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Bombardier misses guidance in preview of 2014 results, stock plunges 22% in early trading

Jan. 15, 2015: Bombardier, struggling with poor aerospace sales across its business jet and commercial lines, missed previous guidance on cash flow and other metrics, three Wall Street investment banks reported today.

BBD’s stock traded off 22% in early trading.

Immediate reaction from the banks’ aerospace analysts: Read more

15 Comments

Posted on January 15, 2015 by Scott Hamilton

Bombardier, CSeries

Bombardier, CSeries, Desjardins, Goldman Sachs, JP Morgan, Learjet 85, UBS

Assessing turmoil at Bombardier: it doesn’t stop at CSeries

The Wall Street Journal takes a look at Bombardier.(Subscription required.)
““We did not fully expect and prepare” for the competitive response, said a Bombardier executive. Its studies concluded re-engining the A320 and 737 made no economic sense and was unlikely to happen,” The WSJ writes.

This is an incredibly naive assessment by BBD. We co-wrote in a study in 2009 that concluded Airbus and Boeing had no choice but to reengine their A320 and 737 families, about 18 months before Airbus launched the A320neo and two years before Boeing launched the 737 MAX. The WSJ piece is a good look at the program and competitive situation. We take a critical look at the turmoil below.

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Introduction

Jan. 9, 2015: The sudden departure of the sales chief at Bombardier Aerospace, the second time in 13 months, underscores the continuing turmoil at the multimodal transportation company and the drag its commercial aerospace unit has been and continues to be.

Summary

Key sales people departed in 2014.
CSeries sales still anemic.
Q400 down to 10% market share.
CRJ struggling.
Falling oil prices gives reasons to put off committing to CSeries.
Airbus viewed CSeries as a threat.

1 Comment

Posted on January 9, 2015 by Scott Hamilton

Airbus, Boeing, Bombardier, CSeries, Embraer, Premium

Airbus, Boeing, Bombardier, Chet Fuller, CRJ, CSeries, Embraer, Mike Arcamone, Philippe Poutissou, Q400, Ray Jones, Rod Sheridan

Sales chief Ray Jones leaves Bombardier, delivering another blow to commercial program

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.

35 Comments

Posted on January 8, 2015 by Scott Hamilton

Bombardier, CSeries

Bombardier, CSeries, Philip Poutissou, Ray Jones, Rod Sheridan

2015 a year of execution for Embraer commercial

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Introduction
Jan. 7, 2015: Embraer, the world’s #3 commercial airplane manufacturer, enters 2015 viewing this as a year of execution, says its chief commercial officer, John S. Slattery.

There are three pillars:

Continuing to fill out the balance of the current generation orders and commitments in advance of the E-Jet E2 re-engined airplane scheduled for entry-into-service in 2018;
Execution to continue to grow the commitments for the E2—there are already 590; and
Execution for the next several years for the milestones of the E2 development.

Summary

Customer base goal by the end of 2017;
Customer support;
Barriers to entry for competitors.

Turboprops’ future is OK but not great as ATR corners market

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Introduction

Jan. 5, 2015: Conventional wisdom suggests that turboprops are making a bit of a comeback because these remain far more efficient for routes up to 400 miles than jets, particularly at high fuel prices.

Even though oil prices have plunged to a seven year low, few expect that long-term prices will remain at today’s levels. While fuel between $50-$60bbl breathes new life into aging regional jets, there remains efforts in several corners to develop a new generation of turboprops.

Summary
ATR wants to launch a new, 90-100 seat turboprop.
Bombardier launched a high-density, 86, seat version of its Q400 but appears cool to a new design.
China offers its indigenously built turboprop.
India and Indonesia are exploring a new design.
Pratt & Whitney, GE, others are developing the next generation engine.

Odds and Ends: Wrapping up 2014 in the news

Dec. 31, 2014, just under the wire: 2014 is over and there was some news unrelated to the loss of AirAsia flight 8501:

Bombardier: The company received a firm order for 24 CRJ900s from an unidentified customer (we believe it is a US regional airline). The National Post of Canada also has this look at how 2015 will be a “pivotal” year for the CSeries. BBD also announced an order from mega-lessor GECAS for five Q400s and options for 10 more.

ARJ-21 certified: The Chinese government certified the COMAC ARJ-21, the 70 seat regional jet that looks like the old Douglas DC-9-10. The airplane is now supposed to go into service in April or May, only eight years late.

Boeing declares victory: The year was really over yet but Boeing declared victory over Airbus in this Dec. 29 story in The Seattle Times. Yes, Boeing will deliver more airplanes than Airbus in 2014, but will it truly end with more orders? Airbus won’t reveal its full 2014 performance until its annual press conference Jan. 13, and it’s famous for announcing a whole bunch of orders to pull the proverbial rabbit out of the hat. So we’ll wait and see then who truly has the bragging rights for the full year.

Airbus and Boeing: For all of our extremely partisan Airbus and Boeing readers, choke on this one: Airbus and Boeing have teamed up to bid on a defense contract, reports Aviation Week.

Real-time tracking: It’s possible and it’s being done. See this Washington Post article.

12 Comments

Posted on December 31, 2014 by Scott Hamilton

AirAsia, Airbus, Boeing, Bombardier, Comac, CSeries

Airbus, ARJ-21, Boeing, Bombardier, Comac, CRJ900, CSeries, GECAS, Q400

Looking ahead in 2015 in commercial aviation

Here’s a visualization of events to look for in commercial aviation in 2015.

Click to enlarge for crisp view.

20 Comments

Posted on December 26, 2014 by Scott Hamilton

Airbus, Boeing, Bombardier, CFM, China, Comac, CSeries, Embraer, GE Aviation, Mitsubishi, Paris Air Show, Pratt & Whitney, Rolls-Royce

767-2C, A320NEO, A350-1000, A350-900, A380neo, air force tanker, Airbus, Boeing, Bombardier, CFM, CSeries, E-Jet E2, Embraer, GTF, KC-46A, LEAP, MC-21, Mitsubishi, MRJ, Pratt & Whitney, Qatar Airways, Rolls-Royce, Trent XWB

Boom times leads to looming cash flow shortfall across OEMs

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Introduction

Dec. 16, 2014: There have been record aircraft orders year after year, swelling the backlogs of Airbus and Boeing to seven years on some product lines, Bombardier’s CSeries is sold out through 2016, Embraer has a good backlog and the engine makers are swamped with new development programs.

So it is with some irony that several Original Equipment Manufacturers (OEMs) are warning of cash flow squeezes in the coming years.

Summary

With so many development programs in the works, the prospect of new airplane and engine programs are being trimmed.
Most airframe and engine OEMs under pressure.
The full impact of the pending cash flow squeeze hasn’t been appreciated by the markets yet.

5 Comments

Posted on December 16, 2014 by Scott Hamilton

Airbus, Boeing, Bombardier, CFM, CSeries, Embraer, GE Aviation, Irkut, Mitsubishi, MTU, Premium, Rolls-Royce

787-10, A320NEO, A330neo, A350, A380, A380-900, A380neo, A400M, air force tanker, Airbus, Boeing, Bombardier, C-17, CFM, Comac, E-Jet E2, Embraer, GE Aviation, GE9X, GTF, Irkut, KC-390, KC-46A, LEAP, Mitsubishi, MTU, Pratt & Whitney, Rolls-Royce

The challenges in bringing a new turboprop to market

By Philippe Poutissou
Special to Leeham News and Comment
Introduction
Dec. 15, 2014: The market for turboprop aircraft has been strong for nearly a decade, yet there has been limited new product development in the segment. This has some regional airlines getting nervous about their future, in particular those who specialize in serving smaller markets with 30- to 50- seat turboprops built in the 1980s and 1990s. Which aircraft will replace the robust, but not indestructible, Bombardier DHC-8, Saab 340 and Embraer Brasilias?

Setting aside the technical challenges of developing and certifying a new aircraft type (of which there is ample evidence), the market challenge for smaller turboprops comes down to a question of limited revenue potential. Due to overall pressure on aircraft prices and demand that is highly fragmented, the business case for an aircraft OEM becomes risky and difficult to justify.

Summary

High-yield regional routes are increasingly rare and harder to protect.
Turboprop acquisition costs must remain in line with those of larger jets on a per-seat basis.
The 30- to 50- seat turboprop market is a highly fragmented, replacement market with limited potential for large volume orders.

7 Comments

Posted on December 15, 2014 by Scott Hamilton

ATR, Bombardier, Embraer

ATR, ATR 42, AVIC, Bombardier, Brasilias, CASA, CN-235, Comac, Dash 8, Embraer, IPTN, Q400, Turboprops

New UTC CEO throws cold water on PW GTF growth

The new chief executive officer of United Technologies Corp., Gregory Hayes, threw cold water on hopes and dreams of Pratt & Whitney, a subsidiary, that the successful small- and medium-sized Geared Turbo Fan will grow into the wide-body market.

Aviation Week just published an article in which all three engine OEMs were reported to be looking at a 40,000 lb engine that would be needed to power a replacement in the category of the Boeing 757 and small 767. Hayes did not specifically rule out a 40,000 lb engine, leaving PW’s potential to compete for this business unclear.

Hayes has been CEO for two weeks. He was previously CFO. He made his remarks in a UTC investors event last night. The Hartford Courant has this report.

Hayes’ remarks were in response to a question from an analyst about research and development expenses. Here is his reply, from a transcript of the event:

44 Comments

Posted on December 12, 2014 by Scott Hamilton

Boeing, Bombardier, CFM, Comac, CSeries, Embraer, Irkut, Mitsubishi, Pratt & Whitney, Rolls-Royce

737 MAX, 757, 757 replacement, 767, 767 replacement, A320NEO, Alain M. Bellemare, Bombardier, C919, CFM, Comac, CSeries, E-Jet E2, Embraer, GE Aviation, Gregory Hayes, GTF, Irkut, MC-21, Mitsubishi, MRJ, Pratt & Whitney, United Technologies

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Leeham News and Analysis

There's more to real news than a news release.

Leeham News and Analysis

Bombardier misses guidance in preview of 2014 results, stock plunges 22% in early trading

Assessing turmoil at Bombardier: it doesn’t stop at CSeries

Sales chief Ray Jones leaves Bombardier, delivering another blow to commercial program

2015 a year of execution for Embraer commercial

Turboprops’ future is OK but not great as ATR corners market

Odds and Ends: Wrapping up 2014 in the news

Looking ahead in 2015 in commercial aviation

Boom times leads to looming cash flow shortfall across OEMs

The challenges in bringing a new turboprop to market

New UTC CEO throws cold water on PW GTF growth

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