Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing’s 2025 annual safety report due this month May 20, 2025
- FAA’s data of accident, incidents, often not shared May 19, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 22. May 16, 2025
- Services are driving revenues and profits in difficult times, Part I May 15, 2025
- The BWB has a long way to go before flying passengers, freight May 12, 2025
Bjorn’s Corner: Aircraft programs
By Bjorn Fehrm
30 October 2015, ©. Leeham Co: There has been dramatic news this week around Bombardier’s (BBD) CSeries program. I wrote a subscribers article about what to expect in terms of the cash flow problem that the BBD management has been wrestling with. The announcements yesterday and the following earnings call confirmed the financial modelling I did with our aircraft modelling tool.
Having watched experienced Wall Street analysts being hard pressed to understand what has happened with the CSeries, I thought I could use this week’s corner to explain the overall economical flow of an aircraft program like the CSeries (there will be details in a follow up subscriber article). I will also put it in context with how it affects a company like BBD and what one must think about when it comes to timing of such projects.
To give the timing aspect more colour, I will also compare with Embraer and their E-Jet E2 project and Boeing’s 787 program. The three programs are very different and they demonstrate in an illustrative way the challenges of making a new civil airliner and that one must adapt the project to the company’s position and its strength and weaknesses.
Bombardier 3Q2015 earnings call
Oct. 29, 2015: “I feel confident in our liquidity going forward,” following the investment by the Quebec government of $1bn in the CSeries program, says Alain
Alain Bellemare
Bellemare, president and CEO.
With that, Bombardier launched its third quarter earnings call.
Cancellation of the Learjet 85 program was due to a lack of sales due to a prolonged downturn in the business jet market, Bellemare said. The $3.2bn charge against the CSeries program was driven by delays. Bellemare said that production aircraft are moving down the production lines. “We’re getting traction with potential customers” with the new sales team. The partnership with the Quebec government “is excellent news.”
Key initiatives have been identified for cash savings over the next five years. More information will be forthcoming on November 24 at a New York investment conference.
Bombardier: $3.2bn charge, $1bn from Quebec
Oct. 29, 2015: Bombardier today announced a US$3.2bn charge against the CSeries program and a $1bn investment from the province of Quebec, about half of what
CS100: Certification 97% complete. Photo via Google images.
had been rumored, with its 3Q2015 earnings. The press release is here.
BBD also canceled its Learjet 85 program. Revenues declined $800m to $4.1bn. Exclusive of charges against the CSeries and Learjet programs, BBD reported net income of $71m vs $171m. Total reported net loss was $4.9bn, including the charges against the two programs.
“Today, we are proud to announce that the government of Québec will invest $1 billion in the C Series aircraft program. This partnership comes at a pivotal time, with the C Series on the verge of certification. The market is there, our leadership is in place, we have the best product and with the support of the government, we are ready to make this aircraft a commercial success,” said Alain Bellemare, president and CEO.
Pontifications: 50% of something or 100% of nothing: something to consider at Bombardier
By Scott Hamilton
- On Sunday, The Seattle Times had a long article about whether the Boeing 787 will ever record a profit. Leeham Co’s Bjorn Fehrm is quoted extensively.
Oct. 19, 2015, © Leeham Co. Bombardier is dominating the aerospace news lately, given the reports of talks with Airbus about selling a stake of the CSeries program to the European company; a report that it planned to approach Embraer for a business tie-up; and on Friday, a long analysis by Reuters about BBD’s financial challenges.
Last week I chronicled Bombardier’s history predicament of how it got to where it is today, a very deep hole that the new management—which only got on the scene last February and which has spent much of the year reorganizing the company and hiring a new team—has to dig out of. It’s not an easy task and it won’t come overnight.
Let’s take yet another look at things, given the continued headlines last week.
CSeries dilemma: a saga of missed opportunities, bad decisions, stiff competition
By Scott Hamilton
Oct. 12, 2015, © Leeham Co.: The news agencies, stock markets and aerospace analysts last week went wild when Reuters reported there were talks going on between Bombardier and Airbus whereby the latter would take a majority stake in the CSeries program.
Within hours, both companies said talks had ended. As could be expected, the stock went into another tailspin.
Then United Airlines said it wants pilots to approve a contract, and is dangling a 100-seat airplane order for mainline operations as an incentive. The CS100 fits into this category, as does the Embraer E195 E2.
It is worth recapturing reasons BBD finds itself in its current predicament.
Bjorn’s Corner: Engine rubbing
09 October 2015, ©. Leeham Co: Last week an Airbus A320neo prototype with Pratt & Whitney’s (PW) GTF had a problem while testing hot and high conditions at Al-Ain airport in Abu Dhabi. The engine suffered a rubbing problem and PW and Airbus decided to replace the engine before returning the A320neo to Toulouse.
I had the opportunity to discuss what happened with PW people at ISTAT this week and decided it makes for a good follow up to our two other engine Corners to write about what happened and how serious it was.
The problem was compressor blades rubbing against the compressors stator wall. PW knew that this engine individual could have that problem. They saw when assembling the engine it was a bit tight in the compressor area. PW said they told Airbus there was a risk with this particular unit, and sure enough, there was rubbing to be seen when they boroscope checked the engine after the test.
Here what it was all about and what to do about it. Read more
Assessing the China market
Subscription required.
Introduction
Sept. 30, 2015, (c) Leeham Co.: The Boeing deals announced last week with China put the country into the spotlight about its commercial aviation ambitions.
For many, the various deals announced by Boeing raise alarm bells. For most, that fire horse already left the fire station. The smoke has been billowing out of China (or maybe that’s smog) for a long, long time.
Summary
- Boeing announces 300 orders and commitments for China, though the company was vague about the details. We try to dissect what’s real and what’s smoke.
- Additional deals announced by Boeing are driven by China’s pay-to-play approach to business.
- Other OEMs, suppliers also have to pay-to-play.
- China’s deals with Airbus and Boeing are only two elements of a national goal for commercial aerospace.
- IP theft and technology transfer big concerns.
New single aisles on home stretch
By Bjorn Fehrm
16 Sep 2015, © Leeham Co.: Boeing released pictures yesterday of the first 737 MAX 8 being on the Renton Final Assembly Line (FAL) having completed the wing-to-body joins. With the Airbus A320neo now flying again with both Pratt & Whitney GTF and CFM LEAP test vehicles and Bombardier completing 85% on CSeries (having passed 2,400 hours of flight testing), one can say the new single aisles are on their home stretch.
737 MAX on the Final Assembly Line at Renton, Seattle. Source: Boeing.
Original planning had the CSeries entering service in December 2013, nearly two years before A320neo (October 2015) and four years before the 737 MAX (4Q2017). With the 737 MAX now on the FAL one can start to review the Entry into Service (EIS) for all three. It will be tighter than the companies have said.