Ray Jones, who replaced Chet Fuller in December 2013 as head of Bombardier commercial airplane programs, quit.
BBD said Jones and the company mutually agreed to his departure, was was labeled for “personal reasons.” BBD would not elaborate.
Sales will report directly to Aerospace president Mike Arcamone while Jones’ replacement is found.
Philippe Poutissou, VP marketing, left last year as Jones shuffled his team. Rod Sheridan, another VP, also left last year, retiring. Both have been long-time staples of Bombardier Aerospace.
Market intelligence tells us that customers viewed their departures negatively and see a lack of continuity, hurting relationships and sales.
CSeries sales have stalled, the Q400 backlog is down to 10% of the turboprop market share and the aging CRJ is just hanging on by a flap.
Hate to see it, not good for anyone
“Market intelligence tells us that customers viewed their departures negatively and see a lack of continuity, hurting relationships and sales.”
I share this view. It looks like the problem is at the very top of Bombardier. Too many people have left in recent years. They cannot possibly all be a bunch of incompetent. Chet Fuller must be laughing right now. But I m not. 🙁
Many people leave and will leave because it’s a very toxic workplace.
Many people would say the same thing for Boeing, and probably most of the larger corporations in America and around the world. For they are all managed by what the numbers have to say about the state of the business. CEOs don’t listen to their people anymore, like Bill Allen used to do when he was heading Boeing; nowadays they just watch figures on their computer screens and respond to them like if they and their employees were all robots.
I wonder if there is a problem with the C Series performance.
Have you seen a customer’s comparison of its fuel burn to neo and max?
The president of Porter Air said in an interview that the CSeries has met or exceeded every one of the performance guarantees that was in the conditional order.
That may very well be the case. But if the performance does not provide better economics than the NEO or the MAX, then there is a problem.
It seems to me that if the commercial director leaves the job of his own volition, he probably doesn’t perceive an opportunity for career success in his current position. It seems quite possible that could be due to the position of the product in the market.
There is a reason why the smaller versions of the Max and A319NEO are not selling. It is because this niche has been ceded to Bombardier. It is not a huge market but one where BBD can make money for the next 20 years. The CS100 is something ling 8 tons lighter than the A319. There is no way its performance can be close. As for the commercial director leaving, he had a year to show what he could do. He struggled for sales and so he is gone. If this was a big deal the share value would have tanked yesterday rather than going up 4%.
I just don’t get the whole situation.
The C series is a totally different market than what the A320 and 737 have evolved into.
Neither A or B really makes an aircraft in this class and the ones that are close don’t sell.
Why would you even care what the NEO in either A320 or 737 is or does?
Bottom line is per trip even the smallest variants will eat far more fuel than a C series if the C series is flying its normal segments.
The difference the C series would be full or mostly full and the A or B offering would be half empty.
Cost of fuel is a current issue and that will make the older aircraft more viable for however long the low fuel prices last.
Trooper, that would be true if the C Series had sold comparable volumes to the rest of the single aisle market and left the only sales of A319 and 737-7 languishing. However, the reality is that the whole segment small single aisle segment is stuck. So one can hardly crow victory for the C Series.
Why has th segment got stuck for sales? Perhaps because there is a glut of second hand, not too old, A319 equipment in particular. Or perhaps because, after years of building networks with A319 and -700 size modules, the bulk of carriers are sizing up.
One would think that if the economics of the CS300 allowed Bombardier to promote the same fuel per seat as A320neo but lower fuel per trip (as one would hope from a new build aircraft), then there should have been more sales. The fact that there aren’t suggests a lack of a competitive advantage.
You’ve hit the nail on the head: It’s hard for a CS300 at $300,000/mo lease rate to compete with an old A319ceo and 737-700 with a least rate of $100,000/mo, especially in the fuel price environment today.
Transworld, those are certainly the expectations I would think an airline would have, and which would lead them to study the C Series.
However, imagine if an airline studied the C Series and found that the CS300 had around the same fuel per trip as the A320neo despite being smaller.
That might sound wildly crazy. Even shocking. But that is what I have heard.
What is correct (or claimed by BBD) is that the CS300 has the same seat mile costs as the large A320neo, not the same trip costs, which are lower.
I don’t doubt Bombardier’s claim. And certainly, that is a performance proposition that needs to be atleast close to true for the CS300 to succeed.
But as you know yourself, the best place to check the OEM’s claims is inside an airline. As I wrote above, the conclusion of one such an analysis is same fuel per trip CS300 vs A320neo. Not per seat.
Frankly, when I learnt of this, it made a much better explanation of the mysterious and confusing things we have seen in the market and at Bombardier.
It makes no sense to purchase an unproven product such as the C-Series. Beyond Pity sales and sales to where Canada has/had given Humanity Aid in once developing countries..tough rough ahead for the C-Series in terms of sales.
1. reasonable used parts not available.
1A. replacement new parts will be extremely expensive and hard to get for a few years.
1B. no commonality of parts with its other products.
2.no real-world operating costs to compare.
3. It’s overpriced against fleet sale/lease versions of the Embraer,737,A320 Series.
Bombardier (The Brand Name) has developed a not so good reputation for building stuff that is not right there(or backing it up),whether it’s a plane, ATV,snowmobile,jet ski,Trike………all Bombardier Products are less than compared to the competition
I certainly hope so. I’m seriously hoping for the CSeries to be massively successful. Can’t wait to fly one.
The market seems to have shrugged off this news. BBD.B is up 4% on 17m shares so far today. I suspect that word of good 4th q results have leaked out.
Looks like Embraer will have most of the small jet liner market, 75-110 seat category. Too many hiccups on the c series and the Q400 sales are dismal.
Speculation ? The Beaudoin- Bombardier family, the company’s owner, due to an entrepreneurial vision of business development , that is to say, slow and conservative to provide a quality product. Perhaps a Jones & Co. wanted to rush things and have complete control over the planning of new products , that is to say the CS500 , CS700 , CS900 , Q500 , CRJNeo with PassPort engine, etc. Problems between directors and owners with vision, strategy, money, budget, schedule: the family spoke
If Bombardier feels they have misjudged the market Airbus / Boeing response, we might have seen another case of “groupthinking”. Everyone being upbeat, can do, entrepreneurial, repeating each other, becoming unable a hear critical signals. And at some stage the critical people start to understand/ experience it is better for their careers to go with the flow instead of being “negative”, “uncooperative”. The Dreamliner saga.
Thinking Airbus couldn’t respond would have been non-sense. They tried a A320 GTF configuation in the late nineties, and tested the water for various improvements years later. I remember opening a discussion and doing realistic fuel cost / investment estimations in 2006 and 2008. On the record, including artist impression.
I produced a small analysis of the situation at Bombardier in other comment. I think it is interesting to reproduce my early post:
I think that one big problem of Bombardier is negative cash flow. The Q-Series is in difficulties comparatively the ATR-72-600 and the fact that the russian orders is on hold is not helping. Even the CRJ family is not particularly successful and the backlog is significantly lower than the E-Jet E1. Low orders and low production rate will reduced profit margin and Bombardier need money for its Cseries. Furthermore, Bombardier will probably lose money on early CSeries deliveries (Boeing call this deferred production cost). This probably explains why Bombardier cuts its workforce of 1700 employers.
A few years ago, Bombardier claimed that the new factory for the CSeries has a capacity of 20 aircrafts/month with possibility to increase its capacity with further financing. Now, Bombardier talk about a capacity of 10 aircrafts/month. It seems that the idea of a second assembly line is on hold for a few years.
I do not think cash flow is a concern at this point. They have cash in the bank and a line of credit they have not touched yet. Most of the costs of setting up the new line have been accounted for in 2014 and the drop in the Canadian dollar is going to going to start having a positive effect. The CSeries business plan was planned in 2008 with the dollar at par and now it is at .83 and falling. many thought they were crazy to set a goal of 300 orders by EIS as only one other clean sheet plane at that time had ever had more. Some have noted that if only 60% of the options are converted to firm orders then the CSeries already have exceeded their goal. It will take some time to ramp up to full production and the option to use the second line is there if they need it. In any event, this one new product will double their aerospace revenues. I am looking forward to seeing FTV 5 at the Paris Air show in June.
This is a good point, but Bombardier has a 750 millions debt due for 2016. On the other hand, Bombardier will probably loose money on its early delivery and will only make money in 2017.
Cormark Securities analyst David Newman says in a research note Wednesday he expects Bombardier to post 91 aircraft deliveries in the fourth quarter – up from 83 last year – compared with Embraer’s 82.
“We anticipate ongoing improvements in [Bombardier’s] financial performance, given solid deliveries, according to our tracking for Q4/14, a healthy backlog, a growing foreign exchange tailwind, significant cost savings from its recent reorganization and restructuring ($268 MM) plan, and expected decline in capex and commensurate pick-up in [free cash flows], and improved execution, especially on the CSeries flight test program.”
In other news:
Shares in Embraer fell to their lowest level since October after the world’s third-largest commercial aircraft manufacturer warned that customer payment delays would result in it having negative cash flow in 2014. http://www.ft.com/cms/s/0/57732686-9c10-11e4-b9f8-00144feabdc0.html
I think the E195E2 is real bad news for Bombardier. It significantly will increase the reach of the E-jet family, right into CSeries territory.
The fact Embraer isn’t pushing it as a 737-300/737-700/A318/319 alternative and still names it E195 is strategic communication. Keeping everybody asleep.
The main question is that if an operator has E195E2 and A319/737-700s, will it invest in a dedicated inbetween family to cover a gab of say 130 passengers two class >2000NM..
EMB considers the 195 E2 a CS100 competitor and not a CS300 competitor.
Yes a direct CS100 competitor. When A319/737-700s are already in the fleet, the incentive to add CSeries type might be reduced. The E190 sofar was the most popular E jet, the E195 traded range/runway performance. The E195E2 is a bigger step up then the name suggests.
Here’s the WSJ article without the paywall:
Google the link.
Apparently, Mr. Philippe Poutissou would still be available to replace Mr Jones… He has experience with the company and the products.
I can not imagine the CS300 having the same fuelburn as an A319 or even A320. The CS300 is 6-7t lighter, has a smaller cross section etc. while using very similar engines.
However for that higher fuel burn, the A319 compensates with superior payload range options, container capability, and maybe most importantly: full commonality with 11000 A320s ordered sofar, pilots, MRO infrastructure and reliability trackrecord.
I am wondering if the Cseries is not too expansive comparatively to A320CEO/NEO and 737NG/MAX. Airbus and Boeing have significantly higher production rate which reduce the unit production cost. Indeed at the Renton facility, Boeing can assemble up to 63 B737s/month with its 3 assembly lines and Airbus has a total capacity of 54 A320s with its assembly lines (8 Alabama, 8 Tianjin and 38 Toulouse/hamburg).
Moreover since A320 and B737 are relatively old and the supply chain well implemented, the production cost is reduced even without considering the production rate. Bombardier with the Cseries is at the beginning of its learning curve and have to manage a new supply chain.
“Bombardier Inc. announced today the pause of its Learjet 85 business aircraft program. The pause is due to weak demand for the Learjet 85 aircraft and follows a downward revision of Bombardier’s business aircraft market forecast. This reflects the continued weakness of the Light aircraft category since the economic downturn. As a result, the Company will record a pre-tax special charge in the fourth quarter of 2014 of approximately $1.4 billion mainly related to the impairment of the Learjet 85 development costs.
Additionally, Bombardier will reduce its workforce by approximately 1,000 employees at its sites in Querétaro, Mexico, and Wichita, United States. A severance provision of approximately $25 million will be recorded as a special item during the first quarter of 2015.
Furthermore, following a review of preliminary results compiled by Bombardier for the fiscal year ended December 31, 2014, it has become clear that certain financial guidance previously provided will not be met. Based on these preliminary results, Bombardier is updating its guidance for 2014.
Earnings before financing expenses, financing income and income taxes (EBIT) before special items at Aerospace is expected to be approximately 4% compared with a previous guidance of 5%. The variation is mainly due to increased provisions for credit and residual value guarantees, pricing pressure on new aircraft sold, as well as a decrease in fair value of used aircraft…….
Cash flow from operating activities at Aerospace is expected to be approximately $800 million while net additions to property, plant and equipment (PP&E) and intangible assets are expected to be approximately $1.8 billion, compared with a previous guidance for cash flow from operating activities between $1.2 billion and $1.6 billion and net additions to PP&E and intangible assets between $1.6 billion and $1.9 billion. The variation in Aerospace’s cash flow from operating activities is mainly due to a lower level of customer advances, a lower EBIT and an increase in used aircraft inventory…..”