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KarelXWB
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Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 9:45 am

Please continue posting your updates here.

Air Canada To Order Up To 75 CS300 Jets - Part 1 (by KarelXWB Feb 17 2016 in Civil Aviation)
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bmacleod
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 2:21 pm

Quoting KarelXWB (Thread starter):
Will the CS300 replace the A319 to go transatlantic (LHR-YYT)?
Quoting KarelXWB (Thread starter):
Any chance Air Canada places any of these on some routes from YHZ/YYT to smaller markets in Western Europe? Maybe with some of the options. That'd be an interesting application of the aircraft imo.

I'm sure AC will consider those routes assuming the CS300 has the required range plus a little extra range for safety parameters.
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Marcus
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 3:47 pm

I have been out of this site for a few days and then I see this thread with the great news, does anyone have a recap of the highlights from part 1?
Kids!....we are going to the happiest place on earth...TIJUANA! signed: Krusty the Clown
 
sixtyseven
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 4:02 pm

1) thread Drift of epic a.net proportion concerning the Republic order

2) a distressing lack of LCY talk as that airport appears to be the linchpin of civil aviation. The Templehof of the Civilian Airlift, if you will. YTZ not far behind. YTZ-LCY service potential being the things a.netters have wet dreams over

3) a lot of rejoicing

4) A firm belief in the fact no sort of political issues were in play, at all, no siree.

5) People not surprised by order because the aircraft is a technical marvel, very advanced, despite the fact nobody has flown it or in it, and it's super late to launch.



[Edited 2016-02-18 08:09:08]
Stand-by for new ATIS message......
 
m1m2
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 4:23 pm

"The 175's are moved out to Jazz and the E190's will be old enough to have been nicely depreciated so the time frame makes sense."

Hi pnwtraveler, is this something that's going to happen to the 175's in the future? As of right now they are with Sky Regional.

Back on topic, I think this is great news for Bombardier and also for Air Canada, congrats to all.

[Edited 2016-02-18 08:24:36]
 
INFINITI329
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 5:01 pm

Quoting PlanesNTrains (Reply 205):

Frankly, without necessarily any basis in reality, my vote is to make a great deal with Allegiant to replace their some of their aging and unreliable MD fleet. I know they are going Airbus but a CS300/A320 fleet would seem quite nice for them.



Thats not G4s style. Like DL...G4 likes used birds. Makes no sense paying on a brand new bird when the almost 1/2 the time it may be on ground not generating revenue.
 
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Quantos
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 5:06 pm

Quoting infiniti329 (Reply 5):
Thats not G4s style. Like DL...G4 likes used birds. Makes no sense paying on a brand new bird when the almost 1/2 the time it may be on ground not generating revenue.

Also, I highly doubt that G4's business model is even possible at all with branch new aircraft, whatever the type. The whole point is to have used frames that cost next to nothing up front. Even if they cost more to operate, the up front cost is so low that they can operate these used MDs for a good while before they start losing money. It'll happen at some point, but evidently not now. G4 will simply look for another type to buy used when the time comes.
Quantos,

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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 5:30 pm

Anyone have any information on where the e190's that are leaving AC's fleet as a result of this will end up going? B6? I assume there's still a healthy market for these frames.
 
wrongwayup
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 5:57 pm

Quoting N202PA (Reply 7):
Anyone have any information on where the e190's that are leaving AC's fleet as a result of this will end up going? B6? I assume there's still a healthy market for these frames.

Other than one that's already been earmarked to be taken apart, Delta has picked them up.
 
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 5:58 pm

Quoting N202PA (Reply 7):
Anyone have any information on where the e190's that are leaving AC's fleet as a result of this will end up going? B6? I assume there's still a healthy market for these frames.

Isn't DL acquiring the first batch of AC E-190s (via Boeing)? Would they possibly be interested in taking the whole fleet?
 
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 6:05 pm

Quoting sixtyseven (Reply 3):
1) thread Drift of epic a.net proportion concerning the Republic order

2) a distressing lack of LCY talk as that airport appears to be the linchpin of civil aviation. The Templehof of the Civilian Airlift, if you will. YTZ-LCY service potential being the things a.netters have wet dreams over

3) a lot of rejoicing

4) A firm belief in the fact no sort of political issues were in play, at all, no siree.

5) People not surprised by order because the aircraft is a technical marvel, very advanced, despite the fact nobody has flown it or in it, and it's super late to launch.

   Thanks man, I needed that!

Here's a rendering. Looks sharp.
http://www.bombardier.com/content/dam/Websites/bombardiercom/News/BA/BCA_4566_CS300_Air_CANADA_HR_16-9_V1.jpg/_jcr_content/renditions/cq5dam.web.750.750.jpeg

YOWza

[Edited 2016-02-18 10:10:02]
 
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 6:13 pm

Question for you AC operators. Why not the CS100 as a direct replacement for the E190? Was it simply because "free" revenue from upgauging? How many FAs on the E190 now and how many would they have on the CS300?

I get the comments about the E190s flying long routes now. But I always thought those were rare. Rather that the E190s were flying sectors that are generally 2-3 hrs long, simply because it's right sized to connect smaller centres (YXE, YQR, YFC) to hubs (YUL, YVR, YYZ, YYC). How does average block time compare now between the A319 and the E190? Is there a difference? Curious how the CS300 will be deployed. I would have assumed the 737 MAX would mostly have longer and heavier routes.
 
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 6:50 pm

Quoting redzeppelin (Reply 9):

Quoting N202PA (Reply 7):
Anyone have any information on where the e190's that are leaving AC's fleet as a result of this will end up going? B6? I assume there's still a healthy market for these frames.

Isn't DL acquiring the first batch of AC E-190s (via Boeing)? Would they possibly be interested in taking the whole fleet?

The first 20 E190s are heading to DL, at least 12 have already left the fleet. It still a few years before the other 25 start leaving the fleet, so who knows where they'll end up.

Quoting ytz (Reply 11):
Question for you AC operators. Why not the CS100 as a direct replacement for the E190? Was it simply because "free" revenue from upgauging? How many FAs on the E190 now and how many would they have on the CS300?

I'm sure some of the aircraft can and will be converted to CS100s, same as any company. The E190 is operated with 2 FAs under the 1:50 rules....the CS100/300 would be 3 or 4 depending on seat configuration.
 
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 7:34 pm

Quoting redzeppelin (Reply 9):

Quoting N202PA (Reply 7):
Anyone have any information on where the e190's that are leaving AC's fleet as a result of this will end up going? B6? I assume there's still a healthy market for these frames.

Isn't DL acquiring the first batch of AC E-190s (via Boeing)? Would they possibly be interested in taking the whole fleet?

There's that belief in some AC circles - that Delta would, and might have made an offer already.
 
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 7:34 pm

Quoting m1m2 (Reply 4):

The 15x E175s that were mainline are indeed with Sky Regional now. Another 5 were added to the Sky fleet recently for a total of 20. Pnw probably meant AC Express which is sometimes used synonymously with Jazz.
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 8:43 pm

Quoting yowza (Reply 10):
YOWza

No problem. Narrow bodies across the pond, especially to LCY are topics I LMAO at. "If it can't fly into LCY it's small wonder it can do anything".

Quoting ytz (Reply 11):
I get the comments about the E190s flying long routes now. But I always thought those were rare. Rather that the E190s were flying sectors that are generally 2-3 hrs long, simply because it's right sized to connect smaller centres (YXE, YQR, YFC) to hubs (YUL, YVR, YYZ, YYC). How does average block time compare now between the A319 and the E190? Is there a difference? Curious how the CS300 will be deployed. I would have assumed the 737 MAX would mostly have longer and heavier routes.

The 319 is flying the longest narrow body routes we have right now. Things changed a bit (a lot actually) when mainline lost all those FINs to Rouge. Still the 319 is doing all the deep stuff into Mexico, any deep Caribbean mainline stuff, any of the 5 hour flights, it does and does it comfortably. You rarely see one unless you're going way down south (for Airbus flying that is), or going to YDF (heaven forbid). Of course they're around and you'll see them in the triangle occasionally. I don't know much about the 190 other than the fact it's way more expensive to maintain than first thought. If they can replace it with something much better and cheaper, great. I'm like many of you, I'll never fly the C Series. Just ride around in it.

If they got the screaming deal that is rumoured, then the extra lift is pure cream. Liken it to the 789, it's made the 788 pretty much a dead airplane at the airline in terms of the fact you'll never see another 788 ordered. The economics of the 9 being that much better.

The thing I am most impressed with recently is AC's purchases of airplanes and securing great deals.

They killed Boeing with the 777/787 order. The second gen 777 hadn't been sold in North Am yet, the 787 sold a small order to NW. Boeing wanted AC to come back to the wide body fold and AC hammered them. Yes, they did.

The 737 order was a shocker but AC again played from a position of strength. And now this with hints at greater than 50% discounts.

A carrier that was late to the party or went to the wrong address continually in the sense of buying the wrong airplane, or the right one at the wrong time seems to have ended. And thats great news going forward.
Stand-by for new ATIS message......
 
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 9:04 pm

Quoting sixtyseven (Reply 15):
A carrier that was late to the party or went to the wrong address continually in the sense of buying the wrong airplane, or the right one at the wrong time seems to have ended. And thats great news going forward.

To add to that excellent synopsis ...

I personally brought two new E190s to Canada and got to watch the "cash exchange" on delivery. Yes, the cheque was handed over at Sao Jose ... I am guessing for tax reasons. And yes ... Air Canada paid less than half of list price for the aircraft. (I can't say how much less, as I am sure it is not in the public domain. But, I do have a picture of me holding the cheque!)

I am sure Embrarer "gave" the aircraft away as a snub to Bombardier who's headquarters was within spitting distance of Air Canada's! But that low capital outlay, I am sure had a lot to do with making the aircraft more profitable.

With regard to the B787s, I remember when slots ahead of AC's became available, I asked those above why we didn't jump at them. I was told the contract price we paid was tied with the line numbers, and if we switched we'd end up paying more than twice what we were paying!

Good negotiators!

But to me, the biggest gain with the CSeries is easing of the rules of the ACPPA. I am not sure if many on here are aware that Air Canada is operating, 30 years later, under the Air Canada Public Participation Act! This is a set of guidelines that put's AC at a disadvantage against every airline with whom they compete, both domestically and internationally. It dictates things from language rules, to crew basing, to accounting rules, maintenance rules ... almost everything. It is very expensive!

Some of those rules were relaxed with the purchase of the CSeries. If AC were going to buy the aircraft anyway, they got it for some great terms, not just price.
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 9:28 pm

Quoting sixtyseven (Reply 15):
The thing I am most impressed with recently is AC's purchases of airplanes and securing great deals.
Quoting longhauler (Reply 16):
To add to that excellent synopsis ...

Thanks guys for the first handed information, this thread was really being dragged into the weeds for a while by some others. So thanks again for adding some perspective and quality back to the thread.
Very much appreciate the insight, and I echo most everyone in congratulating both Air Canada and Bombardier, I think its a big win for Canadian Manufacturing, and am super happy that Air Canada will be flying a nice sized fleet in Canada, and beyond.
 
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 9:33 pm

Quoting Whiteguy (Reply 12):
The E190 is operated with 2 FAs under the 1:50 rules....

I was under the impression that for some reason AC had a 1:45 requirement? Is that true? If 1:50 then CS300 makes sense since AC would be over 100 seats in a CS100 unless it was a generous config.
 
sixtyseven
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 9:51 pm

Quoting ytz (Reply 18):
ytz F

AC has 1 : 50 but will operate with more depending on time of day and route.

The 321 was always 5 but now has 4 even with the extra seats.
Stand-by for new ATIS message......
 
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 10:15 pm

Quoting sixtyseven (Reply 15):
Quoting longhauler (Reply 16):

While AC may well have driven good discounts on the 777, 787 and Max orders, there is nothing to suggest that Boeing is not still earning good margins on AC orders. Boeing has long stated that they will not sell aircraft at a loss nor will they chase market share. AC orders were not needed to make the 777, 787 and Max programs a success so it's likely the orders were mutually beneficial financially, and if AC pushed too hard, Boeing might have said no.

The AC Cs300 order is arguably the most important C series order which likely put AC much more in the drivers seat with BBD than they ever were with Boeing on the 777, 787 or Max orders.
I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
wrongwayup
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 10:50 pm

Quoting sixtyseven (Reply 19):
Quoting Whiteguy (Reply 12):
The E190 is operated with 2 FAs under the 1:50 rules....

I was under the impression that for some reason AC had a 1:45 requirement? Is that true? If 1:50 then CS300 makes sense since AC would be over 100 seats in a CS100 unless it was a generous config.

Pretty sure the rule is 1:40 with an exemption for 50-seaters like the Q300 and CRJ100/200
 
sixtyseven
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Thu Feb 18, 2016 11:00 pm

Quoting longhauler (Reply 16):
longhauler
Quoting yyz717 (Reply 20):
Boeing has long stated that they will not sell aircraft at a loss nor will they chase market share. AC orders were not needed to make the 777, 787 and Max programs a success so it's likely the orders were mutually beneficial financially, and if AC pushed too hard, Boeing might have said no.

Without thread drift here. Believe me. AC got likely the best deal on the 787 out there. I have knowledge of this and no I can't say who told me. It was an epic deal and frankly irked this person.

If you put things into context timeline wise you can see why AC did so well with Boeing. They were all Airbus. They had 767s sure but essentially all Airbus as the 767 fleet was shrinking with the -200s being parked in short order. Boeing wanted AC back as a customer, but the biggest factor is they wanted ANYONE as a customer.

The 777 had sold very well to US customers but the second gen hadn't been sold to anyone in North America as of that time. The 787 had a small orders to Continental and Northwest, COA being the North American launch. So there wasn't much happening in North America for Boeing and their wide bodies. Also realize the 787 (still is but even moreso then), was Boeing's gamble. 787 vs 380 and they'd basically sold a couple to North American companies.

Luckily for AC they had Robert Milton. Now as an employee I say luckily with somewhat of a forked tongue. He wanted the 777 the whole time but the BoD trumped his ego because the deal for the 340 was just too good. He saw an opportunity to finally get his wish and he made it happen.

The market could not have been more of a buyers one for AC and the negotiations were long, fierce. As to your point concerning Boeing. I don't buy it, pardon the pun. Boeing saying they'd never sell at a loss sounds good for shareholders and was likely pointed more at Airbus than anyone. I say this because in reality how much have they made on the 787 so far? Will the program ever make money? I hope so. But you can't expect me to buy your tune when they've delivered how many? Close to 400 without making a cent on one yet. And when they do there's one helluva hole to climb out of.

Robert Milton could have pushed as hard as he liked. He had more leverage than he needed. He had a fleet of young Airbus wide bodies in his stable at the time. He got his deal, not the other way around.

I am hoping the CS300 will be as good a fit for the airline as the 787.
Stand-by for new ATIS message......
 
Whiteguy
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 12:07 am

Quoting wrongwayup (Reply 21):

Quoting sixtyseven (Reply 19):
Quoting Whiteguy (Reply 12):
The E190 is operated with 2 FAs under the 1:50 rules....

I was under the impression that for some reason AC had a 1:45 requirement? Is that true? If 1:50 then CS300 makes sense since AC would be over 100 seats in a CS100 unless it was a generous config.

Pretty sure the rule is 1:40 with an exemption for 50-seaters like the Q300 and CRJ100/200

It is 1:50 seats in Canada, it was introduced a few years ago.

Quoting sixtyseven (Reply 19):

AC has 1 : 50 but will operate with more depending on time of day and route.

The 321 was always 5 but now has 4 even with the extra seats.

It's 1:50 SEATS not pax, it was 1:40 pax before. Even if the seat is empty it has to be crewed to the number of seats.
 
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czbbflier
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 12:30 am

There has been some great discussion and superb analysis on this thread. Thanks especially to sixtyseven and long hauler for your expertise. My two cents worth pale but I have been holding my breath a long, long time over this project. Here goes nothing!

I've been waiting for this day for a long time. As BBD's share price dropped I bought more knowing that one day the story behind the aircraft would change.

Did someone wave a political magic "assist" wand? There is a preponderance of evidence to suggest that this is indeed the case. There is a lot of political back scratching going on with these magic wands.

For BBD:
* A major sale.
* C-Series gets momentum.
* Distraction from job losses.

For the Government of Quebec:
* Cash flow on their investment
* Security of jobs to maintain the fleet for 20 years
* Good news story in the press

For Air Canada:
* Renegotiated operating conditions
* Relief from ongoing litigation concerning their closed heavy overhaul facilities
* Ultra-fuel efficient aircraft when fuel prices rise at a good price
* Additional capacity
* Fleet utilization flexibility: ability to cover work of A319 and Emb190.

For Government of Canada:
* Good news story
* Minimal economic intervention but supporting Canadian industry and jobs
* Lower chance of needing to consider overruling sale of BBD to foreign purchaser

I, for one, will not look a gift-horse in the mouth. It seems all these factors (many of them had to come together to make this LOI possible.

But it can also be said that this is an excellent aircraft- just late. It has also come out at a time where its biggest selling point is its ability to save fuel when fuel prices are at record lows. However, I'd be surprised to find a fleet planner who does not consider the day when the cost of fuel returns to at least a happy medium between what is found now and "peak oil" prices of a year ago. It was just a matter of time that the C-Series would be again in the running with the GTF power plants. The fear was that BBD's cash flow might run out before that time.

It's performance numbers are coming in on spec- sometimes exceeding them significantly. Anybody who pushes pencils around for a living would be aware that the C-Series would be a game changer. Sadly, the plane was just too expensive in the short term as the price (and concomitant interest payments) of an uber-expensive new fuel-sipper exceeded the relatively higher fuel cost of a bought-and-paid-for fuel hog, as well as in the medium term as multiple fleet types add significantly to overhead, to name just a couple of serious drawbacks to the C-Series at this time.

It was only in the long term that a purchase like this- on the numbers alone* might have seemed viable: *Maybe* fuel prices would rise. *Maybe* interest rates will stay low. *Maybe* the flexibility of the aircraft would allow AC to use it in unconventional markets. But who's going to by a simple car on these factors alone, never mind a fleet of multi-million dollar planes?

But thanks to the interventions on the part of the Government of Quebec and the Government of Canada, neither producing a direct subsidy to Air Canada or BBD, the short and medium term drawbacks were negated and the long-term benefits enhanced. As stated before, it was a win-win-win-win situation.

Now that Air Canada has come on board- by hook or by crook- the reality is that other carriers will have to give this aircraft a new look.

I foresee the tide is turning with this order, as each unit sold brings the productions costs down and makes the entire project affordable for other airlines and financiers that don't have the same incentives that Air Canada has in this instance.
 
sixtyseven
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 12:40 am

Quoting Whiteguy (Reply 23):
It's 1:50 SEATS not pax, it was 1:40 pax before. Even if the seat is empty it has to be crewed to the number of seats.

Thank you I'm aware, I was making a point that even with more seat AC has less FAs on the 321.

As to the rest of your comment. Not quite.

AC uses 1:40 on the wide body fleet. And its not SEATS as you say in the crewing, it's EXITS. Rarely will the company crew to load but they can and have. Where crewing to load works is if you have a crew member fall ill, or unable to get to work in a storm.

Take for instance the 777 HD config. You need a minimum of 7 flight attendants to cover exits. If the flight is full they need 12.

So not quite SEATS, but EXITS.
Stand-by for new ATIS message......
 
Whiteguy
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 12:49 am

Quoting sixtyseven (Reply 25):


AC uses 1:40 on the wide body fleet. And its not SEATS as you say in the crewing, it's EXITS. Rarely will the company crew to load but they can and have. Where crewing to load works is if you have a crew member fall ill, or unable to get to work in a storm.

Take for instance the 777 HD config. You need a minimum of 7 flight attendants to cover exits. If the flight is full they need 12.

So not quite SEATS, but EXITS.

The widebody crewing is a contractual thing that was just implemented under the new contract, as far as I know.
 
sixtyseven
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 12:59 am

Quoting Whiteguy (Reply 26):
he widebody crewing is a contractual thing that was just implemented under the new contract, as far as I know.

Not sure. All I know is if you have 100 people on a 777HD you need 7 flight attendants. 12 if its full. Therefore it's not quite seats in the airplane as you said. My statement was in response to yours stating it was based on seats which whether its legislated or contractual, it's what covers the operation.
Stand-by for new ATIS message......
 
wrongwayup
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 1:35 am

Quoting Whiteguy (Reply 23):
It is 1:50 seats in Canada, it was introduced a few years ago.

Knew it had been proposed, didn't know if it went through. Thanks!
 
PlanesNTrains
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 2:01 am

Quoting infiniti329 (Reply 5):
Thats not G4s style. Like DL...G4 likes used birds. Makes no sense paying on a brand new bird when the almost 1/2 the time it may be on ground not generating revenue.

Ya, like I say, it wasn't based in reality, but if we go back to Valujet days we had a carrier that was thriving on aging frames but for various reasons elected to take on an all-new fleet order. Frankly, Allegiant seems to be struggling a bit with the aging airframe business plan, though scores of gently used Airbii will be coming on the market over the next 10 years. Regardless, I was being a bit fanciful in my post.

AC, though, will make great use of these frames, and they will look quite beautiful in their soft colors.

-Dave
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
wrongwayup
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 2:02 am

Quoting longhauler (Reply 16):
Yes, the cheque was handed over at Sao Jose .

Crazy. I am having a hard time believing it was a cheque! Must be a jurisdictional thing. Everywhere I'm aware of transfers that kind of dough by wire.

Quoting czbbflier (Reply 24):
Quoting sixtyseven (Reply 25):

Great discussion on here, particularly from the two of you. And happy to be corrected by someone with insider info at AC, but from my vantage point, this is how it went down, from the very start:

BBD pitches AC on the CSeries. Great fit for the network; long range, lower capacity, premium cabin vs LCCs or leisure charters. BBD knows it. AC knows it. But AC has a book value problem on the E190s, the only owned type in the fleet. (Check their accounting statements for their aircraft depreciation policy - it's in there) Frankly, there is also no immediate impetus to replace 190s, especially with low fuel prices. Also, AC doesn't want to be seen as a foregone conclusion or bring back undue perceptions of national impropriety (Airbus Affair anyone?). Let there be no doubt - as a huge BBD customer (via Jazz/Chorus, Air Georgian & Sky Regional) AC would have been pitched on the C Series from the days of the BRJ-X. This on-again, off-again affair AC has with the C Series goes on for years. BBD is negotiated down via Chinese Water Torture, a drop at a time. Yes, we like it, no, we'll take options on -7MAX, yes we like it, no there's no business case...

Flash forward to 2016, when AC's pending litigation between the QC government related to the ACPPA and job losses at bankrupt Aveos comes to a head. We know how much Quebec values employment (e.g. investing $1B into the C Series to save a few thousand jobs), so you can imagine they're serious about the 1,700 Aveos jobs lost in Quebec. 1,700 jobs x $75,000/yr avg salary (my estimate) x 30% tax revenue = ~$40M/yr in lost tax revenue, nevermind paying out any kind of gov't unemployment benefits. So to settle this, AC is going to be writing a big cheque, and sooner rather than later with the Supreme Court upholding the ruling against them in January.

AC puts two and two together, blows the dust off their last C Series offer from BBD, and has them update the validity date to current. Waves that offer in front of the QC gov't and says "we'll do this deal, this landmark endorsement of the aircraft you just bought half of, if you clean up the ACPPA and drop the suit against us". QC gov't says yes, AC gets a great deal from BBD on the perfect aircraft for their network and on top of that, a way out of a big lawsuit settlement. Add that to any discussions that may or may not be happening with Delta on the remaining E190 fleet (hint: a critical mass fleet size for DL is larger than just the 19 they're getting via Boeing), and Air Canada has themselves a nice tight transitions solution.

Say what you will about governments deals in smoky rooms with the feds, province, Beaudoins and AC execs, but I think it was a lot simpler than that - just a brilliant strategic play on the part of Air Canada.
 
Whiteguy
Posts: 1572
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 3:15 am

Quoting sixtyseven (Reply 25):

Thank you I'm aware, I was making a point that even with more seat AC has less FAs on the 321.


4 FAs on an A321 covers 200 seats, so it meets the requirement.
 
sebring
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 4:16 am

Quoting wrongwayup (Reply 30):
Quoting wrongwayup (Reply 30):
Great discussion on here, particularly from the two of you. And happy to be corrected by someone with insider info at AC, but from my vantage point, this is how it went down, from the very start:

BBD pitches AC on the CSeries. Great fit for the network; long range, lower capacity, premium cabin vs LCCs or leisure charters. BBD knows it. AC knows it. But AC has a book value problem on the E190s, the only owned type in the fleet. (Check their accounting statements for their aircraft depreciation policy - it's in there) Frankly, there is also no immediate impetus to replace 190s, especially with low fuel prices. Also, AC doesn't want to be seen as a foregone conclusion or bring back undue perceptions of national impropriety (Airbus Affair anyone?). Let there be no doubt - as a huge BBD customer (via Jazz/Chorus, Air Georgian & Sky Regional) AC would have been pitched on the C Series from the days of the BRJ-X. This on-again, off-again affair AC has with the C Series goes on for years. BBD is negotiated down via Chinese Water Torture, a drop at a time. Yes, we like it, no, we'll take options on -7MAX, yes we like it, no there's no business case...

Flash forward to 2016, when AC's pending litigation between the QC government related to the ACPPA and job losses at bankrupt Aveos comes to a head. We know how much Quebec values employment (e.g. investing $1B into the C Series to save a few thousand jobs), so you can imagine they're serious about the 1,700 Aveos jobs lost in Quebec. 1,700 jobs x $75,000/yr avg salary (my estimate) x 30% tax revenue = ~$40M/yr in lost tax revenue, nevermind paying out any kind of gov't unemployment benefits. So to settle this, AC is going to be writing a big cheque, and sooner rather than later with the Supreme Court upholding the ruling against them in January.

AC puts two and two together, blows the dust off their last C Series offer from BBD, and has them update the validity date to current. Waves that offer in front of the QC gov't and says "we'll do this deal, this landmark endorsement of the aircraft you just bought half of, if you clean up the ACPPA and drop the suit against us". QC gov't says yes, AC gets a great deal from BBD on the perfect aircraft for their network and on top of that, a way out of a big lawsuit settlement. Add that to any discussions that may or may not be happening with Delta on the remaining E190 fleet (hint: a critical mass fleet size for DL is larger than just the 19 they're getting via Boeing), and Air Canada has themselves a nice tight transitions solution.

Say what you will about governments deals in smoky rooms with the feds, province, Beaudoins and AC execs, but I think it was a lot simpler than that - just a brilliant strategic play on the part of Air Canada.

I think you're pretty close, if not bang on, with a bit of room for nuance, which I will add. The Canadian government would have screwed over the Aveos workers without the Quebec lawsuit being withdrawn - once the ACPPA is amended, the suit has no basis on which to proceed. However, the sharp decline of the Canadian dollar has made Air Canada's outsourcing of heavy maintenance a lot more expensive, so doing what amount to a domestic insource to a third party maintenance shop - likely non-union - dovetails with the next to repatriate some of the heavy work from abroad (mainly from the US - in places like Minnesota and NY State.) The Aveos workers were thrown under the bus by this deal - they might have been compensated if the case had proceeded, but now they are screwed, and there was quite a brouhaha in the Quebec legislature about that.

This order was always coming, if for no other reason that AC had not dispensed with a rogue fleet of 190s when it made the Boeing deal. The question was whether they would replace the 190s with a larger plane like the Max-7 (a sub-optimal choice like the 737-600 was for Westjet and others), go for the E2 - since they already flew Embraer- or go in a new direction. Or not replace those planes at all. But CSeries at the right price was always the best bet, and frankly if previous Bombardier management had offered the kind of discount AC allegedly got, AC might have placed this order tow years ago and the whole fate of the CSeries and its parent might be different. The fact is, AC has always been an influencer in aerospace purchasing, the lynchpin Airbus needed to popularize the A32x narrow body in North America. AC's Embraer buy was a huge setback for Bombardier and along with the JetBlue purchase of the 190 helped sell that plane. AC knew when to jump over to Boeing for wide bodies, too. Even with the perception that this is an in-house deal among all the parties, not a true indicator of the CSeries' attributes as buyers see them, any time AC buys a plane, it will sway others precisely because it has refused to always do the nationalist thing. Its engineering analysis, along with that of Lufthansa, is considered second to none, and now they are both CSeries customers.

There is one other factor AC will tout with the CSeries. With the new ICAO emissions regs announced last week, though not Draconian and subject to a long phase-in, AC gets a plane that will help arbitrage down its emissions per fleet seat mile. Even if fuel prices remain low, carbon taxes are coming. It's a not inconsiderable consideration.

Finally, there are more shoes to drop on this deal. I can't disclose what, but the federal government wants to make sure that the CSeries returns the public investment. (And no, it won't be allowing YTZ expansion, though canning the YTZ jet option was not part of this deal or Air Canada's demands.)
 
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longhauler
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 4:57 am

Quoting Whiteguy (Reply 23):
It is 1:50 seats in Canada, it was introduced a few years ago.
Quoting Whiteguy (Reply 23):
It's 1:50 SEATS not pax, it was 1:40 pax before.
Quoting sixtyseven (Reply 25):
AC uses 1:40 on the wide body fleet. And its not SEATS as you say in the crewing, it's EXITS.

You are all right.

The narrow body requirement was changed to 1:50 seats. The wide-body was 1:40 passengers, not seats, but ... Transport Canada, when certifying the aircraft for Canada, set a minimum number of Flight Attendants. That minimum was set by the exit arrangement.

That is why the minimum on the A321 was 5, (reduced to 4 for reasons other than the 1:50 rule), even if the aircraft was empty! When the B767 with the 4 large doors and overwing exits could go with 3! (4 with 8 doors).
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
Whiteguy
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Joined: Sat Nov 29, 2003 6:11 am

RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 5:08 am

Quoting longhauler (Reply 33):

You are all right.

The narrow body requirement was changed to 1:50 seats. The wide-body was 1:40 passengers, not seats, but ... Transport Canada, when certifying the aircraft for Canada, set a minimum number of Flight Attendants. That minimum was set by the exit arrangement.

That is why the minimum on the A321 was 5, (reduced to 4 for reasons other than the 1:50 rule), even if the aircraft was empty! When the B767 with the 4 large doors and overwing exits could go with 3! (4 with 8 doors).

Thanks Longhauler.…
 
wrongwayup
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 5:25 am

Quoting sebring (Reply 32):

Great post. New here so apparently I need to post 20 times before I can add you to my "respected users list" but rest assured you'd be on it now if I had the choice!

I had neglected to mention that restricting themselves to doing CS300 mtx in Canada was a concession that they gave up as part of all this. It ties their hands in a scenario of a strong dollar, but with CAD-centric revenues they will probably be looking at current exchange rates and the domestic maintenance deal as something of a natural hedge. Doubt the Aveos workers themselves would have ever been cut a cheque as part of any of this, but that's a side discussion and I don't have much of a legal background to back up this assertion - so we digress.

I am certain (for many reasons I care not to share) that AC will get one of the best, if not the best deal going, in terms of pricing and other commercial considerations (after all, no 2 deals in this business are alike and while price is a huge variable it is far from the only one). I personally don't believe the "keep E190" or "execute -7MAX options" (or even "go E2") strategies were used only as stalking horses against BBD, but that they were legitimate options AC was evaluating. But knowing what I know about both AC and the C Series, you can bet these options were waved in front of BBD as the on-again/off-again discussions dragged on. But for all of this, I will 100% agree with you that this deal was always coming unless BBD really blew it. It was the timing of the ACPPA settlement that made today the day.

You allude to knowledge of confidential shoes yet to drop - I am salivating. To this I will only add that you can be sure Porter's decision to "buy Canadian" was a part of their pitch to the Toronto Port Authority et al to extend the runway, and you can also be sure AC was resisting this extension using back channels. Certainly I wouldn't want to be the guy pressuring the government to hamstring a small Canadian business that "bought Canadian" after having "bought foreign" myself (after all, Canada loves an underdog, right?). Combine that with gov't imposed restrictions on ME3 carriers capacity restrictions to Canada (don't see WS or TS offering too many flights that compete with ME3...), and there is definitely a "Canadian" element to all of this that, while it will never be accurately quantified in $$$ terms, absolutely had an impact on AC's decision process.
 
JoeCanuck
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 8:53 am

Government at some level, is involved in sales from huge companies all of the time...either in the front with tax breaks, cheap loans, rezoning or some such thing, or like this one with a little mutual back scratching.

Large international companies are a huge deal for regions and anyone is naive to think that there isn't government backing on all levels, is terribly naive.

Hollande has been at many Airbus photo ops where big sales have been announced...and the same happens everywhere else. http://www.thelocal.fr/20130425/holl...its-china-in-bid-to-boost-exports. Obama himself declared that he deserved a gold medal for selling Boeing airliners. http://dailycaller.com/2013/09/19/ob...ma-demands-gold-medal-from-boeing/

Every government which is the home to companies selling military hardware shills for their respective favourites shamelessly.

The endless battles between Airbus and Boeing at the WTO and the ME3 vs. the US3 show that governments couldn't stay out of big deals if they wanted to. BBD and Emb have spent years battling over the nuances of their respective financing deals.

The dropping of the suit was a good deal for AC but does anyone actually think that it covered the cost of potentially buying the wrong aircraft, with which they would be stuck for decades?

AC needs aircraft of a certain size down the road. The had a desperate seller offering big discounts on a suitable product and a nagging headache of a suit. They got their products, the headache went away and they have earned some goodwill with the provincial and fed governments, which can be, (informally), cashed in along the way.

Of course various governments were involved....they always are.
What the...?
 
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solnabo
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 9:05 am

Quoting yowza (Reply 10):
Here's a rendering. Looks sharp.

Gorgeous aircraft. Hope to see them in AC Rouge livery and in Malmö Aviation fleet

Cheers //   
Airbus SAS - Love them both
 
golfradio
Posts: 920
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 2:31 pm

Put me in the camp that believes, if the A320 order was purely a technical one in spite of Mulroney/Schreiber, then so is the CS300 order.
CSeries forever. Bring back the old site.
 
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longhauler
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 2:56 pm

Quoting golfradio (Reply 38):
Put me in the camp that believes, if the A320 order was purely a technical one in spite of Mulroney/Schreiber, then so is the CS300 order.

I have always said that the last aircraft that AC (TCA) purchased from political pressure that was not the the best aircraft for the job was the DC-4M. (The DC-6 was a better choice).

All of the other choices, poitical pressure or not, were the best suited to AC. I remember when the A320 was chosen. The B737-300 and B737-400 were the Boeing offers, and everyone thought number one in the running. As it turns out, almost 30 years later, clearly the A320 was the best for the job. Whether it was by chance, or whether AC knew all along is up for speculation. But I personally think it was the latter. AC knew they wanted it, and like the B777/B787, E190, and now the CSeries, they knew they could get a better deal.

Quoting solnabo (Reply 37):
Hope to see them in AC Rouge livery

Right now, Rouge can only fly the A320 series narrow body. Anything else would be up for negotiation. Personally, while I think the CSeries is a perfect fit for AC, a 180 seat A320neo and 200 seat A321neo would be better fits for Rouge.
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
planemaker
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 4:39 pm

Quoting wrongwayup (Reply 35):
I had neglected to mention that restricting themselves to doing CS300 mtx in Canada was a concession that they gave up as part of all this. It ties their hands in a scenario of a strong dollar, but with CAD-centric revenues they will probably be looking at current exchange rates and the domestic maintenance deal as something of a natural hedge.

The P.Q. and union have pointed out that the CS300 heavy maintenance deal is a bit of sleight of hand as it won't happen for another ~10 years... and who is going to be around then to enforce it? The AC brain trust has to be given a lot of kudos on crafting such a great deal (of course, from a position of strength).

Quoting wrongwayup (Reply 35):
To this I will only add that you can be sure Porter's decision to "buy Canadian" was a part of their pitch to the Toronto Port Authority et al to extend the runway

One could argue that Deluce had no choice but to "buy Canadian" if he wanted to have a decent load and range out of the island airport. "Buy Canadian" certainly helped with the public relations optics but Deluce already had the Port Authority "in his pocket" (as well as the Minister of Transport - who was the former head of the Port Authority, and the Mayor). So the deal was closer than some people may imagine since "all" he needed was council to green light it and it would have been a done deal. Of course, the change in municipal and federal governments changed the dynamics.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
Oroka
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RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 5:01 pm

id put money on either the federal or quebec government put pressure on AC to go with the C-Series. Maybe a good discount and some government grant money, same money helps AC and Bombardier.
 
wrongwayup
Posts: 442
Joined: Thu Jan 07, 2016 6:23 pm

RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 5:20 pm

Quoting planemaker (Reply 40):
The P.Q. and union have pointed out that the CS300 heavy maintenance deal is a bit of sleight of hand as it won't happen for another ~10 years... and who is going to be around then to enforce it? The AC brain trust has to be given a lot of kudos on crafting such a great deal (of course, from a position of strength).

Absolutely. The impetus for the order being now, had everything to do with the lawsuit timing (IMHO), not an urgent fleet need. Is the airplane the right fit for AC? Absolutely. But the optimal fleet is a function of both the ideal fleet and the current fleet, which given E190 book values among other things AC still needs some time to make the transition a smooth one. But would I rather a settlement payment in 2016 or some requirements around my heavy maintenance strategy in 2019+? (and really, well beyond 2019 - if C Series maintenance intervals and PW1000 MTBRs are to be believed) I know what I'd do. The PQ and unions are right to call this out - though I wouldn't call it sleight of hand though, I'd say it was much more overt than that.

Quoting planemaker (Reply 40):
One could argue that Deluce had no choice but to "buy Canadian"...

For sure. The CS100 payload/range & field performance combo were what won it the conditional order - more so than even pure economics (again IMHO). Truly no other airplane that could do the job. But their pitch to the TPA & co wouldn't have included any of that, but rather a bunch of Canadian flags, noise maps, and greenwashing (hey, the CS100 is relatively "greener" than anything in it's class, but as long as we're still burning Jet-A, we won't be truly "green"). That is not to say I don't think there weren't more smoky room conversations in Toronto - quite the opposite. I think there was more political involvement in the Porter case than the AC case. I just think Calin & co were holding a better hand than Bob - and played it better, too.

For the record I don't think it's wrong for companies to play off politicians to get what they want - I blame politicians for letting themselves get played.
 
WaywardMemphian
Posts: 1507
Joined: Sat Dec 13, 2014 9:05 pm

RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 5:27 pm

Quoting czbbflier (Reply 24):
I've been waiting for this day for a long time. As BBD's share price dropped I bought more knowing that one day the story behind the aircraft would change.

I bought 10,000 shares last week. I did so after reading this forum and noticing how far Bombardier had fallen, making it stupid cheap and a cheap bet considering the philly in their stable looked solid. ANET provides a place where you "listen" for things. This was one. I took my profit yesterday, started looking at African Safari trips this morning and left my initial investment amount in Bombardier to capture more good news. It's all house money now.

I know it'll not happen but I'd love to see another major order and for Boeing to make a run at this plane develop it further(CS500) and clean sheet an MOM/NMA.

[Edited 2016-02-19 09:30:24]
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 5:57 pm

Quoting wrongwayup (Reply 42):
I just think Calin & co were holding a better hand than Bob - and played it better, too.

Until the change in governments, Bob's hand looked pretty damn good since he "only" needed council to support Rob Ford's push for the deal. But time favoured Calvin... BBD "needed" the announcement (hence the "LOI") for that day. Plus, it was great PR to be able to announce the LOI at Changi.

Quoting WaywardMemphian (Reply 43):
I bought 10,000 shares last week.

It is a good stock to trade but the company is still in the ICU.  
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
marktci
Posts: 199
Joined: Wed Aug 05, 2009 4:05 am

RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 6:06 pm

Quoting WaywardMemphian (Reply 43):
It's all house money now.

I don't think that phrase means what you think it means.
 
wrongwayup
Posts: 442
Joined: Thu Jan 07, 2016 6:23 pm

RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 6:20 pm

Quoting planemaker (Reply 44):

Until the change in governments, Bob's hand looked pretty damn good since he "only" needed council to support Rob Ford's push for the deal. But time favoured Calvin... BBD "needed" the announcement (hence the "LOI") for that day. Plus, it was great PR to be able to announce the LOI at Changi.

No question BBD needed it - badly, and now. AC needed it too - just not for a while yet... at least until a trip to the supreme court looked like an eventuality. That lit something of a fire, and changed the purchase economics calculation in a big way. Avoiding a tens (even hundreds?) of millions of dollars in settlements, spread over an order for 75 aircraft is a huge number. Even bigger over 45 firm, if that's all they take. Especially when you consider any settlement cash would be going out the door sooner rather than later - almost like the economic equivalent of free PDPs.

On the timing of the announcement itself, my money's on it having to do more with both companies' earnings calls, quite conveniently falling on the same day, than anything else.
 
WaywardMemphian
Posts: 1507
Joined: Sat Dec 13, 2014 9:05 pm

RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 6:50 pm

Quoting planemaker (Reply 44):

Oops, I meant 10,000 US dollars in stock.

Quoting marktci (Reply 45):

Your right, I still have around 10,000 usd in it, but...I think it goes up a bit more. I'll sell before I lose money. I hate having to watch a stock closely and basically day trading.
 
pnwtraveler
Posts: 1074
Joined: Wed Jun 13, 2007 2:12 am

RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 7:01 pm

Quoting m1m2 (Reply 4):
"The 175's are moved out to Jazz and the E190's will be old enough to have been nicely depreciated so the time frame makes sense."

Hi pnwtraveler, is this something that's going to happen to the 175's in the future? As of right now they are with Sky Regional.

Back on topic, I think this is great news for Bombardier and also for Air Canada, congrats to all.

Yes already done.
 
marktci
Posts: 199
Joined: Wed Aug 05, 2009 4:05 am

RE: Air Canada To Order Up To 75 CS300 Jets - Part 2

Fri Feb 19, 2016 7:10 pm

Quoting WaywardMemphian (Reply 47):
Your right, I still have around 10,000 usd in it, but...I think it goes up a bit more. I'll sell before I lose money. I hate having to watch a stock closely and basically day trading.

I bought in when it was around $4 Canadian. It was always going to be a long term play for me but that term keeps on getting longer.

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