Posts: 8593
Joined: Fri Jan 01, 2016 4:44 am

Re: 'The Globe and Mail' on C Series subsidies

Thu Oct 07, 2021 10:00 pm

Skywatcher wrote:
GalaxyFlyer wrote:
No longer existent, that’s news to the BBD employees in Dorval and Downsview turning out a new plane every second working day. 120 in 2021.

https://www.globenewswire.com/news-rele ... sults.html


Hair splitting. The vast majority of the empire is gone forever.

Why doesn't the Globe do some actual reporting and list who gets what all over Canada from government subsidies? BBD was just a drop in the bucker federally at least. Much of that went to the dash 8 in Toronto and the 2 train plants in Kingston and Thunder Bay which the Globe always ignores.


Hair splitting? They produce 120 jets a year, it’s not non-existent”.
 
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lightsaber
Moderator
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Joined: Wed Jan 19, 2005 10:55 pm

Re: 'The Globe and Mail' on C Series subsidies

Fri Oct 08, 2021 8:52 am

Discuss the topic, not other users.
 
GDB
Posts: 14412
Joined: Wed May 23, 2001 6:25 pm

Re: 'The Globe and Mail' on C Series subsidies

Fri Oct 08, 2021 12:26 pm

FlapOperator wrote:
Bingo1 wrote:
I partially blame the Avro Arrow for the C Series.


FlapOperator's Law of any discussion of Canadian aviation.

If the discussion lasts long enough, the probability of the Arrow being mentioned and the US being blamed approaches 1.


God yes, the Canadian version of endless ahistorical, woe is us, all the Labour Party AND the Americans fault that is also where most discussions about UK post war aerospace end up with...TSR2.
The CF105 was overtaken by events, the appearance of ICBM’s and the non appearance of the mooted Soviet supersonic long range, Mach 3 even, long range bombers. The first it could not counter, the second it was designed to.

For Bombardier it looks like a classic case of over extension, ironically what came out was a fine airliner, which as stated, IS being produced in Canada still, along with the Airbus FAL.
I would argue that while they are not big players, the fall out from Bombardier has enabled companies like Viking to revive and modernize some other Canadian designed airframes.

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