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KarelXWB
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Bombardier Pauses Learjet 85 Program

Thu Jan 15, 2015 3:30 pm

Bombardier has taken a $1.4 billion impairment charge after deciding to "pause" its Learjet 85 programme due to continued weak demand in the light jet sector.

Quote:
Canadian plane maker Bombardier Inc. on Thursday said it would halt its Learjet 85 business-aircraft-development program due to weak market demand, resulting in a pretax charge of around $1.4 billion and about 1,000 job cuts.

Article:
http://www.flightglobal.com/news/art...rjet-85-on-1.4bn-write-off-407950/

Pretty heavy, shares just dropped 20%.



[Edited 2015-01-15 07:48:21]
What we leave behind is not as important as how we've lived.
 
TUSDawg23
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RE: Bombardier Pauses Learjet 85 Program

Thu Jan 15, 2015 3:52 pm

Wow, this is huge news. It mentioned it was focusing on the Global Express and C-Series, but had no mention of the Challenger jet. Will it be keep producing the Challenger?
 
aerodog
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RE: Bombardier Pauses Learjet 85 Program

Thu Jan 15, 2015 4:28 pm

The weak demand in the light jet sector is not new...it has been around for several years. I suspect the real reasons are unsolvable problems with empty weights and a lack of acceptance of plastic airplanes in the business jet market place.

Fractional ownership companies want proven reliable airplanes...managers of corporate flight departments will be reluctant to risk their jobs/pensions on unproven technology and the Beech Premier only underscores their concerns.
 
planemaker
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RE: Bombardier Pauses Learjet 85 Program

Thu Jan 15, 2015 5:18 pm

Quoting KarelXWB (Thread starter):
Pretty heavy, shares just dropped 20%.
Quoting aerodog (Reply 2):
The weak demand in the light jet sector is not new...it has been around for several years.

From the comment section in the Bloomberg article:

Quote:
People should go to jail. Bombardier execs have been deliberately lying to the media and shareholders for years. It's criminal theft what they've done.

I've been warning about BBD for many years and what is happening is actually worse than I anticipated, unfortunately.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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clickhappy
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RE: Bombardier Pauses Learjet 85 Program

Thu Jan 15, 2015 5:47 pm

Does this mean the 60XR will continue to be offered?
 
MIflyer12
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RE: Bombardier Pauses Learjet 85 Program

Thu Jan 15, 2015 6:53 pm

Quoting planemaker (Reply 3):
From the comment section in the Bloomberg article:

Quote:
People should go to jail. Bombardier execs have been deliberately lying to the media and shareholders for years. It's criminal theft what they've done.

I've been warning about BBD for many years and what is happening is actually worse than I anticipated, unfortunately.

Any moron can comment in a comment section, and morons do - there's no obligation to provide proof. That it appeared with the Bloomberg article in no way indicates fact-checking by Bloomberg or editorial agreement by Bloomberg.
 
planemaker
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RE: Bombardier Pauses Learjet 85 Program

Thu Jan 15, 2015 6:56 pm

Quoting MIflyer12 (Reply 5):
That it appeared with the Bloomberg article in no way indicates fact-checking by Bloomberg or editorial agreement by Bloomberg.

Obviously.  
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
Drewski2112
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RE: Bombardier Pauses Learjet 85 Program

Thu Jan 15, 2015 7:39 pm

Genuinely surprised it took them this long to call it quits. Anyone who followed this program saw the writing on the wall since 2013.

Unlike the Learjet 60 which is wholly manufactured in Wichita, the Lear 85 spread its production out -- like Boeing did with the 787. Unlike Boeing, the Lear 85 never had a large market from the start and now here we are. I remember reading about a Lear 85 customer cancelling his order once he found out major components would be made in Mexico. Snap judgement, yes, but we're now finding out the Mexico facility was the plague of this program, due mainly to Bombardiers lack of oversight of the facility.

Don't get me started on Bombardiers business jet offerings. From Lears to Globals, there's a serious lack of innovation to stay competitive.
 
Dash9
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RE: Bombardier Pauses Learjet 85 Program

Thu Jan 15, 2015 9:02 pm

Quoting TusDawg23 (Reply 1):
Will it be keep producing the Challenger?

yes they will. They just revamped the 305 into the 350 and are preparing to do the same for the 605 to become the 650. These are manufactured in Canada where the downfall of the CRJ has left lots of production capacity. Demand is still OK for these 2 products, no reason to stop producing them

The Learjet 40 and 45 were just revamped into the 70 and 75 as well. The Global are getting bigger siblings in the 7000 and 8000.

Despite all the doomsayer, BBD is still #1 or #2 in the bizjet industry and most of their product were refreshed are are being so. Mothballing the Lear 85 will leave a gap in the protefolio but not a huge one and not one which the market is very healthy neither. A good decision overall, but should have been taken earlier.
 
r2rho
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RE: Bombardier Pauses Learjet 85 Program

Fri Jan 16, 2015 2:06 pm

But why now, with flight test already underway? I would have understood this decision some years ago, when the program progress was less. But with most of the money now spent anyway, you might as well just go ahead and certify the damned thing, and at least have a certified design out there, even if you don't intend to produce it in the short term.
 
planemaker
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RE: Bombardier Pauses Learjet 85 Program

Fri Jan 16, 2015 4:05 pm

Quoting r2rho (Reply 9):
But why now, with flight test already underway?

It still costs money and cash flow is a concern...

Quote:
Bombardier also trimmed its 2015 guidance, including a significant drop in the amount of cash flow it expects from its aerospace division. At least one analyst said this raised the possibility that Bombardier may resort to selling stock to improve its financial cushion — a move that would be negative for current shareholders.

The new cashflow estimate for Bombardier Aerospace is US$800 million, down from the previous estimate of between US$1.2 billion to US$$1.6 billion in the prior forecast. Cash flow from the rail division is expected to increase slightly.

David Tyerman of Canaccord Genuity said the credibility of Bombardier's management is likely to take a major hit from Thursday's announcement.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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KarelXWB
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RE: Bombardier Pauses Learjet 85 Program

Fri Jan 16, 2015 7:56 pm

Shares continue to decline, now below $3.

What we leave behind is not as important as how we've lived.
 
planemaker
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RE: Bombardier Pauses Learjet 85 Program

Fri Jan 16, 2015 8:45 pm

Quoting KarelXWB (Reply 11):
Shares continue to decline, now below $3.

It is because debt got downgraded:

Quote:
S&P cut Bombardier's long-term corporate credit rating to B+ from BB- late on Thursday, and said its outlook was negative, in part because of the Canadian company's reduced profitability and pricing pressure on new aircraft. It said a tough market and big capital expenditures could weigh on performance again in 2015.

The concern is that covenants could be triggered with such actions leading to a more restrictive environment.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
queb
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RE: Bombardier Pauses Learjet 85 Program

Sat Jan 17, 2015 12:20 am

Quoting planemaker (Reply 10):

Quoting r2rho (Reply 9):
But why now, with flight test already underway?

It still costs money and cash flow is a concern...

No because the real problem is technical, the Lear 85 is dead, believe me. The next Learjet will be in aluminum.
 
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lightsaber
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RE: Bombardier Pauses Learjet 85 Program

Sat Jan 17, 2015 12:36 am

Quoting queb (Reply 13):

What in particular? CFRP wings are now a better known than beer can wings. Did something go wrong with the larger body pieces? I find this amazing as I can list 5 airframers who could have pulled this off.

In 20 years, I expect CFRP or the next gen to be a given.

Lightsaber
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BD500
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RE: Bombardier Pauses Learjet 85 Program

Sat Jan 17, 2015 1:15 am

Quoting lightsaber (Reply 14):
CFRP wings are now a better known than beer can wings. Did something go wrong with the larger body pieces?

I Think what Queb meant by his statement is that the smaller the plane is, the less are the weight gains and the higher are the manufacturing costs. Hence to compete in a market segment where profit margins are thinner, the manufacturing costs needs to be at their lowest. Especially if the sales forecast are not very promising.

I still believe there is a market for a product in between Learjet 70/75 and challenger 350, however, it has be profittable.

Since cash flow seems to be an issue at the moment, I think the pause is wise decision.
 
Tangowhisky
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RE: Bombardier Pauses Learjet 85 Program

Sat Jan 17, 2015 1:40 am

Quoting Dash9 (Reply 8):
Mothballing the Lear 85 will leave a gap in the protefolio but not a huge one and not one which the market is very healthy neither. A good decision overall, but should have been taken earlier.

The bottom line is that they started a program and could not finish it. They put a lot of top management on the program, and they could not deliver. Sure BBD had 2 other bigger programs (Global 7/8 and CSeries) but those were launched later thinking the Lear 85 would be delivered as planned.

The bottom lines is that the "market" lost all confidence in BBD on Thursday, The Lear 85 program does not have the weight to push the stock down by 30%. It is that the market are throwing their arms in the air and are giving up on BBD. A $1.4B write off (I guess for the liquidated damages in this decision) is another hit the investors don't want to see in the balance sheet.

Quoting queb (Reply 13):
The next Learjet will be in aluminum.

No new Lears if BBD is still owns Learjet.

[Edited 2015-01-16 17:40:34]
Only the paranoid survive
 
queb
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RE: Bombardier Pauses Learjet 85 Program

Sat Jan 17, 2015 1:43 am

No, they had major structural problem with the monocoque fuselage (without frames and stringers). During the production of the first two planes, they realized that the fuselage was not stiff enough, so they decided to add frames and stringers like a traditional fuselage. Result: too heavy aircraft, interior dimensions way too small (even for a Learjet), impossible to meet customers requirements (range, timeline, etc), cracks all around after first flights. Some pilots refused to fly again after their first flight. And that's only what I know, I let you imagine what I don't know.

In addition, both prototypes are not certifiable, it was a just a circus.
 
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notaxonrotax
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RE: Bombardier Pauses Learjet 85 Program

Sat Jan 17, 2015 2:01 am

Bad news!
Now what should I buy instead?

No Tax On Rotax
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sf260
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RE: Bombardier Pauses Learjet 85 Program

Sat Jan 17, 2015 3:29 am

Quoting queb (Reply 17):
No, they had major structural problem with the monocoque fuselage (without frames and stringers). During the production of the first two planes, they realized that the fuselage was not stiff enough, so they decided to add frames and stringers like a traditional fuselage. Result: too heavy aircraft, interior dimensions way too small (even for a Learjet), impossible to meet customers requirements (range, timeline, etc), cracks all around after first flights. Some pilots refused to fly again after their first flight. And that's only what I know, I let you imagine what I don't know.

In addition, both prototypes are not certifiable, it was a just a circus.

That sounds like big mess up from the start. One can only hope not one of those design engineers was involved in the CSeries progrm. I can imagine BBD will have even more trouble finding customers for the CSeries, faith in BBD is at an all time low now.
 
queb
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RE: Bombardier Pauses Learjet 85 Program

Sat Jan 17, 2015 5:40 am

Quoting sf260 (Reply 19):
That sounds like big mess up from the start. One can only hope not one of those design engineers was involved in the CSeries progrm. I can imagine BBD will have even more trouble finding customers for the CSeries, faith in BBD is at an all time low now.

BBD mexican manufacturing center (Queretaro), where the L85 composites fuselage was made, is at 6000 ft altitude and per Jon Ostrower in the WSJ, this is not the best idea for composites parts manufacturing.

Quote:
Signs of trouble have been evident for some time in the Learjet 85 program, which Bombardier launched in 2007. The company struggled to perfect the manufacturing of the mostly carbon-fiber-composite design. It built them at a facility in Querétaro, Mexico facility that sits 6,000 feet above sea level, an altitude that made it hard to produce enough pressure to force air bubbles out from under the carbon fibers, leaving some material weaker than desired.

Around 2012, according to Mr. Beaudoin, Bombardier abandoned its initial design for the jet’s body, opting for a more traditional carbon-fiber construction that required more reinforcement. But the manufacturing snags meant Bombardier had to delay the plane’s first flight to April 2014, flying with the original design, well after the aircraft was originally scheduled to be delivered. The new design never flew.
http://www.wsj.com/articles/bombardi...rogram-amid-weak-demand-1421328869
 
planemaker
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RE: Bombardier Pauses Learjet 85 Program

Sun Jan 18, 2015 1:58 am

Quoting queb (Reply 13):
No because the real problem is technical, the Lear 85 is dead, believe me.

If so, then just another example of BBD's habit of "misspeaking"... something I have been warning of on here for many years... to much disbelief.

Some points from Friday's financial news:
  • Bombardier Inc.’s cash levels are getting “uncomfortably close” to the minimum needed to run the company, analysts said Friday, sending the shares tumbling for a second day after the aerospace firm slashed its financial outlook and suspended its Learjet 85 program on Thursday.

  • The biggest concern out of the company’s update was “the extent of the cash flow miss and what this means in terms of liquidity”

  • Standard & Poor’s credit rating agency downgraded the Montreal-based plane and train maker’s ratings to single-B-plus from double-B-minus

  • At least five analysts downgraded the stock after Bombardier

  • Bombardier said margins in both its aerospace and transportation divisions will be one percentage point lower than previously forecast for the full year.

  • "This is another hit to Bombardier's credibility"

  • “[Thursday’s] announcement cast an immense cloud of uncertainty over Bombardier’s outlook, in our view, seemingly wiping out any beneficial credit for recent operational progress and macro tailwinds”

Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
Tangowhisky
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RE: Bombardier Pauses Learjet 85 Program

Sun Jan 18, 2015 10:33 pm

Quoting planemaker (Reply 21):
Some points from Friday's financial news:

Bombardier Inc.’s cash levels are getting “uncomfortably close” to the minimum needed to run the company,

They need to desperately sell assets to improve their liquidity
Only the paranoid survive
 
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KarelXWB
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RE: Bombardier Pauses Learjet 85 Program

Sun Jan 18, 2015 10:44 pm

Quoting planemaker (Reply 21):
something I have been warning of on here for many years

You seem to have lots of insight on Bombardier. Any idea what this would mean for the CSeries if Bombardier runs out of cash?
What we leave behind is not as important as how we've lived.
 
r2rho
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RE: Bombardier Pauses Learjet 85 Program

Mon Jan 19, 2015 12:17 pm

Quoting queb (Reply 20):

Thanks for those insights. If the program was indeed technically flawed from such an early point, then it seems that it has been cancelled far too late; this should have been done 1-2 years ago.

Quoting planemaker (Reply 10):
cash flow is a concern..

It seems so indeed. With little cash coming in (a trickle of CRJ and Q400 deliveries + the bizjets) and a lot going out (CSeries & Learjet 85 flight test), they have stopped the one which has less hope of success.
In any case, this is yet another blow to whatever credibility BBD management still had...
 
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Quantos
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RE: Bombardier Pauses Learjet 85 Program

Mon Jan 19, 2015 12:30 pm

To be fair to the current management, there has been so much shuffling around at BBD in the past months that whoever took the original LJ85 decisions, as well as whoever took the continuing decisions to keep the program alive, is probably gone (correct me if I'm wrong).
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queb
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RE: Bombardier Pauses Learjet 85 Program

Mon Jan 19, 2015 12:38 pm

Quoting Quantos (Reply 25):

Yep, Ralph Acs is gone.
 
planemaker
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RE: Bombardier Pauses Learjet 85 Program

Mon Jan 19, 2015 4:37 pm

Quoting KarelXWB (Reply 23):
Any idea what this would mean for the CSeries if Bombardier runs out of cash?

Obviously, not good.   Even without the cash crunch the CSeries was already in a world of hurt on several fronts. BBD will not literally "run out of cash" as they do have various options (from not so good to worse) to survive a cash crunch. As I have mentioned several times, BBD's books are actually quite "engineered".   The opaqueness makes it difficult to suss out magnitude, timing and degree of impact of financial events. The timing of this Learjet 85 "pause" and the recent order announcement of 24 CRJ900 are just two recent examples.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
planemaker
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RE: Bombardier Pauses Learjet 85 Program

Tue Jan 20, 2015 6:41 pm

Quoting Quantos (Reply 25):
To be fair to the current management, there has been so much shuffling around at BBD in the past months that whoever took the original LJ85 decisions, as well as whoever took the continuing decisions to keep the program alive, is probably gone (correct me if I'm wrong).

The Board approves all aircraft programs, and the Board includes Beudoin father and son plus a Bombardier.

Quoting r2rho (Reply 24):
In any case, this is yet another blow to whatever credibility BBD management still had...

Finally, people are starting to realize that the rot starts at that top... Critics take aim at Bombardier Inc leadership as delays, missed targets batter share price
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
planemaker
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RE: Bombardier Pauses Learjet 85 Program

Tue Feb 03, 2015 6:48 pm

Aviation Week has a fairly detailed account of the Lear 85 story...

Bombardier Learjet 85: Window of Opportunity Slams Shut

Quote:
In mid-January, Bombardier announced a “pause” for an “indeterminate period” in the Learjet 85 program, interpreted by some market analysts as permanently shelving the project. In light of Montreal’s taking a pre-tax special $1.4 billion write down that represents nearly 90 percent of development costs, as well as announcing a cut of 1,000 jobs at company facilities in Wichita, Kan., and Queretaro, Mexico, it appears the most ambitious Lear model ever is lapsing into a deep coma.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein

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