leghorn
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 2:29 pm

https://www.indonesianewsgazette.com/bo ... um=twitter

Bombardier are still suffering. The joint venture with Airbus needs more investment reducing the yield on the project over its life time.
Bombardier share price is down about 4% today.

Nothing mentioned about other assets to sell. It looks like the only way they can reduce debt now is to more actively manage the debt pile.
 
leghorn
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 2:45 pm

correction: down 36% at the moment. The markets are pissed off.

https://finance.yahoo.com/news/bombardi ... QKTb24Ylqy
 
A388
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 3:41 pm

leghorn wrote:
correction: down 36% at the moment. The markets are pissed off.


No where does the article mention anything about the markets being pissed off. It only says that Bombardier is reassessing its participation in the A220 project and that more investments are needed for this program. Where do you get that the markets are pissed? Which markets?

A388
 
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 3:47 pm

leghorn wrote:
correction: down 36% at the moment. The markets are pissed off.

https://finance.yahoo.com/news/bombardi ... QKTb24Ylqy


Why do we care about BBD share price in an A220 thread? They sold control to Airbus.

Now if you want to start a thread that says BBD's remaining investment is worth a lot less than anticipated because Airbus says the A220 program needs more investment and more time to make money, go for it.

Amazing to think that, at an acquisition price of $0, Airbus overpaid.
 
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 3:49 pm

A388 wrote:
leghorn wrote:
correction: down 36% at the moment. The markets are pissed off.


No where does the article mention anything about the markets being pissed off. It only says that Bombardier is reassessing its participation in the A220 project and that more investments are needed for this program. Where do you get that the markets are pissed? Which markets?

A388


The markets on which the shares of BBD trade. Do you think single-day 37% declines are normal for large Canadian and U.S. firms?
 
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 4:01 pm

MIflyer12 wrote:
leghorn wrote:
correction: down 36% at the moment. The markets are pissed off.

https://finance.yahoo.com/news/bombardi ... QKTb24Ylqy


Why do we care about BBD share price in an A220 thread? They sold control to Airbus.

Now if you want to start a thread that says BBD's remaining investment is worth a lot less than anticipated because Airbus says the A220 program needs more investment and more time to make money, go for it.

Amazing to think that, at an acquisition price of $0, Airbus overpaid.

Bombardier still have to build out the production lines and they are suffering considerable hardship.
My posts are very pertinent to the A220.
 
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 4:05 pm

MIflyer12 wrote:
...

Why do we care about BBD share price in an A220 thread?...


BBD is still on the hook to invest money into A220 program, AFAIR.
If BBD implodes, A220, as a program, suffers.
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 4:08 pm

I have moved this topic into a separate thread.
 
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 4:20 pm

A388 wrote:
leghorn wrote:
correction: down 36% at the moment. The markets are pissed off.


No where does the article mention anything about the markets being pissed off. It only says that Bombardier is reassessing its participation in the A220 project and that more investments are needed for this program. Where do you get that the markets are pissed? Which markets?

A388


Financial market, investors, shareholders stuff like that, Economics 101.

When your company share price chart looks like that, it means that the markets are pissed off, big time.

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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 4:25 pm

I smell BBD being afraid the biggest beneficairy of the program (Airbus) isn't the one paying the highest bills.
Airbus gambled & won. BBD feels they now should pay more, even if the contract says otherwise..
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 4:27 pm

Airbus already has controlling interest in the A220 program. They own 50.01%. BBD owns 31% with final 19% held by Investissement Québec. Currently with BBD suffering, BBD is looking at looking at options to sell their 31%. :stirthepot: :duck:

I had also read that Airbus is looking at a new A350 line. Currently Mobile, Alabama and Mirabel, PQ are being considered. :duck:

For it to go to PQ will likely require Airbus increasing their share of the Airbus Private Limited. (A220) program
 
VV
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 4:35 pm

Ouch!


Does it mean Investissement Québec is going to buy Bombardier's stake?

Basically it would be 50-50 shareholding between Airbus and Quebec.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 4:40 pm

keesje wrote:
I smell BBD being afraid the biggest beneficairy of the program (Airbus) isn't the one paying the highest bills.
Airbus gambled & won. BBD feels they now should pay more, even if the contract says otherwise..

feeling hard done by has no currency in financial affairs.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 5:01 pm

If anyone ever wanted to get in to the private jet business now is the time to offer Bombardier money for that business area because it is about the only business left which they can wrap up, tie a bow on it and split.
Airbus would make everyone else feel unwelcome if they start nosing around the A220 business.

Heads should roll but due to the unique ownership structure of Bombardier that is unlikely to happen.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 5:01 pm

VV wrote:
Ouch!


Does it mean Investissement Québec is going to buy Bombardier's stake?

Basically it would be 50-50 shareholding between Airbus and Quebec.


I doubt it - I strongly suspect Airbus will own 100% of the A220 or have announced a deal to so within 6 months.

The Quebec government won't want to put money into it - but they could sell and get some cash - and get a political win by keeping the FAL in Quebec with Tax concessions and potentially more jobs if they increase the FAL's rate.

If Airbus invests heavily in A220 they will need the production capacity.

As I mentioned in other threads - Southwest does have to replace 500 737-700's and an A220-500 would be the most efficient solution as most of those routes are very short ranged.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 5:10 pm

Bombardier has no future without merging. Even the giants in Europe are looking to merge (or have merged) with other companies (and obviously Airbus is a mega merger). It cannot compete with the US giants and it can't differentiate itself enough from American products.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 5:12 pm

morrisond wrote:
VV wrote:
Ouch!


Does it mean Investissement Québec is going to buy Bombardier's stake?

Basically it would be 50-50 shareholding between Airbus and Quebec.


I doubt it - I strongly suspect Airbus will own 100% of the A220 or have announced a deal to so within 6 months.

The Quebec government won't want to put money into it - but they could sell and get some cash - and get a political win by keeping the FAL in Quebec with Tax concessions and potentially more jobs if they increase the FAL's rate.

If Airbus invests heavily in A220 they will need the production capacity.

As I mentioned in other threads - Southwest does have to replace 500 737-700's and an A220-500 would be the most efficient solution as most of those routes are very short ranged.



I am not sure Airbus is willing to take 100% stake in C Series.
Today they must have understood the full potential of the program and I do not believe it is brilliant in Airbus' context.

I think They want a partner and more importantly they need a "firewall" between the C Series and the rest of the company.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 5:25 pm

What would be interesting is if Mitsubishi were to try to sweep in and buy out Bombardier's remaining share in the A220 program. I'm sure Airbus would fight this tooth and nail, but it could set off a bidding war. Another possible bidder would be Raytheon Technologies (Pratt's parent) looking to invest in this program. This 31% could end up being a (one-time) cash cow for Bombardier.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 5:29 pm

Airbus is guiding well for 2019 and results will be announced in a few weeks. I can see them negotiating hard to take control so that they can announce buyout simultaneously to publishing last years results and outlook for the future.
Airbus is doing great at the moment but it doesn't have much more upside after the A321XLR was launched. Taking full control of the A220 will please the investors. That is about the only thing that Bombardier can use to extract a good sale price(or minimise obligations) but Bombardier can't be too optimistic as up until now all they could negotiate was to give 50.1% of the company to Airbus for 1 dollar.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 5:31 pm

VV wrote:
I think They want a partner and more importantly they need a "firewall" between the C Series and the rest of the company.


Airbus does not have an effective firewall. BBD has a put option to force Airbus to buy its remaining stake in the program - at market value. This prospective write-down means BBD currently thinks it may not get as much as it had thought for that ownership. (Airbus also has options to buy the BBD and Quebec stakes in the program.)

So much for the A220 takes over the universe threads. Aerospace engineering, tooling, and manufacturing is more than Photoshop and Crayola crayons as is regularly put forward in this forum.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 5:32 pm

FLALEFTY wrote:
What would be interesting is if Mitsubishi were to try to sweep in and buy out Bombardier's remaining share in the A220 program. I'm sure Airbus would fight this tooth and nail, but it could set off a bidding war. Another possible bidder would be Raytheon Technologies (Pratt's parent) looking to invest in this program. This 31% could end up being a (one-time) cash cow for Bombardier.

Mitsu MRJ is basically a government program dressed in corporate clothing, the whole goal is to develop local expertise. I don't see them wanting to buy out a whole new product line. CRJ program was acquired mainly to build out the MRJ sales and support network.

The A220 lives or dies based on Airbus's preference, they have controlling interest in the ACLP board of directors so can vote down any proposal not in line with their interests.
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 5:34 pm

leghorn wrote:
correction: down 36% at the moment. The markets are pissed off.

https://finance.yahoo.com/news/bombardi ... QKTb24Ylqy


Pissed off may be a local traders term, it is more that a lot of investors want out of their investment and no one wants in. Lots of sellers, few if any buyers. It can be an incredible investment opportunity if in the panic the share price drops too far and someone steps in to buy a lot. It takes balls to do that and enough knowledge to tell that the market price is well below the 'value', thus with support there can be a gain back of say half the drop.

The big point of this recent news is that BBD does not have the cash to make the needed investments in its programs right now.
 
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 6:06 pm

JayinKitsap wrote:
leghorn wrote:
correction: down 36% at the moment. The markets are pissed off.

https://finance.yahoo.com/news/bombardi ... QKTb24Ylqy


Pissed off may be a local traders term, it is more that a lot of investors want out of their investment and no one wants in. Lots of sellers, few if any buyers. It can be an incredible investment opportunity if in the panic the share price drops too far and someone steps in to buy a lot. It takes balls to do that and enough knowledge to tell that the market price is well below the 'value', thus with support there can be a gain back of say half the drop.

The big point of this recent news is that BBD does not have the cash to make the needed investments in its programs right now.


Shares are a way to participate in company profit/success, and have a say in managing the company. BBD shareholding appears to be structured in a way, precluding external shareholders from having a meaningful say. So what remains is hope of future profits. Maybe the sellers see that there is very limited hope of profit, but almost certain risk of losses, and bailing out? Of course, their losses are limited at 100% of share value, but still...
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:09 pm

MIflyer12 wrote:
BBD has a put option to force Airbus to buy its remaining stake in the program - at market value. This prospective write-down means BBD currently thinks it may not get as much as it had thought for that ownership. (Airbus also has options to buy the BBD and Quebec stakes in the program.)

My understanding ( see links earlier ) is that these options come into effect in 2021 for QI and 2023 for BBD, yet BBD is stuck funding ACLP till July 2021 or so. It seems time has run out, BBD is crying uncle.

MIflyer12 wrote:
So much for the A220 takes over the universe threads. Aerospace engineering, tooling, and manufacturing is more than Photoshop and Crayola crayons as is regularly put forward in this forum.

The world of reality is harsh and unforgiving when compared to the world of fantasy.

JayinKitsap wrote:
The big point of this recent news is that BBD does not have the cash to make the needed investments in its programs right now.

Yes, BBD seems to be in caught out. It seems they thought (hoped?) that they could hang on till 2023 or so and cash in after Airbus's muscle was able to make the project a success, but it seems they cannot hang on that long.
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 6:11 pm

leghorn wrote:
Bombardier are still suffering. The joint venture with Airbus needs more investment reducing the yield on the project over its life time.


Of course it needs more investment. Earlier this month a production rate increase was announced. Airbus wants to push the rate to 14 aircraft per month in 2025. This require investment.

Also according to https://www.flightglobal.com/air-transp ... 64.article further cost reductions are underway. Airbus got insight into the supplier contracts only around half-2018 so there is still work to do.

High production rates and further cost reductions might turn the program cash positive. But as the article points out, it usually takes years to achieve such goals.

“The journey to get the cost down has started [and] is on [a] good track,” Balducchi tells FlightGlobal on 15 January, adding that Airbus expects to achieve more cost reductions “in the coming months and year”.

“We are on the normal path of an aircraft programme at this stage,” adds Balducchi, who spoke at an event in Montreal during which Air Canada unveiled its first A220-300.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:13 pm

People are really misinterpreting the story.

1) Company wide poor financial performance is a result of problems in the rail division. Not the aerospace division, which is doing fine now that they are getting of the CRJ business and have reduced losses on the CSeries/A220.

2) It is the cost of the ramp-up that is reducing the value of the 220 stake. This is reducing the profitability of the stake for Bombardier. This does not mean the 220 will not be profitable for Airbus. Bombardier just has a higher share of liabilities as part of the deal.

3) They have plenty of cash on hand despite guiding to lower than expected free cash flow for the quarter.

All I see is that they have to decide whether to lower dividends or whether to give Airbus a fantastic deal on their 31% stake.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:17 pm

TObound wrote:
People are really misinterpreting the story.

1) Company wide poor financial performance is a result of problems in the rail division. Not the aerospace division, which is doing fine now that they are getting of the CRJ business and have reduced losses on the CSeries/A220.

2) It is the cost of the ramp-up that is reducing the value of the 220 stake. This is reducing the profitability of the stake for Bombardier. This does not mean the 220 will not be profitable for Airbus. Bombardier just has a higher share of liabilities as part of the deal.

3) They have plenty of cash on hand despite guiding to lower than expected free cash flow for the quarter.

All I see is that they have to decide whether to lower dividends or whether to give Airbus a fantastic deal on their 31% stake.


You are right, the article is about the entire Bombardier business, including rail.

Time for a title change I think.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:17 pm

VV wrote:
Ouch!


Does it mean Investissement Québec is going to buy Bombardier's stake?

Basically it would be 50-50 shareholding between Airbus and Quebec.


IQ is involved to ensure that jobs are protected. They don't care about much else. They would let Airbus buy Bombardier's shares, as long as Airbus sticks to the promise of keeping the program at Mirabel. Given the right guarantees and price, they'd probably sell their stake early.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:26 pm

TObound wrote:
People are really misinterpreting the story.

1) Company wide poor financial performance is a result of problems in the rail division. Not the aerospace division, which is doing fine now that they are getting of the CRJ business and have reduced losses on the CSeries/A220.

2) It is the cost of the ramp-up that is reducing the value of the 220 stake. This is reducing the profitability of the stake for Bombardier. This does not mean the 220 will not be profitable for Airbus. Bombardier just has a higher share of liabilities as part of the deal.

3) They have plenty of cash on hand despite guiding to lower than expected free cash flow for the quarter.

All I see is that they have to decide whether to lower dividends or whether to give Airbus a fantastic deal on their 31% stake.

BBD's need to contribute was capped by the partnership agreement, right?

Costs beyond the agreed contribution would have to be met via traditional means, the partners agreeing to contribute more (doubtful in the case of BBD) or by going to the markets or perhaps the government.

I guess this means BBD simply could not make its agreed contribution? Or was predicting that the venture would request less than the agreed amount, and was caught out by the cost of the ramp up?
Last edited by Revelation on Thu Jan 16, 2020 6:31 pm, edited 1 time in total.
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:28 pm

Keep in mind, Quebec owns 19% of the aircraft program. No way is the Quebec manufacturing being shutdown.
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:34 pm

Cruiser wrote:
Keep in mind, Quebec owns 19% of the aircraft program. No way is the Quebec manufacturing being shutdown.

As pointed out above, QC/IQ's ability to control events may be limited in time.

But I feel Airbus will find value in keeping a presence in Canada.

YMX costs may be higher than MOB, but abandoning YMX will have its own costs.

The government could make such an approach pretty challenging.

YMX presumably benefits from US-Canada trade agreements and also hosts the PW GTF final assembly line.

I think it will be hard for Airbus to walk away from all of that.
Last edited by Revelation on Thu Jan 16, 2020 6:36 pm, edited 1 time in total.
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:39 pm

For what it is worth, https://www.ainonline.com/aviation-news ... 20-program describes the partnership deal in these terms:

Under the deal, which closed in July 2018, Bombardier agreed to fund cash shortfalls of up to $925 million over the course of three and a half years, and the partners' Class A shareholders would share the cost of any excess shortfall. The deal also allowed for Bombardier to force Airbus to take its entire stake in the program in 2026 or Airbus could oblige Bombardier to sell the stake.
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:44 pm

One question - haven't the US tarriffs been taken off the table? I thought they were overruled after the decision was made to open Mobile.
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:49 pm

Cruiser wrote:
One question - haven't the US tarriffs been taken off the table? I thought they were overruled after the decision was made to open Mobile.


There's no point ever trusting American authorities. They could provide a crushing blow to revoke it later, after your program has lost orders or even been killed.

Airbus is smart to keep a low rate production line in the US just to supply the US market.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 6:56 pm

You know you wrote a bad contract when you believe you will lose more money if more product is to be sold.
 
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 7:01 pm

TObound wrote:
They have provided guarantees for 20 years of employment in Quebec. Other than the lawsuits involved in getting out of that, any sort of hostile move could well see the feds step in and/or disallow Canadian IP from leaving with Airbus. You don't just get to muscle your way out of a deal.


Sure, but unless Airbus's lawyers are pretty dumb, they'll be pages of clauses that may or may not apply to that guarantee.

With a 50%+ holding, wouldn't Airbus already have access to all the IP? I don't see how the IP belongs to Canada, the country, rather than Bombardier, the company, which gave up control of the program to Airbus. :confused:
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 7:45 pm

Revelation wrote:
...

BBD's need to contribute was capped by the partnership agreement, right?

...


The text says the following.
  • "At closing, there will be no cash contribution by any of the partners, nor will CSALP assume any financial debt. It also contemplates that Bombardier will continue with its current funding plan of CSALP and will fund, if required, the cash shortfalls of CSALP during the first year following the closing up to a maximum amount of US$350 million, and during the second and third years following the closing up to a maximum aggregate amount of US$350 million over both years, in consideration for non-voting participating shares of CSALP with cumulative annual dividends of 2%, with any excess shortfall during such periods to be shared proportionately amongst Class A shareholders."

This is the link to the announcement.
https://www.bombardier.com/en/media/new ... ercom.html
 
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Re: Airbus A220 Developments : more of a match for A320neo than Airbus says

Thu Jan 16, 2020 8:02 pm

scbriml wrote:
TObound wrote:
They have provided guarantees for 20 years of employment in Quebec. Other than the lawsuits involved in getting out of that, any sort of hostile move could well see the feds step in and/or disallow Canadian IP from leaving with Airbus. You don't just get to muscle your way out of a deal.


Sure, but unless Airbus's lawyers are pretty dumb, they'll be pages of clauses that may or may not apply to that guarantee.

With a 50%+ holding, wouldn't Airbus already have access to all the IP? I don't see how the IP belongs to Canada, the country, rather than Bombardier, the company, which gave up control of the program to Airbus. :confused:


Contracts can have whatever they want. Ministerial writ and legislation trump all of that. And Canadian laws have specific requirements for ministerial permission when businesses of strategic significance are changing ownership. Regardless of who or where the major shareholder is located. Should the federal government choose, they could make it very, very difficult for Airbus to move the program out.

In any event, this is some ridiculously cocked up fantasy. Airbus has plenty of advantages in Mirabel. A good bit of the supply chain is in the Montreal area. And it's a cheaper location to operate in than say Europe with whole bunch of advantages accruing beyond just labour costs. They aren't moving. And if they had any thoughts of doing so, they most certainly would not have sprung for the new pre-FAL facility being built or discussed expansion with the Montreal airport authority.
Last edited by TObound on Thu Jan 16, 2020 8:06 pm, edited 1 time in total.
 
leghorn
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 8:06 pm

TObound wrote:
All I see is that they have to decide whether to lower dividends or whether to give Airbus a fantastic deal on their 31% stake.

what are these dividends you speak of? I haven't got any in the years I've been holding. :(
 
TObound
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 8:07 pm

leghorn wrote:
TObound wrote:
All I see is that they have to decide whether to lower dividends or whether to give Airbus a fantastic deal on their 31% stake.

what are these dividends you speak of? I haven't got any in the years I've been holding. :(


I believe they pay dividends on their preferred.
 
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Revelation
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 9:33 pm

Exeiowa wrote:
You know you wrote a bad contract when you believe you will lose more money if more product is to be sold.

They really had no choice but sign the bad contract. Boeing looked at the books twice and walked away, Airbus looked once and walked away and only took the offer when the price was reduced to $1 for a majority share.

Bombardier has invested a total of $6 billion in the former C Series program since its launch in 2008. After several delays, the narrowbody airliner won Transport Canada certification in December 2015, [b]not long after a first round of talks with Airbus over a possible combination fizzled when Airbus’s due diligence failed to find a compelling case for it[/b]. Finally, in October 2017, Bombardier agreed to hand over 51 percent of the loss-making program to the European airframer for no cash consideration while retaining a 31-percent stake in what would become the C Series Aircraft Limited Partnership (CSALP). The Quebec provincial government took the remaining 19 percent.

Under the deal, which closed in July 2018, Bombardier agreed to fund cash shortfalls of up to $925 million over the course of three and a half years, and the partners' Class A shareholders would share the cost of any excess shortfall. The deal also allowed for Bombardier to force Airbus to take its entire stake in the program in 2026 or Airbus could oblige Bombardier to sell the stake.

It's starting to look like even giving away half the enterprise for $1 wasn't a viable approach.

Ref: https://www.ainonline.com/aviation-news ... 20-program
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 9:40 pm

Just a reminder, a reduced projection of profits for the A220/CSeries program, doesn't mean it's not going to be profitable long term.

Bombardier is in a tough spot because they took on a lot of the liabilities of ramping up, while signing away a lot of the future profits to Airbus. If they stick it out, they will do quite well. If they sell now, they'll maybe be lucky to recover what they were putting into CSALP. But that's probably about it.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 9:48 pm

TObound wrote:
.....

If they stick it out, they will do quite well. If they sell now, they'll maybe be lucky to recover what they were putting into CSALP. But that's probably about it.


Are you sure about it?
 
Skywatcher
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 10:00 pm

Why do people always assume that the USA is a cheaper manufacturing location than Canada?
I used to work for a US multinational that owned a Montreal telecom manufacturing company where I was the controller. The efficiency and costs in Montreal were far more lucrative compared to our sister operations in the states at the time. Much of it is exchange rate related. Airbus understands the complexities of global operations well. Currency balancing is critical.
Didn't the brilliant workers in Mobile destroy the first A220-300 on the line with a foam accident? How is that cheaper?
 
leghorn
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 10:04 pm

Revelation wrote:

13th of February is mention in that report.

"In a statement to AIN, Bombardier said the joint venture remains under review by the partners and that it would release more information on February 13."

13th February is the date of the Full year 2019 results for Airbus.
https://www.airbus.com/investors/events ... tions.html

If they sell to Airbus I think that is the day on which they announce the sale.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 11:44 pm

VV wrote:
TObound wrote:
.....

If they stick it out, they will do quite well. If they sell now, they'll maybe be lucky to recover what they were putting into CSALP. But that's probably about it.


Are you sure about it?


Yes. Airbus is quite good at managing production and supply chain costs. If they didn't think the program was salvageable, they wouldn't have come onboard and they most certainly wouldn't be investing in additional facilities and performance improvements. They think they can make it profitable. I believe them.

And if Airbus makes the program profitable, Bombardier stands to do well with that 31% share. Over a 20 year production run, they might actually recoup most of the $7 billion they've incinerated on this program. Compare that to getting a few hundred million for their share today if sold.

I get the saltiness since you were told to move on from Mirabel. But the skepticism is farless sensible now that Airbus is in charge.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Thu Jan 16, 2020 11:51 pm

Skywatcher wrote:
Why do people always assume that the USA is a cheaper manufacturing location than Canada?
I used to work for a US multinational that owned a Montreal telecom manufacturing company where I was the controller. The efficiency and costs in Montreal were far more lucrative compared to our sister operations in the states at the time. Much of it is exchange rate related. Airbus understands the complexities of global operations well. Currency balancing is critical.
Didn't the brilliant workers in Mobile destroy the first A220-300 on the line with a foam accident? How is that cheaper?


Americans have an Americentric point of view. That's why. Even if Mirabel was high cost on final assembly (probably not true), it would be moronic not to consider the cost of their whole supply chain and moving parts and such to Mobile. Not to mention the massive disruption to production when they need it the most.

Also, it's a fortunate circumstance. But with this administration waging trade wars everywhere, is it really wise to put the sole FAL for the type in the US? We're dealing with an administration that randomly threatens allies and trade partners like this

https://www.independent.co.uk/news/uk/p ... 86496.html

And it doesn't look like the outlook on trade would improve under a Democratic administration either. Better to dedicate US facilities solely to US demand.
 
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Fri Jan 17, 2020 12:23 am

TObound wrote:
And if Airbus makes the program profitable, Bombardier stands to do well with that 31% share. Over a 20 year production run, they might actually recoup most of the $7 billion they've incinerated on this program. Compare that to getting a few hundred million for their share today if sold.


That won't happen if Airbus exercises its buy option, will it?
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Fri Jan 17, 2020 12:59 am

TObound wrote:
Just a reminder, a reduced projection of profits for the A220/CSeries program, doesn't mean it's not going to be profitable long term.

Bombardier is in a tough spot because they took on a lot of the liabilities of ramping up, while signing away a lot of the future profits to Airbus. If they stick it out, they will do quite well. If they sell now, they'll maybe be lucky to recover what they were putting into CSALP. But that's probably about it.

The thread isn't about the long term health of the program, it's about BBD reassessing their participation in the partnership.

Bloomberg ( https://www.bloomberg.com/news/articles ... 0-jet-deal ) suggests the whole company is on the brink due to the fact that the A220 partnership is not playing out the way the BBD projected:

The deal with Airbus was an elegant solution. Though Bombardier received no upfront cash for ceding its controlling stake, it allowed Bombardier to offload the risk and additional costs of developing the A220. But the latest financial plan calls for more cash to support the ramp-up, pushes out the break-even timeline, and generates a lower return over the life of the program, Bombardier said in a statement Thursday.

With few other assets left to sell, Bombardier may struggle to keep everything going.
One of its two remaining businesses -- rail equipment and private jets -- may have to go, Karl Moore, an associate professor at McGill University in Montreal, said in an interview with BNN Bloomberg.

“Then you become a pure play of either transportation on the train side, or business jets,” he said. “It’s a big dramatic move for sure but one that might be necessary to solve the cash flow issue. I think that’s the question they’re giving some serious thought to right now.”

BBD finds itself in an uncomfortable position. The elegant solution might not have been elegant enough...

scbriml wrote:
TObound wrote:
And if Airbus makes the program profitable, Bombardier stands to do well with that 31% share. Over a 20 year production run, they might actually recoup most of the $7 billion they've incinerated on this program. Compare that to getting a few hundred million for their share today if sold.

That won't happen if Airbus exercises its buy option, will it?

The current partnership arrangement may be moot if BBD can't solve its problems before the various options can be triggered. It seems without amendment the options only become actionable in 2023. BBD is on the hook to keep putting money into ACLP for a while, July 2021 if I am reading the time lines correctly. Earlier linked articles say they're borrowing money to do that. Getting more loans just to fund something that may or may not pay off in a few years time seems to be quite problematic.
Wake up to find out that you are the eyes of the world
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Wake now, discover that you are the song that the morning brings
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TObound
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Re: Bombardier reassessing future participation in Airbus Canada Limited Partnership

Fri Jan 17, 2020 1:17 am

scbriml wrote:
TObound wrote:
And if Airbus makes the program profitable, Bombardier stands to do well with that 31% share. Over a 20 year production run, they might actually recoup most of the $7 billion they've incinerated on this program. Compare that to getting a few hundred million for their share today if sold.


That won't happen if Airbus exercises its buy option, will it?


The options for BBD shares aren't active till 2025/2026.

As Revelation says, this may all be moot if Bombardier wants out. Airbus will happily take their share. Funding the program for another 1.5 years wouldn't be extremely impactful to Airbus' balance sheet.

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