Bombardier 2014 earnings, 4Q negative cash flow at Aerospace, debt/equity plan

Feb. 12, 2015: Struggling under the strain of two years of delays for the CSeries, poor sales of the Q400 and CRJ and a disastrous LearJet program, the world’s commercial airplane maker shuffled its very top leadership and announced it would seek more than $2bn in new debt and equity as the fourth quarter negative cash flow exceeded $1bn.

Bombardier said in its press release: Read more

Alain Bellemare, ex-CEO of United Tech division named Bombardier CEO

Feb. 12, 2015: Alain M. Bellemare, 53, was named president and CEO at Bombardier , it was announced today ahead of the company’s 2014 earnings call. The appointment is a move to restore confidence in Bombardier, its Aerospace division and the CSeries program.

Stakeholders in the CSeries program we had talked to expressed a desire for Pierre Beaudoin, who has become executive chairman, to step down.

According to Bloomberg Business, Bellemare has been consultant at United Technologies Corp. since January 31, 2015. He previously was President and CEO of UTC Propulsion & Aerospace Systems from July 26, 2012, to January 31, 2015. He also served as the president of Pratt & Whitney Canada and a number of other executive positions. Read more

Boeing 757 MAX: why its operating economics does not work

By Bjorn Fehrm

Introduction

Feb 12, 2015: In a series of articles during the autumn we covered the replacement scenarios for Boeing’s 757-200 when used for long haul passenger operations. The series also included an interview with Boeing’s head of new airplane studies, Kourosh Hadi, director of product development at Boeing where he outlined what Boeing studied and why.

This week The Wall Street Journal published an article portraying that Boeing seriously considered launching a re-engined 757 as a response to Airbus A321LR. Boeing has since vehemently denied the story and we have given the reasons why it does not make sense for Boeing.

As a complement we show the operational economical analysis that we did at the time of our 757 articles, now updated to the exact modifications suggested by The WSJ, a new engine and new winglets paired with modern avionics.

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Here’s why Boeing won’t do a “757 MAX”

Feb. 12, 2015, c. 2015 Leeham News and Comment: Boeing appeared to put to bed once and for all any prospect of reviving the 757 to fill a product gap between the 737-9 and the 787-8.

Randy Tinseth, vice president of marketing, refuted a published report that said Boeing was studying resurrecting the plane, last delivered in 2005, with new engines and winglets. Tinseth made the remarks Feb. 11 at the Pacific Northwest Aerospace Alliance conference in Lynnwood (WA).

While Boeing studied the prospect at one or more points, we didn’t view this as particularly significant; Boeing looks at virtually all options when studying product development.

Our economic analysis, performed after the published report, is one reason why we didn’t believe Boeing would proceed with a “757 MAX.” The economics simply fall short of the competing Airbus A321LR by double digits.

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PNAA Conference: EMB’s John Slattery: Market share from deliveries key in measuring success

Quotations are paraphrased.

Feb. 11, 2015: You can market share from sales. We don’t make revenues from sales but from deliveries, says John Slattery, chief commercial officer for Embraer. EMB dominates in deliveries, he said at the Pacific Northwest Aerospace Alliance conference today in Lynnwood (WA). Read more

PNAA Conference: Boeing’s Tinseth dismisses Aboulafia forecast of Airbus A320 dominance; firm ” no” on 757RE

Quotations are paraphrased.

Feb. 11, 2015: I don’t see a 60% market share for our competition (Airbus, single-aisle airplanes), says Randy Tinseth, VP Marketing, Boeing Commercial Airplanes, in his presentation today before the Pacific Northwest Aerospace Alliance in Lynnwood (WA).

Tinseth instead points to the 50/50 deliveries of the A320 v the 737 in 2014.

He was referring to Richard Aboulafia’s prediction that Airbus will have a 60% single-aisle market share through 2024.

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PNAA Conference: Boeing’s supply chain chief: we are in a more-for-less world today

The quotations are paraphrased.

Feb. 11, 2015: The reality is that we are in a more for less world now, says Kent Fisher, vice president and general manager, Supplier Management, for Boeing Commercial Aircraft. The reality is that getting paid of technology advances is over. We have to cut costs as a result, he said at the Pacific Northwest Aerospace Alliance conference today in Lynnwood (WA).

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PNAA Conference: Aboulafia–“A lot of positivity” (except for A380, 787)

Feb. 11, 2015: We’re at the Pacific Northwest Aerospace Alliance conference in Lynnwood (WA) north of Seattle. This is the 14th annual conference. Appearing are consultant Richard Aboulafia, Airbus, Boeing, Embraer and a number of key suppliers.

This is the first of several reports, beginning with Aboulafia, of the consulting firm Teal Group. We’ll be reporting in the format of paraphrasing his and other presenters.

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Tomorrow’s Bombardier earnings call: trying to be upbeat in the midst of a tornado

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Introduction
As the market prepares for Bombardier’s 2014 year end earnings call tomorrow, CEO Pierre Beaudoin has his work cut out for him to restore confidence among the airlines and lessors who have ordered the CSeries and who might.

The abrupt departure last month of yet another aerospace sales chief, Ray Jones, is the third top executive to leave within a short time. Gary Scott resigned as CEO of the Aerospace unit for personal reasons. Chet Fuller, Scott’s successor, left after his three year contract wasn’t renewed. Jones followed Fuller out the door after 13 months. Guy Hachey, president of the aerospace unit, left in a corporate reorganization of the unit.

Key people is sales and marketing also departed after Jones took over. Philippe Poutissou, VP-Marketing, was unceremoniously ousted as Jones wanted his own team. Rod Sheridan, Vice President Commercial Aircraft Customer Finance, left and joined Nordic Aviation as vice chairman. There has been turnover in the sales force as well.

Summary

  • Customers bewildered by events.
  • Confidence in CSeries remains, but uncertainty swirls.
  • CSeries EIS seen slipping to 1Q2016.
  • Customers worry about lack of “relationships.”

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Odds and Ends: CSeries; Mitsubishi MRJ; Air France; Saving airlines

CSeries: Bombardier provided a short update from program head Rob Dewar in advance of its 2014 earnings call Thursday. The flutter test has been completed, CS300 is moving toward joining the flight test fleet and the fleet has completed 900 hours of the 2,400 required toward certification.

  • BBD today revealed the identify of the customer for 24 CRJ-900s, announced Dec. 30: it’s American Airlines.
  • Luxair plans to order some Q400s to replace its Embraer E145 jets.

MRJ90: The Mitsubishi MRJ is Japan’s first commercial airliner since the YS-11 turboprop in the last century. It’s a bold project intended to break into a highly competitive market sector. Air&Space magazine of the Smithsonian Institute profiles the MRJ.

Air France: Aviation Week has a dark opinion of the future of Air France. It’s worth a read.

Saving airlines: While Aviation Week has a dim view on the future of Air France, The Wall Street Journal has a piece about how private equity saved airlines. (Subscription may be required).