372mm Bombardier bailout - APPROVED

[R154]

http://www.macleans.ca/politics/government-to-provide-bombardier-with-372m-in-loans/


So, basically the government has decided to help bombardier continue to finance their declining business jet division with an interest free loan. To the tune for 372 million of your money.

Bailout? The gov't wouldn't do that.

What if they can't pay it back? Bombardier? They're good for it.

And discuss.

[Gestalt]

There's worse things to blow money on. Interest rates are effectively zero anywau.

I would be completely happy if they even keep the money, as long as they deliver on the flying cars they say they can build.

[gwill]

wheres the hundreds of millions for the 150,000 unemployed in alberta? It blows my mind how they can throw money at quebec and their companies while ignoring alberta for as long as they have.

[01RedDX]

.

[Xtrema]

http://www.usatoday.com/story/travel/columnist/mcgee/2015/09/02/how-much-do-taxpayers-support-airlines/71568226/

[R154]

The Quebec govt gave them 1billion for a minority stake last year. They begged the feds for another 1b this year. Absolutely ridiculous.

I absolutely wish they would let them go bankrupt already. How many kicks at the proverbial can does this company get?

[Gestalt]

I like that we have such a diverse and quality manufacturer in Canada. Proud of it.

They've been profitable in the past, and expect to be again. They employ 60000 people long term.

We are building a pipeline across a continent for 35,000 temporary jobs. So dont give me the small potatoes speach. How much do we subsidize our other corporations and businesses.

If they need a few more years, Im good with that, and imagine that flying cars will be made in Canada. That's epic.

[R154]

There is nothing left to build in Canada for keystone. Our part is built to the border.
There is only technical jobs from TransCanada left. Not labour.

Why should we subsidize a manufacturing company that has been in debt continuously for a decade? Time and again our money goes to a failing business model.

If they were any good anymore, they wouldn't have to be so heavily subsidized.

I don't seeother oil companies begging for handouts despite them being infinitely less profitable now. They just get bought by bigger fish.

Bombardier needs o be bought out by Boeing or Lockheed.

Fuck off.

[Tik-Tok]

Still kicking myself for not buying stock when it was under $1.

[Gestalt]

Originally posted by R154
There is nothing left to build in Canada for keystone. Our part is built to the border.
There is only technical jobs from TransCanada left. Not labour.

Why should we subsidize a manufacturing company that has been in debt continuously for a decade? Time and again our money goes to a failing business model.

If they were any good anymore, they wouldn't have to be so heavily subsidized.

I don't seeother oil companies begging for handouts despite them being infinitely less profitable now. They just get bought by bigger fish.

Bombardier needs o be bought out by Boeing or Lockheed.

Fuck off.
Trump is building keystone for 35,000 jobs. Everyjob is important.

Im not a finance guy. Does this say what you say? Decade?

http://financials.morningstar.com/ratios/r.html?t=BBD.A

[R154]

What do American jobs have to do with Canadian jobs exactly?

And who is subsidizing keystone. Stay on point here. TransCanada has shouldered the entire cost all the way through.

The govt has been supporting Bombardier since 1966. http://www.theglobeandmail.com/report-on-business/rob-commentary/quebecs-bombardier-bailout-is-not-an-investment-its-corporate-welfare/article27081111/

They have recieved 2.2b in that time and are requesting a further 5b to keep going.

Let them. Die.

As far as an Roi is concerned, when was the govt made whole again?

Any mention of repayment?

[HiTempguy1]

Originally posted by Gestalt

How much do we subsidize our other corporations and businesses.


This company isn't profitable because of incompetent management and an ownership structure that basically makes it a privately owned company with public ownership trappings.

It should be forced to declare bankruptcy and management completely replaced.

[ickyflex]

Originally posted by Gestalt
I like that we have such a diverse and quality manufacturer in Canada. Proud of it.

They've been profitable in the past, and expect to be again. They employ 60000 people long term.

We are building a pipeline across a continent for 35,000 temporary jobs. So dont give me the small potatoes speach. How much do we subsidize our other corporations and businesses.

If they need a few more years, Im good with that, and imagine that flying cars will be made in Canada. That's epic.

You must be on facebook lots, I find all the idiots hangout and post nonsense on there

[Gestalt]

Im not seeing r154s decade claim. Not even close.

Is this a french thing?

[Stuart]

Originally posted by Gestalt
Im not seeing r154s decade claim. Not even close.

Is this a french thing?

I'm not a fan of Huffington Post, but in 2014 they did a reasonable write up of the history of corporate welfare going to Bombardier for decades.
http://www.huffingtonpost.ca/mark-milke/bombardier-corporate-welfare-trap_b_4705751.html

[R154]

I never said the years were consecutive. With that said I should have said decade(s). I posted an article from globe and mail about it.

Bombardier is a shit company trying to sell shit products in a highly competitive environment that makes their product redundant and over priced.

[Gestalt]

continuously for a decade is your exact words, and does in fact mean consecutive.

The financials I posted above are accurate. You are wrong.

[R154]

I admit that. As far as I can tell the years of debt are not consecutive.

Doesn't take away from the fact that they are a horrendous company.

[rx7_turbo2]

What's Alain Bellemare's salary plus bonuses amount to? I mean the company's been so well run with him at the helm I'm sure it's warranted, right? :rolleyes:

[Nitro5]

This should mean Quebec losses any ability to oppose Energy East. The rest of Canada needs to be able to prop them up. Tax from oil companies is needed.

[Buster]

Generally speaking, the aerospace industry globally is a pseudo-public entity. They are all subsidized and supported by their respective governments. (The Americans do it by spending a large percentage of their GDP on their military. Of course, the Americans can then translate that to a massive positive externality by utilizing that military to ensure the existence of the petro dollar and the greenback as the reserve currency, but I digress).

If you want an aerospace industry in your country, you need to subsidize it with public funds. That's just the way it is. That's the way it has always been. That's probably the way it always will be. Whether you WANT a domestic aerospace industry under those circumstances is another question.

Governments love these types of subsidies because it allows them to curry favor and votes in specific and targeted jurisdictions and geographies.

Such cronyism is why large government always works against the best interest of the citizens: public money expenditures encourage the enrichment of the managers chosen to manage the projects, or the contractors/corporations chosen to receive funds. It's a classic abusive relationship: I am going to confiscate your resources/freedom, and then mete those resources back to you in such a way that it appears I am doing you a favor.

The whole thing is why any reasonable and intelligent person realizes that the only just course of action is to radically reduces the role of government.

[HiTempguy1]

Originally posted by Buster
Generally speaking, the aerospace industry globally is a pseudo-public entity. They are all subsidized and supported by their respective governments. (The Americans do it by spending a large percentage of their GDP on their military. Of course, the Americans can then translate that to a massive positive externality by utilizing that military to ensure the existence of the petro dollar and the greenback as the reserve currency, but I digress).

If you want an aerospace industry in your country, you need to subsidize it with public funds. That's just the way it is. That's the way it has always been. That's probably the way it always will be. Whether you WANT a domestic aerospace industry under those circumstances is another question.

Governments love these types of subsidies because it allows them to curry favor and votes in specific and targeted jurisdictions and geographies.

Such cronyism is why large government always works against the best interest of the citizens: public money expenditures encourage the enrichment of the managers chosen to manage the projects, or the contractors/corporations chosen to receive funds. It's a classic abusive relationship: I am going to confiscate your resources/freedom, and then mete those resources back to you in such a way that it appears I am doing you a favor.

The whole thing is why any reasonable and intelligent person realizes that the only just course of action is to radically reduces the role of government.

We need a wheeping joy emoticon. Brilliant post :clap:

[HiTempguy1]

http://www.nationalpost.com/m/wp/full-comment/blog.html?b=news.nationalpost.com/full-comment/andrew-coyne-bombardiers-loan-1930s-public-works-spending-with-1970s-industrial-policy&pubdate=2017-02-10

Everything summed up in a nutshell.

[ipeefreely]

Rex Murphy: Bombardier’s bailout (http://www.cbc.ca/news/thenational/rex-murphy-bombardier-s-bailout-1.3975382)

:D

[ZenOps]

http://business.financialpost.com/news/transportation/absurdly-low-prices-boeing-seeks-u-s-anti-dumping-probe-against-bombardiers-cseries-jet

Boeing accusing Bombardier of "Absurdly low prices" product dumping, or basically selling too close or below cost to gain marketshare.

I think the US lost its sense of what was cheap and what is expensive when everyone took Kanyes $1 Billion loan request seriously.

[phreezee]

So basically Bombardier can't compete with normal profit margins and relies on our tax dollars to bail them out. What else is new? Glad somebody is trying to put a spotlight on it.

[zhao]

This is pretty much old recycled news. Brazil also complained about bombardier recently too.

IMO if you want to have an aerospace industry in your country you have to subsidize it heavily.

The united states subsidizes their aerospace industry heavily as well; it's called the US military. Canada has no virtually no military so we're stuck subsidizing it more transparently by just shoveling money in to it in front of everyone.

[RickDaTuner]

I believe their strategy is based on providing after sales support and parts. They may be subsided on the front end but I'm sure are looking to recoup cost on long term service contracts.
With all the new aircraft it makes it a shoe in for them as older refurbished parts are incompatible.

[Seth1968]

Originally posted by zhao
IMO if you want to have an aerospace industry in your country you have to subsidize it heavily.


Others have said the same thing in a thread from a few months ago.

Can someone please explain why in any country the aerospace industry has to heavily subsidized? More specifically, how is it any different from all the industrys that aren't subsidized? Well, other than one being subsidized:)

[ZenOps]

Space shuttles had to be subsidized because they have yet to create a useful one... That is one that does not blow up 1 in 23 times or one that can go higher than 250 miles above the surface of the earth, Obviously the SS subsidies failed as the program is now defunct.

The conspiracy theory is that the initial Aerospace program was conceived at least partially to keep (male white) engineers employed in the US doing something other than trying to kill each other (1950's coming off a 100 million death war)

Kim Jong is putting massive amounts of capital towards aerospace, and yet - about half of the time (1 in 2 times) his space/ICBM program also blows up on the Launchpad.

Side note: North Korea also put massive amounts of capital towards submarines, they have about 70 diesel compared to the 75 (some nuclear) submarines the US has.

[Seth1968]

Originally posted by Seth1968


Others have said the same thing in a thread from a few months ago.

Can someone please explain why in any country the aerospace industry has to heavily subsidized?

NM.

I thought the subsidies were also refering to the airline industry. Doh!

[ZenOps]

Yknow, there *is* the argument that in general the US tends to overprice or overestimate the value of its goods.

I mean look at Hollywood. Does anyone remember the days when a VCR movie was $80 or a cassette tape was $20 apiece?

[kertejud2]

Originally posted by Seth1968


Others have said the same thing in a thread from a few months ago.

Can someone please explain why in any country the aerospace industry has to heavily subsidized? More specifically, how is it any different from all the industrys that aren't subsidized? Well, other than one being subsidized:)

Boeing was effectively subsidized by the U.S. needing planes for the war effort, and later rockets for the space race. This helped them with their commercial airline production by having a lot of money invested for R+D and manufacturing and a lot of other entry barriers taken care of by massive government contracts. Likewise the other big aerospace players were a product of the war effort and still are today. Various car companies saw the same benefits of such spending but cars are a lot cheaper to produce and carry a lot less risk to the company if one fails so the entry barriers aren't nearly as much which is why so many other auto companies have been able to rise up and compete against the old guard of companies that received a lot of government contracts during the wars.

With all that government money going to Boeing, the European industry was well behind and Airbus required subsidies in order to be competitive.

So with the two biggest players in the game being heavily funded by governments, and the other big players building things for the U.S. military it means all the others have to be as well in order to compete, or else those countries risk losing their aerospace sector and personnel altogether, which isn't great. So countries like Canada have decided it is worth it to subsidize such ventures instead of giving up on aerospace altogether because Boeing and Airbus will otherwise crush them.



So your short answer is: because of World War II and because planes are expensive.

[dirtsniffer]

Originally posted by ZenOps

The conspiracy theory is that the initial Aerospace program was conceived at least partially to keep (male white) engineers employed in the US doing something other than trying to kill each other (1950's coming off a 100 million death war

Your racism is showing.

[Zhariak]

I think the problem here isn't the subsidizing exactly, Boeing is complaining that the Bombardier aircraft are being sold below the cost to manufacture.

So essentially if you buy a Bombardier plane you're paying less than cost. The Canadian tax payer and Quebec taxpayer (bailouts from Canada fed, and Quebec Provincial) are paying for the markup for these aircraft to be sold to American buyers.

[ZenOps]

Originally posted by dirtsniffer


Your racism is showing.

Just calling it the way I see it.

[zhao]

Originally posted by ZenOps


Just calling it the way I see it.

You need to buy some glasses, because you're blind as a bat.

WTF do you think black people were doing in ww2 and the cold war? Swinging from trees to get to their job picking cotton?

[KrisYYC]

Boeing sells aircraft at a loss all the time. In fact their entire 787 program is at a loss.

Not to mention Boeing gets all kinds of tax breaks other companies can only dream of, and sweetheart military contracts galore.

This is just sour grapes over the loss of the Delta Airlines order to the C-Series and their realization that the C-series is a threat to their 737 sales.

[ZenOps]

Originally posted by zhao
You need to buy some glasses, because you're blind as a bat.

WTF do you think black people were doing in ww2 and the cold war? Swinging from trees to get to their job picking cotton?

As one Mexican construction worker put it best, a wall is a wall - he will build the wall because he is being paid, if he doesn't someone else will just do it.

Half the people in the US civil war fought for freedom from slavery, half the other people fought for slavery - and *just* barely lost that one.

People do many things that are not in their best interest just to survive another day. White people seem to have difficulty with the concept.

People in the US go to war, some just to be paid and survive another day. They don't care if they are fighting Martians or Cthulhu, just label it "evil" and pay me so I can eat.

[rage2]

Bump. US imposes 220% tariff.

http://money.cnn.com/2017/09/26/news/companies/bombardier-boeing-cseries-delta-itc-ruling/index.html


The U.S. Commerce Department has backed Boeing in its challenge to Bombardier, recommending an enormous tariff on sales of the Canadian firm's C Series jetliner.
The initial ruling by the International Trade Commission, an arm of the Commerce Department, recommends a 219.63% tariff on the delivery of each airliner.

Boeing (BA), America's largest exporter and sole producer of commercial airliners, is suing Bombardier. At issue is whether the plane maker received financial backing from the Canadian government that allowed it to stay afloat and sell to Delta for what Boeing alleges were "absurdly low prices."

"The U.S. values its relationships with Canada, but even our closest allies must play by the rules," said Commerce Secretary Wilbur Ross in a statement. "The subsidization of goods by foreign governments is something that the Trump Administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination."

The ruling announced Tuesday is the first of two in the case. The second is expected on as early as Oct. 5 and may add even more to Bombardier's tariff penalty.

[ExtraSlow]

Can we just give bombardier more money to compensate? Another eight or nine hundred million might do it.

Man the aerospace industry is fucked up. Can't think of a single company where it's not heavily subsidized.

[Buster]

Aerospace is not a private industry, it's a public industry. Always has been. Probably always will be.

[Zhariak]

Someone correct me if I'm wrong here, but there's a big difference between what US does with Boeing, and what Canada does with Bombardier...

From what I understand:

The US gov gives Boeing money to develop custom military aircraft. Not all come to fruition, and of course it's a profit to Boeing (creates projects, jobs, etc...), but ultimately the money is for development of custom aircraft. Essentially they are paying for a product (even though sometimes the US gov cancels projects or aircraft). Technically no matter what, it's an investment on technology that the government owns or has access to for military applications. Boeing is a vendor for the government itself.

The Canadian gov gives Bombardier money to hire Quebecers and Canadians, almost as if it was a crown corporation (which it isn't). The PM sounds like a sales person or PR guy for the company (keep advertising those "innovative C-Series" jets during question period). Canadian gov doesn't pay for any special aircraft, they don't hire them for any military applications, it's just plain and simple government subsidies (handouts for political reasons). Bombardier is not a vendor for the Canadian government, but they get free money since the government wants them to survive, whereas arguably they may have not on their own.


Can someone chime in and back this up, or correct me?

[rage2]

Man the aerospace industry is fucked up. Can't think of a single company where it's not heavily subsidized.
Pro sports qualify as well? :rofl:

[ExtraSlow]

The Canadian gov gives Bombardier money to hire Quebecers and Canadians, almost as if it was a crown corporation (which it isn't). Sounds right. We treat Bombardier like a crown corporation that is supposed to loose money in order to protect "our Canadian identity and pride" or some other bullshit.

[AndyL]

Well yeah look at the crap they screwed up when the government threw contracts at them to emulate the US, those bombardier built iltis Jeeps were awesome no?

How do you screw up building a proven product and cost the taxpayer more? Hand the drawings and specs to bombardier...

[Tik-Tok]

Considering Trudeau's stance on the thing... HeLLO EUROFIGHTER!

[rage2]

I like how Bombardier's market cap is less than the total bailouts given to Bombardier since the start, and that's not including inflation.

[ExtraSlow]

i like how bombardier's market cap is irrelevant compared to the total valuable investment made in a vital industry.
ftfy

[Go4Long]

Someone correct me if I'm wrong here, but there's a big difference between what US does with Boeing, and what Canada does with Bombardier...

From what I understand:

The US gov gives Boeing money to develop custom military aircraft. Not all come to fruition, and of course it's a profit to Boeing (creates projects, jobs, etc...), but ultimately the money is for development of custom aircraft. Essentially they are paying for a product (even though sometimes the US gov cancels projects or aircraft). Technically no matter what, it's an investment on technology that the government owns or has access to for military applications. Boeing is a vendor for the government itself.

The Canadian gov gives Bombardier money to hire Quebecers and Canadians, almost as if it was a crown corporation (which it isn't). The PM sounds like a sales person or PR guy for the company (keep advertising those "innovative C-Series" jets during question period). Canadian gov doesn't pay for any special aircraft, they don't hire them for any military applications, it's just plain and simple government subsidies (handouts for political reasons). Bombardier is not a vendor for the Canadian government, but they get free money since the government wants them to survive, whereas arguably they may have not on their own.


Can someone chime in and back this up, or correct me?

Mostly true, except the assumption that Boeing doesn't get government money too, they've been given several multi-billion dollar tax breaks. They're essentially whining that someone other than them is getting a hand out...and because Trudeau is an idiot, he won't push back the way that Airbus did.

As for Trudeau sounding like he's marketing for Bombardier, Trump's first visit to a factory as president was Boeing's 787 plant in Charleston.

http://www.latimes.com/business/hiltzik/la-fi-hiltzik-boeing-washington-20170503-story.html


A few years ago, Washington state awarded the Boeing Co. the largest corporate tax break any state had given any corporation — a massive $8.7-billion handout aimed at encouraging the aerospace industry generally, and Boeing specifically, “to maintain and grow its workforce within the state.”

Unwisely, state legislators and Democratic Gov. Jay Inslee didn’t make that a hard and fast requirement of the handout. So they’ve had to stand by powerlessly as the company has cut 12,655 jobs, or more than 15% of its Washington workforce, since that heady signing ceremony in November 2013. Layoff notices have gone out to 429 more employees in just the last few weeks.


Now the state is poised to strike back. Two bills in the state legislature would claw back part of the tax break or eliminate it completely if the company continues to pare jobs.


“When you’ve got a company so dominant it can have its way with the tax code, you have to build in safeguards.
— Greg LeRoy, Good Jobs First


“This is a poster child for the incentives we give away,” Democratic State Rep. Noel Frame, one of the bills’ sponsors, told me this week. Laying off workers despite billions in tax breaks, she said, “has been so blatant in its disrespect for the will and intent of why we give tax incentives, the outrage is bipartisan.”

The outrage comes partially from Boeing’s habit of forcing its workers to shoulder the pain of management’s inability to compete more effectively with Airbus, its European chief rival in the airliner business. Last December, the company blamed that competition for a sharp slowdown in orders for its 777X airliner, a mainstay of Washington state production lines, which it said would mean a hit to the workforce. But the very same day, the company announced a 30% increase in its quarterly dividend and a new $14-billion share repurchase program. Chairman and CEO Dennis Muilenburg crowed that those initiatives signified Boeing’s determination to “meet our commitment to provide competitive returns to our shareholders.”

Don’t expect Boeing to take the threat of cuts in its tax subsidies lying down. “Changing Washington’s aerospace tax incentives would prevent Boeing from being able to respond to future market challenges,” Bill McSherry, a company spokesman, told the Legislature this week. He cited “significant competitive pressure on every order” and said that job reductions have occurred only “when absolutely necessary.”

“Boeing has kept its word to Washington,” McSherry said, but that may be true only because its commitment was so vague. Many of Washington’s lost jobs, according to the Society of Professional Engineering Employees in Aerospace, have gone to South Carolina, Oklahoma, Missouri or Alabama, states where the company faces more tolerant employment regulations or has agreed to more explicit employment mandates, or both.

According to Good Jobs First, which tracks corporate subsidies, Missouri has offered Boeing $229 million in subsidies if the company maintains a workforce of 14,500 and creates 2,000 new jobs; if employment falls below 11,000, Boeing must repay the subsidy. South Carolina capped some of its $450 million in incentives to attract a 787 Dreamliner plant at $12,500 per new job and mandated other investment.

There’s little mystery to why Boeing was able to extract a lavish no-strings-attached handout from Washington. The company is the state’s biggest corporate employer and the source of thousands of high-paying professional jobs. But its demands also have turned Washington into the national leader in Boeing handouts, with $12.3 billion in incentives bestowed on the company over the years by the reckoning of Good Jobs First. (South Carolina comes in second.)

Washington’s multibillion-dollar endowment to Boeing dates back to 2003, when the state awarded the company more than $3.2 billion in incentives through 2024. But the big handout came in 2013, when Inslee and the legislature extended the incentives through 2040, at an estimated value of $8.7 billion.

But that only heightened the need for Washington to be smarter. “When you’ve got a company so dominant it can have its way with the tax code,” says Greg LeRoy, executive director of Good Jobs First, “you have to build in safeguards.”

Even beyond the scale of the subsidy, Washington was especially indulgent toward Boeing. “We gave aerospace and Boeing the largest tax break in U.S. history,” says Bill Dugovich, a spokesman for the engineering union, “and we’re the only state that didn’t tie the break directly to jobs.”

The measures under consideration at the Olympia statehouse aim to rectify that failure. A Democratic version sponsored by Frame would set a baseline for Boeing’s Washington employment at 70,000 jobs. If the workforce falls below that point, the company would lose half its tax break; if it falls below 67,500, it would lose the entire subsidy. A companion Republican bill would require average employment of 75,000 jobs through 2024. Fall below that, and the tax incentive will expire in 2024. Frame says she expects the final version to resemble a melding of both measures.

The bills reflect rising awareness that Washington, like some other states, has been lining corporate pockets with crucial revenues and getting nothing in return. “As a state we are dealing with a financial crisis related to funding for public schools,” Frame says. “We’re in violation of the state constitution and in contempt of a court order.” The incentives mean “our taxpayer dollars are going to Boeing’s bottom line, not to create jobs.”

My end game result is that I hope the liberals sign on the dotted line of Lockheeds proposal for us to procure F-35's immediately as the "interim" fighter purchase. Lockheed submitted their proposal a couple months ago now, it featured a (rumoured) lower price point than the Super Hornets, and a reasonably similar time line to delivery.

[googe]

Yeah, both Boeing and Microsoft don't pay their share of state taxes here in WA. I think MS's benefit is relatively small and has been going away (plus they cheat horribly anyway by offshoring their profits like many other companies), but Boeing gets a major sweetheart deal.

I don't really know how substantial those are in the grand scheme of things, but Boeing is the biggest employer in the state and threatened to leave over it, so it's probably pretty big. The problem with Boeing workers is if Boeing goes away, that's a ton of blue collar unemployment. It's less of a problem if highly paid in-demand tech workers have to change jobs in a tech boomtown.

[Go4Long]

Coles Notes...Airbus just bought a 50.1% stake in the C-Series program.

Checkmate Boeing.


Airbus and Bombardier Announce C Series Partnership

AMSTERDAM, NETHERLANDS and MONTREAL, QUEBEC--(Marketwired - Oct. 16, 2017) - Airbus SE (EPA:AIR) and Bombardier Inc. (TSX:BBD.A)(TSX:BBD.B)(OTCQX:BDRBF)
•Airbus to acquire majority stake in the C Series Aircraft Limited Partnership
•Partnership brings together two complementary product lines, with 100-150 seat market segment expected to represent more than 6,000 new aircraft over the next 20 years
•Combination of Airbus' global reach and scale with Bombardier's newest aircraft family to create significant value for customers, suppliers, employees and shareholders
•Significant C Series production costs savings anticipated by leveraging Airbus' supply chain expertise
•Commitment to Québec: C Series Aircraft Limited Partnership headquarters and primary assembly to remain in Québec, with the support of both companies' global supply chains
•Airbus' global industrial footprint expands with the C Series Final Assembly Line in Canada, resulting in a positive impact on operations in Québec and across the country
•Growing market for C Series results in second Final Assembly Line in Mobile, Alabama, serving U.S. customers

Airbus SE (EPA:AIR) and Bombardier Inc. (TSX:BBD.A)(TSX:BBD.B)(OTCQX:BDRBF) are to become partners on the C Series aircraft programme. A corresponding agreement was signed today. The agreement brings together Airbus' global reach and scale with Bombardier's newest, state-of-the-art jet aircraft family, positioning both partners to fully unlock the value of the C Series platform and create significant new value for customers, suppliers, employees and shareholders.

Under the agreement, Airbus will provide procurement, sales and marketing, and customer support expertise to the C Series Aircraft Limited Partnership (CSALP), the entity that manufactures and sells the C Series. At closing, Airbus will acquire a 50.01% interest in CSALP. Bombardier and Investissement Québec (IQ) will own approximately 31% and 19% respectively.

CSALP's headquarters and primary assembly line and related functions will remain in Québec, with the support of Airbus' global reach and scale. Airbus' global industrial footprint will expand with the Final Assembly Line in Canada and additional C Series production at Airbus' manufacturing site in Alabama, U.S. This strengthening of the programme and global cooperation will have positive effects on Québec and Canadian aerospace operations.

The single aisle market is a key growth driver, representing 70% of the expected global future demand for aircraft. Ranging from 100 to 150 seats, the C Series is highly complementary to Airbus' existing single aisle aircraft portfolio, which focuses on the higher end of the single-aisle business (150-240 seats). The world class sales, marketing and support networks that Airbus brings into the venture are expected to strengthen and accelerate the C Series' commercial momentum. Additionally, Airbus' supply chain expertise is expected to generate significant C Series production cost savings.

Airbus is strongly committed to Canada and its aerospace sector with Canadian suppliers extending their access to Airbus' global supply chain. This new C Series partnership is set to secure jobs in Canada for many years to come.

"This is a win-win for everybody! The C Series, with its state-of-the-art design and great economics, is a great fit with our existing single-aisle aircraft family and rapidly extends our product offering into a fast growing market sector. I have no doubt that our partnership with Bombardier will boost sales and the value of this programme tremendously," said Airbus Chief Executive Officer Tom Enders. "Not only will this partnership secure the C Series and its industrial operations in Canada, the U.K. and China, but we also bring new jobs to the U.S. Airbus will benefit from strengthening its product portfolio in the high-volume single-aisle market, offering superior value to our airline customers worldwide."

"We are very pleased to welcome Airbus to the C Series programme," said Alain Bellemare, President and Chief Executive Officer of Bombardier Inc. "Airbus is the perfect partner for us, Québec and Canada. Their global scale, strong customer relationships and operational expertise are key ingredients for unleashing the full value of the C Series. This partnership should more than double the value of the C Series programme and ensures our remarkable game-changing aircraft realizes its full potential."

"The arrival of Airbus as a strategic partner today will ensure the sustainability and growth of the C Series programme, as well as consolidating the entire Québec aerospace cluster. In the current context, the partnership with Airbus is, for us, the best solution to ensure the maintenance and creation of jobs in this strategic sector of the Québec economy," said Québec's Deputy Prime Minister, Minister of Economy, Science and Innovation and Minister responsible for Digital Strategy, Dominique Anglade.

Ownership Structure and Agreement Highlights

The C Series programme is operated by CSALP in respect of which Bombardier and IQ respectively hold approximately a 62% and a 38% interest. The Investment Agreement contemplates Airbus acquiring a 50.01% interest in CSALP. Airbus will enter into commercial agreements relating to (i) sales and marketing support services for the C Series, (ii) management of procurement, which will include leading negotiations to improve CSALP level supplier agreements, and (iii) customer support. At closing, there will be no cash contribution by any of the partners, nor will CSALP assume any financial debt. It also contemplates that Bombardier will continue with its current funding plan of CSALP and will fund, if required, the cash shortfalls of CSALP during the first year following the closing up to a maximum amount of US$350 million, and during the second and third years following the closing up to a maximum aggregate amount of US$350 million over both years, in consideration for non-voting participating shares of CSALP with cumulative annual dividends of 2%, with any excess shortfall during such periods to be shared proportionately amongst Class A shareholders.

Airbus will benefit from call rights in respect of all of Bombardier's interest in CSALP at fair market value, with the amount for non-voting participating shares used by Bombardier capped at the invested amount plus accrued but unpaid dividends, including a call right exercisable no earlier than 7.5 years following the closing, except in the event of certain changes in the control of Bombardier, in which case the right is accelerated. Bombardier will benefit from a corresponding put right whereby it could require that Airbus acquire its interest at fair market value after the expiry of the same period. IQ's interest is redeemable at fair market value by CSALP, under certain conditions, starting in 2023. IQ will also benefit from tag along rights in connection with a sale by Bombardier of its interest in the partnership.

The Board of Directors of CSALP will initially consist of seven directors, four of whom will be proposed by Airbus, two of whom will be proposed by Bombardier, and one of whom will be proposed by IQ. Airbus will be entitled to name the Chairman of CSALP.

Subject to obtaining the required approval from the Toronto Stock Exchange, the transaction also provides for the issuance to Airbus, upon closing, of warrants exercisable to acquire up to 100,000,000 Class B Shares (subordinate voting) of Bombardier (representing approximately 5% of the aggregate issued and outstanding Class A Shares (multiple voting) and Class B Shares of Bombardier on a fully-diluted basis, and approximately 5% of the aggregate issued and outstanding Class A Shares and Class B Shares on a non-diluted basis), at an exercise price per share equal to the US$ equivalent of C$2.29, which represents the volume-weighted average price of the Class B Shares over the five trading days ending Friday, 13 October 2017. The warrants will have a five-year term from the date of issue, will not be listed and will provide for market standard adjustment provisions, including in the event of corporate changes, stock splits, non-cash dividends, distributions of rights, options or warrants to all or substantially all shareholders or consolidations.

The issuance of the warrants and their terms were negotiated between Bombardier and Airbus at arm's length and will not materially affect control of Bombardier. Security holder approval will be required under Toronto Stock Exchange rules due to the fact that the warrants will be issued later than 45 days from the date upon which the exercise price was established. Such approval is expected to be obtained by way of written consent of shareholders holding more than 50% of the voting rights attached to all of Bombardier's issued and outstanding shares.

The transaction has been approved by the Boards of Directors of both Airbus and Bombardier, as well as the Cabinet of the Government of Québec. The transaction remains subject to regulatory approvals, as well as other conditions usual in this type of transaction. There are no guarantees that the transaction will be completed and that the conditions to which it is subject would be met. Completion of the transaction is currently expected for the second half of 2018.


http://www.marketwired.com/press-release/airbus-and-bombardier-announce-c-series-partnership-2237238.htm

[Xtrema]

The best outcome for Bombardier.

[ExtraSlow]

Does this increase or decrease the need for future government funding for bombardier?

[revelations]

So now, not only does this potentially make the situation worse for Boeing in terms of serious competition in that market, the liberals now probably wont proceed with the F-18 procurement from Boeing either.

Sounds like their arrogance got to them.

[AndyL]

Can we sell the rest of bombardier to them? Surely by now the Canadian government has controlling interest?

I know I can dream.

[ExtraSlow]

Can we sell the entire province of Quebec too? They don't even have to raise the offer.

[Xtrema]

So now, not only does this potentially make the situation worse for Boeing in terms of serious competition in that market, the liberals now probably wont proceed with the F-18 procurement from Boeing either.

Sounds like their arrogance got to them.

I think that's over. Just saw a Boeing PR ad on Global doing damage control. Either we start shopping in EU or get back on the Lougheed Martin's fail train that is the F35.

[Go4Long]

Does this increase or decrease the need for future government funding for bombardier?

Comments so far would indicate that the bailout will be repaid.


I think that's over. Just saw a Boeing PR ad on Global doing damage control.

Boeing is upset...They swung their rather substantial lobbying dick at a lightweight (on a global scale) in bombardier, and ended up getting exactly what they didn't want...someone with the means and abilities to fight back.

Boeing just wanted to prop up their 60 year old platform against new competition that makes it like obsolete...not all that much dissimilar to their current fighter jet marketing strategy.


Either we start shopping in EU or get back on the Lougheed Martin's fail train that is the F35.

If a 17-1 kill ratio against some of the best fighter pilots in the world, and being essentially the cheapest option is a fail to you, you might want to reevaluate how you determine success.

$6.3 Billion for 18 Super Hornets = $350 million per plane for an interim fighter (calculating in the support equipment and everything else required, as is the way that the liberals have always tried to rank the F-35 costs). That's more expensive than the liberals worst estimates on the F-35 purchase on a per fighter basis. Even the SAAB Gripen has been coming out similarly priced to the F-35 in recent sales, and an F-35 can carry a fully loaded Gripen under its wings. The Dassault and Eurofighter options are both significantly more expensive (before even calculating in the price penalty assessed on the Eurofighter because we're not part of the EU)

[revelations]

Interesting concept: (from an FB discussion from Quebec).


A few years ago, Bombardier wanted to pay Boeing just so they could use their name on Bombardier's planes and sell them through Boeing's network, to add credibility to their product.

No wonder the fliberals are so mad at Boeing. Not only did their voter base suffer a potential blow but they were actively trying to vet Boeing and they got the door closed on them.

[Go4Long]

I'm thinking the other way...I wonder if Boeing was planning EXACTLY what Airbus just did in order to get themselves a new Narrow Body single Aisle jet, since they really haven't done anything innovative in the category since the 1960's.

Granted the government would have slammed the door on them hard given their lobbying tactics.

[Xtrema]

Lack of detail on the deal seems to tell me Airbus picked this up for next to nothing. Just like that Buffet on Home Capital.

And Airbus will build Delta's order of C series in Alabama to bypass the tariffs.

Boeing got outplayed here.

[rage2]

Lack of detail on the deal seems to tell me Airbus picked this up for next to nothing.
That's what it sounds like. No cash on the deal at all. This is like the Flames picking up Hamilton and Hamonic for draft picks.

[dirtsniffer]

so the government of Canada gave bombardier a bunch of money so they could sell planes at a huge loss and then they just gave away the company? Seriously?

[rage2]

so the government of Canada gave bombardier a bunch of money so they could sell planes at a huge loss and then they just gave away the company? Seriously?
Just half, not the whole thing. :rofl:

Honestly though, it's not really for nothing. They all of a sudden have use of a plant to build the planes in Alabama, duty free.

[kenny]

so the government of Canada gave bombardier a bunch of money so they could sell planes at a huge loss and then they just gave away the company? Seriously?

Airbus definitely comes out ahead of Bombardier but nobody was buying the C-series, the only orders they had were preorders with no sales in almost 2 years and a big chunk of the market eliminated with the huge tariffs/duties. Now the American market is back on and global market will likely be easier to sell to with Airbus help.

[Go4Long]

That's what it sounds like. No cash on the deal at all. This is like the Flames picking up Hamilton and Hamonic for draft picks.

They bought 100'000'000 shares at about $2.29 per share, so yes, very little cash involved. The sad reality is that it was Boeing's power play here that made the deal so cheap.

[revelations]

And in Boeing's own arrogance, the reason for the tariffs was that they were trying to prevent Bombardier from becoming a major player..... which they now became (well not quite, but certainly more plausible).

[Go4Long]

And in Boeing's own arrogance, the reason for the tariffs was that they were trying to prevent Bombardier from becoming a major player..... which they now became (well not quite, but certainly more plausible).

See my post at the top of the page...I personally think Boeing wanted the C-Series, and was just trying to push the price further down so they could buy it.

[benyl]

Just half, not the whole thing. :rofl:

Honestly though, it's not really for nothing. They all of a sudden have use of a plant to build the planes in Alabama, duty free.

50.01% Full control, half the profits for no money. Nice.

CBC says it was free:
http://www.cbc.ca/news/business/bombardier-airbus-c-series-1.4357567


Bombardier Inc. announced Monday it has sold a majority stake in its CSeries passenger jet business to European aerospace giant Airbus for no cost.

This is basically a bailout by Europe. haha. Wonder what Embarer thinks of this.

[rage2]

50.01% Full control, half the profits for no money. Nice.

CBC says it was free:
http://www.cbc.ca/news/business/bombardier-airbus-c-series-1.4357567



This is basically a bailout by Europe. haha. Wonder what Embarer thinks of this.
Apparently they did buy 0.5% of bombardier shares to get 50.1% interest in the C Series LP. But yea, basically peanuts.

It'd be funny if Delta was still the only deal going forward. They've been trying to sell these C Series forever without much luck. Maybe someone in the industry here can shed some light on what makes the C Series so undesirable?

[revelations]

See my post at the top of the page...I personally think Boeing wanted the C-Series, and was just trying to push the price further down so they could buy it.

I read an article about this - Boeing apparently was fearful of a re[eat of what happened 20-30 years ago with Airbus and they, back then, did not act aggressively enough (in their opinion) to deal with the rising competitor. This time they decided to act - even though it was inappropriate.

[kenny]

Maybe someone in the industry here can shed some light on what makes the C Series so undesirable?

Just a guess, but the CSeries goes against what airlines have been doing the past few years (cramming in seats as tight as possible). I think the seating on CSeries is like premium economy seating in a regional jet config. Its 5 seats per row instead of 6.

[revelations]

Basically, the C series was designed and optimized all the way through for a very specific market. This places it (in theory) above other products that have been just modified for that market (aircraft that have been reconfigured and re-engined).

10-20% better mileage apparently as a result. Even the engines were optimized for the aircraft (which is a way that more large aircraft are going to).

Corporate promo:

http://commercialaircraft.bombardier.com/en/cseries/Technology.html

[Go4Long]

Just a guess, but the CSeries goes against what airlines have been doing the past few years (cramming in seats as tight as possible). I think the seating on CSeries is like premium economy seating in a regional jet config. Its 5 seats per row instead of 6.

They're actually not lagging all THAT much in terms of orders. Here's the outstanding orders:

◾Republic Airlines – 40 CS300
◾Macquarie Air Finance – 40 CS300
◾Ilyushin Finance Co. – 32 CS300
◾Swiss – 20 CS100, 10 CS300
◾Falko Regional Aircraft – 24 CS100 (commitment)
◾Zhejiang Loong Airlines – 20 CS100 (commitment)
◾Lease Corporation International – 3 CS100, 17 CS300
◾flymojo – 20 CS100 (commitment)


The C100 is a narrow body regional type. It's a closer competitor to the CRJ than the 737, so it's not the layout that's the issue as most of the types are a 3-2 layout, or a 2-2 layout.

I think a lot of it has to do with being the first adapter to a new platform. Concerns about stability on the part of Bombardier. Concerns about setting up a whole new maintenance program. Familiarity to the existing offerings. And a lot to do with global distribution and marketing issues. All the other offerings have a lot more money to spend on marketing efforts.

Bombardier's private jets have a huge maintenance network already set up. But this is a whole nother animal.

Another thing that drives the desirability of the CS100/300 UP is when fuel prices go up, as they're somewhat more fuel efficient than the competitors, and fuel represents a huge portion of the operating costs.

The other issue is the list price. The CS100 is ~$10 million more than the Embraer E195-E2 from a list price perspective. It beats it in fuel burn by a healthy margin. Beats it in range, but that really isn't that big of a draw in the regional jet market.

I guess the short version is that there's lots of reasons that it could be a tough sell, but I think it WILL sell under the wing of Airbus.

[benyl]

Maybe someone in the industry here can shed some light on what makes the C Series so undesirable?

Look at the title of the thread. Bombardier is basically insolvent. Would you buy a fridge today from Sears? haha

[benyl]

Another thing that drives the desirability of the CS100/300 UP is when fuel prices go up, as they're somewhat more fuel efficient than the competitors, and fuel represents a huge portion of the operating costs.


When is that going to happen? Oil companies are shifting to an abundance model for oil.

Lowering fuel burn is probably the driver rather than the price. They just pass that on to the consumer like they did in the past with the "fuel Surcharge."

[Go4Long]

I'm not a bombardier fan boy, honestly, but it's really hard to deny that the CS300 is the best aircraft in the segment...they're just having trouble breaking in to the segment.

I found this chart comparing the various aircraft in segment on a cost per flight mile and a cost per seat mile basis. this is for a SHORT (relatively at 600nm) flight. The belief is that longer the flight the more down and right the C series moves.

https://imagr.eu/up/T16X6_emb-casm-v-others-100-lf.jpg

[dirtsniffer]

So with the recent news, did bombardier give away half of the jet for nothing?

[Go4Long]

So with the recent news, did bombardier give away half of the jet for nothing?

Depends on how you look at it. They gain access to a massive distribution network and marketing powerhouse, access to additional production capacity, and the added stability of adding the Airbus name to their perceived stability (or prior to this, their perceived lack of stability)...so in terms of a short term gain, yes, could be deemed to be a bit of a loss...long term wise, probably a win.

[benyl]

So with the recent news, did the Canadian taxpayer give away half of the jet for nothing?
ftfy

[Xtrema]

ftfy

I think Quebec taxpayers lost $2B out of the deal. Fed's a loan so whatever the new entity is "should" pay it back.

But since we all subsidizes Quebec, we all lose.

[JRSC00LUDE]

Fuck Bombardier, let it die.

[Seth1968]

Fuck Bombardier, let it die.

Can't, because Quebec.

Fuck Quebec.

[Go4Long]

Fuck Bombardier, let it die.

Less likely to happen than ever before now.

[AndyL]

Well at least it means we get a discount on the Eurofighter...

Meanwhile Boeing now trying to buy Embraer so they can continue the trade dispute...

[Go4Long]

Well at least it means we get a discount on the Eurofighter...

Meanwhile Boeing now trying to buy Embraer so they can continue the trade dispute...

They're try to buy Embraer for the same reason that they were trying to bankrupt Bombardier. To secure a product line in an expanding portion of the market. At least that's my hunch.

[benyl]

I think Quebec taxpayers lost $2B out of the deal. Fed's a loan so whatever the new entity is "should" pay it back.

But since we all subsidizes Quebec, we all lose.

What good is a loan when the company will just go bankrupt in order to avoid paying it back?

[Tik-Tok]

What good is a loan when the company will just go bankrupt in order to avoid paying it back?

Why go bankrupt, when you can just borrow another loan from the government to pay off the first one, plus a few hundred mill.