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SUMMARY: The Caribbean is a “graveyard” for airlines over 40 in the past 30 years, with 6 government owned airlines still flying and still burning taxpayers money, destined to never make money because they never change, till now. Cayman Airways, owned by the British Overseas Territory of the Cayman Islands has been changing quietly for years, reducing its debt, modernizing its fleet with 4 x B737-8 (Max8’s), but still dependent on $20+M per year from the government. A new modern fleet will help reduce operating costs but lease rates will be 6 times more than the B737-300’s, and new routes like the latest to Roatan, Hondurans are a good sign of expansion. It is at least a change, the other 5 government owned airlines are ‘business as usual’, politicians sticking their noses into everything they don’t understand, no new initiatives, no new strategy, no new leadership, just sitting around their desks “doing the same things over and over again expecting different results” (Einstein’s definition of insanity) and it applies so well to these 5 perpetual money losers. Only radical change will bring about a brighter future for Government owned Caribbean airlines, its time for surgery to revive them or its time for euthanasia, and cut off their life support (aka taxpayers money) ? one or the other, but things cannot keep going on usual, at some point creditors will have had enough, and then its THE END.

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I have written about the Caribbean airline fiasco for years, you can read previous Blog articles on LIAT, Surinam Airways, InselAir, etc.by clicking on State Owned Airlines (under Categories) For many years I have written about the plight of Caribbean airlines, and the infamous region I call a “graveyard” for airlines. Yes, the list of … Continue reading →

SUMMARY: Is it too Early to Bury the A380 ? Then a look at the costly $25.0B, A380-800 program in more detail which has just 317 orders and 210 deliveries for the $436.9M List Price airliner now operated by 13 airlines. As we approach 10 years in service with Singapore Airlines we will see the first used A380’s to come to the used market (for airline and possibly VVIP/Head of State use). Does the big 4 engine airliner have a future ? a niche ? as it is the lowest cost per unit (CASK) airliner in the world at Emirates, where some are configured with 615 seats, and its why Malaysian Airlines is putting in 700 seats on its A380’s for Hajj and other charters, wile ANA will have 600+ seats in its 3 x A380s for its high demand leisure flights from Japan to Hawaii, replacing 2 x B767-300’s flights with one A380 flight, a sign of some new potential for the “Queen” of the skies ? Lets hope so.

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https://www.aerotime.aero/en/civil/18805-is-it-too-early-to-bury-the-a380 ————————————————————————————————————————————————————————————— With permission from Aerotime Is it too early to bury the A380? Published on: May, 19, 2017 Source and image:Oleg Volkov Airbus A380 is big, beautiful, and notoriously problematic when it comes to airport availability and – most importantly – profitability. For some, like Emirates, it is still a signature aircraft that is … Continue reading →

SUMMARY: The General Aviation turboprop deliveries are out for 1st Quarter, 2017 and deliveries are down to 99 aircraft and $273.M in revenue, from 109 deliveries in 1Q/2016 (-9.1%). The decline is due to the large drop in the Twin Turboprop Pressurized Segment, which had only 12 deliveries of King Airs (and NO Piaggio Avanti Evo) versus 27 deliveries (inc. 1 x Piaggio Avanti Evo) in 2016, a drop of 55%, what is happening to the King Air demand or the “walking dead” Piaggio Avanti EVO ? The Agricultural Turboprop Segment did the best with 46 deliveries up from 38 in 2016 (+27.7%) with revenues of $54.1M. The Single Engine Pressurized Segment was stagnant at 23 deliveries as in 2016, with Pilatus delivering 4 less (-25%) PC-12NG’s than in 2016, and total revenue of $98.7M (+26% more than the twin market). The Single Engine Utility market was down to 18 deliveries and had revenue of $42.1M on the back of 4 (-33%) fewer Caravan deliveries, but Quest’s Kodiak was up to 9 deliveries (+80%) over 2016 delivery of 4 aircraft. The big “loser” this past Quarter is Textron Aviation with 12 King Air deliveries down from 26 and then the Caravan with deliveries down to 8 from 12 last year, so what’s up at Textron ? as 16 less turboprops were delivered versus 2016. The “winners” are Quest Aircraft’s Kodiak with 9 deliveries up from 5 last year, and the Air Tractor with 36 deliveries up from 28, a good start for most, but Textron ?

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  READ MORE ON THE TURBOPROP MARKET, JUST CLICK ON GENERAL AVIATION   The First Quarter, 2017 General Aviation turboprop deliveries are out from GAMA, and total aircraft unit deliveries are down (-9.1%) to 99 from 109 in 1st Quarter, 2016 and total revenue was $273.2M ($2.75M per average aircraft delivered). ————————————————————————————————————————————————————————————— The Agricultural Aircraft … Continue reading →

SUMMARY: Textron Aviation culls its smallest Citation, the $3.35M CE-510 Mustang after 11 years and 472 deliveries. In 2016, Gulfstream dropped its smallest product, the $15.7M G150 (an improved G100, originally the IAI Astra SPx, never a big seller with just +120 deliveries in total) and the $43.1M Gulfstream G450 (ex-GIV) which will be replaced by the new $44.6M G500. The Very Light jet segment has struggled since 2009 when deliveries hit 236 to a low of just 62 in 2013 and 89 last year by 4 OEM’s. With The Mustang gone, the entry level jet for Textron is now the $4.5M CE-525 M2 to take on the $4.16M Embraer Phenom 100E and the $5.0M HondaJet HA-420, which is now in full production mode after years of certification delays, and a surprising 15 deliveries in 1st Quarter 2017, where deliveries by the top 3 OEM’s of Very Light jets was up to 28 from last years 9, a 211% increase on 1Q/2016, and a sign of new life for a struggling segment ?

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The latest news from Textron Aviation, that the company is terminating the smallest member of the Citation line, the $3.35M CE-510 Mustang (PHOTO below), which has had 472 deliveries by the end of 2016, since starting the line in 2006. The Very Light jet market ($3.0M to $5.5M aircraft) has been in decline from 2009 … Continue reading →

UPDATE: Bombardier Inc. ex-President & CEO, and as of today also ex-Executive Chairman, Pierre Beaudoin is out at least ! and so are 1st Quarter, 2017 financials. In the first 3 months of 2017, Bombardier’s revenue is down to $3.6B (-7.7% on 1Q/2016) continues its revenue slide (down $3.77B or -18.7% since 2014). Aircraft deliveries for 1Q/17 are down to just 44 aircraft (15 Commercial and 29 Business) , Q400 deliveries were 6 with just 26 orders in backlog (13 months), CRJ deliveries were 8 with just 54 orders in backlog (20 months), and only 1 CS300 delivered. Bombardier delivered 29 business jets, more skewed to light jets as the top end market is struggling these days, not good news for the new Global G7000. Meanwhile, only 2 x CS300’s orders in the past 11 months ? the program has a serious problem selling the aircraft, and two, selling above cost at some point is important, no ? Now, Boeing wants US Commerce Dept. to place a $13.4M “price dumping” tariff on the CSeries deal with Delta Air Lines and ban the aircraft from further US sales, meanwhile ATR and Embraer are complaining to the WTO of Canadian “illegal state aid” to Bombardier, criminal bribery investigation under way in Sweden and yet the top 5 executives wanted a 50% increase for an “Exceptional 2016” seriously ? One wonders what “planet” these executives live on ? and where is this “magical” 7,000 deliveries in 20 years in the 100 to 150 passenger market ? This CSeries program is still with just 320 orders (no 40 for Republic, just PR deferral till the end of time) after 9 years ? maybe they got the market positioning all wrong ? What happened to the “game changer” ? and the “dream team” ? that was suppose to sell lots of CSeries ? Those Top 5 executives need to go, 1 down 4 to go ? Lastly, Porter Airlines (Canada) placed a conditional order for 12 x CS100’s and 18 options in April, 2013, show the price offered to Porter and we will all know if they are “price dumping” in the US market or not, easy no ? Behind all the denials they know they are “price dumping” its sadly the only way they know how to sell the CSeries, yup all 340 orders below cost !

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READ more on Bombardier on this Blog, just click Bombardier under Categories on the right side of menu.   The 1st Quarter results are out for Bombardier, but the most important news is that Executive Chairman, Pierre Beaudoin is stepping down after numerous problems and Revenue declines. The man I refer to as the “Destroyer” … Continue reading →

SUMMARY: A small airline in Thunder Bay, Ontario, North Star Air Ltd. has been bought for $C 31M ($US 23M) by Winnipeg based North West Company (NWC), a large Canadian grocery and retail company with +218 stores, many in remote and isolated communities across Canada’s North. The driver of this deal was to control its distribution by having its own cargo airline, and not being dependent on what is basically a air cargo monopoly by Calm Air in the Manitoba, Nunavut and Kivalliq regions, where NWC has many stores, and where the First Nations communities are totally dependent on aircraft for all their local needs for most of the year. The acquisition raises the problem of a lack of competition in many parts of the North, where communities and suppliers have all but one choice of airline in and out of many communities, which in many cases allows for high margin “monopoly” pricing. Canada has no Essential Air Service (EAS) like the USA, which subsidizes scheduled air services to 150 markets of which 44 are in remote parts of Alaska with single engine turboprops like the CE-208B to SF340’s and CRJ-200’s at a cost of $250M a year (President Trump looking to cut that). Canadian passengers and suppliers in the North have no choice but to pay the very high fares and freight rates demanded by air operators. Time for a new fresh look at affordable air access in the North ? if we are to develop the North as Ottawa says, then we cannot burden and punish the people there with high fares and freight rates, that make life their very expensive as everything in most communities goes by air, from groceries, lumber to even fuel for electric generators.

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It has been pretty quite on the Canadian airline mergers and acquisition front since the late June, 2016 acquisition of Transwest Airlines (Prince Albert, Saskatchewan) by local rival West Wind Aviation (Saskatoon, Saskatchewan). That deal created another Provincial regional airline monopoly, just as EIC (Exchange Income Corporation) has in neighboring Manitoba, where it now owns … Continue reading →

SUMMARY: The Chinese COMAC C919 airliner made its first flight today (May 5, 2017), and hopefully it will not be long before it is delivered to its first customer, China Eastern. The Comac ARJ-21-700 regional jet (evolved from the locally built MD-82’s and MD-90-30’s programs) took an incredibly long 2,769 days (93.3 months or 7.6 years) from its first flight to delivery to its first customer. This C919, is NO ARJ-21, this is an aircraft China can be proud of and one that can and will compete with Airbus, Boeing, Irkut and Bombardier when it gets its EASA Type Certificate which will take time, as the shadow certification of the ARJ-21 with the FAA did not materialize. Yes, there will be many issues with very poor sales & marketing, product support and after sales service, something Comac has no experience with and AVIC is horrible at. The ARJ-21 has no FAA certification and most likely never will, and will be relegated to flying for Chinese airlines and the very few “dubious” nations that do not require EASA or FAA certification for local registration and operations. The C919 has 99 orders, 227 options and 566 “commitments” so well over its stated break-even of 400 units. A proud day indeed, given the fiasco with the ARJ-21, now Comac will work with EASA to shadow certify the C919, but that will take a few years for sure, so no immediate concerns for the other 4 competing OEM’s. Lastly, this C919 is not the first Chinese indigenous jet airliner, back in 1970 the Chinese then under Chairman Mao Zedung, developed the Shanghai Y-10, a close similarity to the Boeing B720/B707, but it started way before President Richard Nixon’s famous trip to China in 1972 with Air Force One, a C-137 Stratoliner, a modified long range Boeing B707, referred to as SAM26000 (special air mission), in service from 1962 to 1999.

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With the Comac C919 making its first flight, China finally has a commercial aircraft it can be proud off, and this aircraft will be able to compete with the Airbus A320neo, Bombardier’s CS300, Irkut MC-21, Boeing B737-7 and, B737-8 in time as it will require years to get its EASA certification, but Chinese airlines who … Continue reading →

UPDATE: Bombardier, the Canadian Government and 49.5% owner of the CSeries program (through CSALP) the Quebec Government are together discounting Boeing’s claim that Bombardier is “price dumping” the struggling CSeries program on the US market (Delta Air Lines order for 75 x CS100’s in April, 2016). In short, “price dumping” means much lower prices on the export market than in a home market. Most likely its true that Bombardier is offering +60% discounts on the CSeries, which means selling below cost and at a loss. Having just 320 orders after 9 years, the company is desperate for orders, and purchase price is the #1 determinant these days by all airlines. Now, Boeing is seeking an order against the sale of the CSeries aircraft in the US market. That would be a severe blow to Bombardier and the CSeries as no commercial aircraft has gone on to be a success, without major sales in the US market (e.g. Viscounts, BAC 1-11, VC-10, Concorde, Saab 2000, Fokker F50, Fokker F-70, Dornier 328/328Jet, etc.), though the US market is not as dominant as it once was, it is still crucial for every commercial aircraft OEM. This is the stuff, President Trump loves, big announcements that he is saving the US workers jobs against foreign companies that don’t play by the rules, for Bombardier the timing could not be any worst. But they wanted “state aid” and with it comes the perception of “illegal state aid”, and Boeing is not the only one to complain against Bombardier, as Airbus and ATR have made moves to go to the WTO (World trade Organization) to investigate Canadian state aid to Bombardier. Now, most Canadians know that “state aid” or “corporate welfare” is going to the company from our pockets, this has been on going for 50+ years and sadly its all a “state secret” even though its public money going to a private company. Canadians have no idea how much taxpayers money was given or returned by Bombardier, for it is THE symbol of Quebec’s industrial capabilities, and always treated “special” here in Canada by most governments in power since the 1970’s. It was then that Quebec started to contemplate breaking away from Canada and becoming its own independent state, and that is why it has been given so much money and cheap deals on privatization of Canadair $120M in 1986 and de Havilland $100M in 1992 from which the whole Challenger, CRJ, Global,DHC-8 and Q400 aircraft products all came from.

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The Canadian Government off course is standing by Bombardier on this, but as I have been on this issues since the Delta Air lines deal, I know through contacts and Boeing knows even better what the price to Delta Air Lines (DAL) was. Now comes a lot of trouble, which was expected as the CSeries … Continue reading →

SUMMARY: Boeing has complained to the Trump Administration and the International Trade Commission about Bombardier’s “price dumping” in the 2016 Delta Air Lines (DAL) deal for 75 x CS100’s. Which according to Boeing was done at a price of $19.6M per unit (72% off list price), on an aircraft Boeing says costs $33.2M to produce, a loss of $13.6M per unit (yes, a -69% profit margin) and a total loss of $1.02B on the Delta deal. That is even lower than my highly criticized numbers from “industry experts” for the past 12 months , using a price of $22M (69% off list price), CS100 production cost of $29M and a loss of $7M per unit, a $525M total loss, now the loss on the DAL deal using Boeing numbers is 94% ($495M) higher than what I calculated a year ago. So much for Bombardier’s BS “onerous contract provision” of $492 in 2016 that everyone pointed to as the “loss”. Now Bombardier’s desperation for CSeries sales is out in the open. It “dumped” prices way below cost, in fact all 320 CSeries orders (in 9 years of dismal sales/marketing) are priced below cost and surely Air Canada’s 2016 deal (45 x CS300’s) was at a huge discount of +/-72% as well, and the total loss could be as high $612M on top of the DAL deal. So Bombardier sold 120 aircraft in 2016 on 2 BIG deals, that may end up being a loss of $1.63B and the greedy top 5 Executives at Bombardier wanted a 50% pay raise last month for a “Exceptional” 2016 ? BS, they should all be fired! As well, since last May’s deal with DAL, only ONE order for the CSeries has been booked, from Air Tanzania for just 2 x C300’s, yes 12 months and 3 big Air Shows (Farnborough, Dubai, Zhuhai) and just 2 aircraft orders and no one is worried ? seriously ? Meanwhile, Airbus has 5,056 orders for its new A320neo family and Boeing has 3,703 orders for its new B737Max family. Lots of talk about new sales at Bombardier (BA, Spirit, JetBlue, etc.), but since there are just 4 OEM’s, every airline will want to talk to each OEM when doing a deal to get the lowest cost. The problem is NOT the CSeries, its fantastic, but very low demand in the 100-150 passenger market, coupled to intense price competition by the duopoly makes life impossible for the CSeries. With all 320 CSeries sold below cost, why be in the business ? as the deliveries of these 320 aircraft will take Bombardier well into 2021, with a big loss every year of production, I see NO light at the end of the tunnel, other than an acquisition by COMAC (China) that needs Bombardier’s know how in support, training and sales/marketing ? and its the only commercial aircraft OEM that can be bought.

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READ more on Bombardier, just click and see past Articles on the troubled OEM. https://www.linkedin.com/in/tomas-chlumecky-3200a021/ I have been saying for a long time that the move to make the CSeries a government owned program by spinning off the program into a new limited partnership (CSALP-CSeries Aircraft Limited Partnership), where the Province of Quebec has 49.5% … Continue reading →

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