Odds and Ends: CSeries schedule; BBD and Russia; MH370

CSeries schedule: An intriguing news item came out of Russia this week concerning the Bombardier CSeries. Lessor Ilyushin Finance Co., which has more orders for the CSeries than any other customer except Republic Airways, claims (according to the article) that BBD sweetened the terms of the final contract following the engine incident in May that results in a grounding of the test flight during the investigation and fix.

The issue was tracked to a faulty oil seal. The fix, according to our sourcing, is relatively easy and straight-forward, but Transport Canada hasn’t green-lighted a return of the test fleet to service yet, and it still may be a few more weeks before it does, we’re told.

BBD maintains that it still plans first delivery in the second half of 2015, but we’re also told all the schedule margin is now gone. And here’s where we get to the heart of the IFC news report.

According to Russian Aviation, IFC has rescheduled deliveries from November 2015 to April 2016, a five month shift to the right. There is no indication, although it is inferred, if this is reflective of a new program delay–or whether this is a rescheduling at IFC’s preference.

  • Bombardier announced a reorganization that saw the retirement of Guy Hachey, president and COO of the Aerospace division. Another 1,800 employees have been laid off as well. BBD continues to burn through cash as delays in the CSeries program mount up.
  • A source familiar with the CSeries flight testing program thinks the flight testing should resume in August.

Bombardier and Russia: More from Russia: The Toronto Globe and Mail reports that Bombardier’s plan to open a Q400 assembly line in Russia has stalled over the crisis in Ukraine.

Boeing and Russia: Boeing has close ties to Russia for its commercial aircraft division, relying on Russia as a large supplier of titanium. The Ukrainian fighting was already affecting the supply chain. The Puget Sound Business Journal has this explanation.

MH370: While the world is focused on Malaysia Airlines flight MH17, Runway Girl Network has an intriguing piece about MH370, the Boeing 777 that disappeared five months ago. She has a video about access to the electronics bay on the 777, a topic that we discussed at the height of MH370’s disappearance. RGN’s article explains the concern as well.

Regional Airline pilot sickout: A campaign is underway to have a US pilot sick-out Sept. 1-5 for regional airlines.

16 Comments on “Odds and Ends: CSeries schedule; BBD and Russia; MH370

  1. I feel that the latest setbacks will roll the EIS past 2015.The sanctions on Russia will produce some interesting results if they’re put in place.

  2. The 777 electronic bay access is an issue, but some are linking the reported electrical oddity as an indication that was gotten into on MH370

    The sequence of events on MH370 does not reflect on an electronic bay access (unless you are into techno thrillers that someone plugs a laptop into the system, takes over the aircraft and flies it into obvion.

    While the sequence doe not follow, the logic of someone who could do that and want to kill themselves in that manner does not either.

  3. Anybody got the suspicion that Bombardier is purposively slowing the development of their Aircraft because they are running low on money? I mean, this CSeries is one Hella’ Aircraft I am sure….but I also bet it’s one Hella’ expensive to produce.

    • Anybody got the suspicion that Bombardier is purposively slowing the development of their Aircraft because they are running low on money?

      No.

      If there’s one thing that’s guaranteed to increase your project costs, it’s missing project milestones/deadlines.
      Ask Boeing on the 787 or Airbus on the A380…

      • anfromme,

        You got a point. Although I would remind you that a lot of losses cause from the A380 and 787 programs were due to “Sporty” pricing. But….like you said, the majority of the losses were via delays.

        • Programme cost overruns in both cases are an effect of delays and production/development issues that were costly to address.
          Sporty pricing then surely doesn’t help you when you’re trying to turn an operational profit on a per-frame basis (particularly if each frames is more expensive to produce than you planned for), but I’d say the cost of this pales in comparison.

  4. I heard Hélène Gagnon, V.P. Public Affairs at Bombardier, say at Farnborough that the CSeries EIS was expected before the end of 2015. Since it was mentioned in a casual manner during an interview in her mother tong I think she was saying inadvertently what was on her mind rather than the official line.

    Lutz Bertling has been very successful at reorganizing and streamlining Bombardier Transportation. This is obviously having an impact on Bombardier Aerospace where the expectations are commensurately higher. The leaner and meaner Transportation division is forcing a restructuring of the Aerospace division in order to carry over some of the benefits.

    But I am not sure what they are trying to achieve by breaking down BA in three distinct and separate divisions. We may have to wait until the beginning of next year to have a better understanding of the new structure. And for the advantages it will bring we may have to wait considerably longer.

    But all this seems to be somewhat improvised, including Hachey’s precipitous departure. It’s like if Bombardier was going through an internal crisis in which the CSeries grounding is playing a minor role. It’s a combination of negatives:

    a) There has been a string of delays.
    b) The added delays are having an impact on cash flow.
    c) CSeries sales have been slow for a long time now.
    d) CRJ and Q400 sales are even slower.
    e) Business Aircraft is the only division that is making money right now.

    And for various reasons a number of key people have left the company: Scott, Boehm, Fuller and now Hachey. Not to mention James Hoblyn who died unexpectedly.

    I just hope things wont get worse before they get better!

    • I just got through reading the Bio of Guy C. Hachey – the late CEO of Bombardier. I can’t believe that this was the best Bombardier could do for a CEO. I’m sure Guy C. Hachey is a nice guy, but I think he was way out of his depth as far as developing an Aircraft program. As a result, I think Bombardier Aircraft is toast.

      • They like car guys… check out Arcamone’s bio. 🙂

        Funny how Ford got Alan Mulally and BBD got GM guys.

      • Alan Mulally was a top executive at Boeing and Guy Hachey was a top executive at GM. In both cases it could be argued that they din’t have the right background for the job.

        But the irony is that Mulally was not considered competent enough to become CEO at Boeing. Ford saw it differently and he was offered the CEO job. Many people, including myself, thought that he did not have the proper curriculum for this appointment, which at the time seemed to come out of the blue. But we were wrong, as the subsequent revival of Ford clearly demonstrated.

        A few years ago Louis Chênevert was named Aerospace Executive of the Year by Aviation Week. Chênevert is CEO of United Technologies, but Like Hachey he comes from the automobile sector. As a matter of fact I believe they worked together at GM. I think Michele Arcamone was there at the same time, but maybe not at the same location.

        Few observers thought that Mulally would be as successful as he became at Ford. Does that mean Boeing was wrong? Was he underestimated by Boeing? Did Ford see in Mulally something Boeing had missed?

        Hiring an individual because he has the right background is like buying a book because it has a nice cover. That’s why French editors like bland covers for their books. They know that the value of the book lies inside, between the covers.

        I don’t think Hachey was let go because he was not competent. I view his retirement as a lost battle with the “owners” of the company. Bombardier is going through an internal crisis similar to the one they went through in 2002.

        Last time it was related to the September 11 aftermath. This time it has more to do with the fact that the company is stuck with obsolete products like the CRJ and Q400 that they have a hard time to sell. At the same time it is bleeding cash on new products like the CSeries, the Lear 75/85 and the new Global 7000/8000.

        Drastic measures had to be taken to maintain the Aerospace division afloat because in cannot rely entirely on the Business aircraft division. My understanding is that those drastic measures were not in line with Hachey’s vision and a divorce was inevitable.

        But the crisis continues. The Commercial aircraft division is a sinkhole and there is no relief in site until the first CSeries are delivered. So when a new EIS date is announced it not only affects the customers but it also has a negative impact on the balance sheet of the company.

        Unless drastic measures are taken the ink is going to turn red pretty soon. They seem to be well aware of that reality and that is why they feel the need to overall the company.

        So I expect more bad news in the coming months. It’s going to hurt for a while but then they might hit the jackpot with the CSeries when it starts to carry happy passengers around the globe.

        • I hope during this down time due to the GTF oil seal problem, that they finished getting the software debugged. It takes time bringing a plane like this to fruition, no matter who is hired or let go, but Normand wouldn’t Bombardier be smart to bring in a guy of Alan Mulally’s stature at this time?

  5. @dstew

    “I hope during this down time due to the GTF oil seal problem, that they finished getting the software debugged.”

    Actually I made a similar comment in a previous post. They may be lousing time, but they are also gaining an opportunity to fix other problems. Most Bombardier employees are on vacation at this time of the year and I hope that when they come back the CSeries will be ready to fly again.

    In regards to Mullally he is getting old now. He would turn 70 before the CSeries EIS. I would see him as Chairman of the Board at a large corporation. I don’t know if this makes sense, but I would like to see him back at Boeing in that “honorific function”. Chicago is not far from Detroit after all! 😉

    There is a much younger candidate who could replace Hachey, and he already works for Bombardier. His name is Lutz Bertling. He is in charge of Bombardier Transportation. He comes from Airbus, and before that he worked for Adtranz before Bombardier purchased the company.

    If background is important, that would make him the perfect candidate to run either the Transportation division or the Aerospace division. He also holds a PhD in mechanical engineering.

    In a relatively short period of time Bertling has completely revamped the Transportation division. I think the “owners” of Bombardier would like to see this kind of efficiency transferred to the Aerospace division. I actually suspect that this is the main reason why Hachey was let go.

    Anyway, it does not look like Bertling would run the Aerospace division in the near future because this division no longer exists as an entity. It has been broken down into three different “services”. This new structure is not very well defined at this stage and I have no idea what they want to achieve.

    I think that LP turbine has done a lot more damage than it looks from the outside when it exploded… ;-(

  6. It is looking like JMc is every bit as bad for Boeing as the McD/D executives were at managing the company…. If not worse.
    The days when Boeing was run by great engineers with good people skills are long in the past.
    So sad, indeed.
    (Sorry to continue the hijack of the thread….)

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