Canadian aerospace company, Bombardier, has developed a new larger series of single aisle aircraft (its Cseries) designed to compete with the Boeing 737 and Airbus A320, but the aircraft is 2 years behind schedule and its parent company is having significant financial difficulties.
In a controversial move, the Quebec government has invested (and risked) $1 billion USD of taxpayer money on the aircraft. Provincial leaders justified the gamble by saying Bombardier is too important to fail. The government calls it an investment in keeping good jobs in the province and to keep its tax revenues alive. Quebec’s aerospace industry supports 40,000 jobs.
Bombardier, grateful for this cash infusion, said the taxpayer money was necessary to reassure markets the company has a future and provides enough cash-flow to remain viable, at least for now.
The province’s cash infusion is not a loan, but “an investment”. The Quebec government will own 49.5% of the company responsible for the CSeries aircraft. Government opposition critics say that as the investment is only in the risky and struggling branch of Bombardier, the money is at risk and that the government should have insisted in a share of the profitable sectors of the company.
More on this story from thestar.com at this link.
From a free market and consumer choice perspective, I like the idea of another quality plane out there. I don’t like two companies in the world having a monopoly on flight, good as their products might be.
Time will tell. But continuous delays will definitely kill the Cseries.
Another nail in the coffin for Bombardier ?
14 September 2015 Press Release
In a much-anticipated ceremony today in Mobile, Alabama, Airbus inaugurated operations at its first ever U.S. Manufacturing Facility. The plant – which assembles the industry-leading family of A319s, A320s and A321s – is officially open for business, with a skilled team of more than 250 Airbus manufacturing employees now at work on the first U.S.-made Airbus aircraft.
I’m rooting for them. Even Airbus admits it’s a good plane.
Yes, but on the other hand, Airbus last month declined to make the same sort of investment in it that Quebec just made…and it’s not about good plane or not.
It’s about whether there is really a market for a plane that competes directly with the two most successful sellers in the market, and which are being made by companies that can afford to meet price competition, because their R&D and initial tooling expenses are long since paid off.
And for an airline, it’s another issue, too. An airline that wanted to by a fleet of these might do well, because they could build a service and maintenance operation around it. But an airline that wanted to add only a few of this size to an existing fleet…well, there are far more parts and service companies out there for the big-sellers.
Hope is one thing; on this one, I’ll cling to doubt.
I think the airlines themselves will want increased competition in plane manufacturing and will be willing to order if Bombardier can get the backing and is looking to get into commercial for the long term, China’s making a go of plane manufacturing too and they have the backing.
A followup to this story, and some good news for Bombardier. It just received an order for 13 of the CS300 from a Latvian airline, to be delivered in the latter half of 2016.
Testing on the CS100 is nearly complete and seems to be going well. Once this testing is complete, the “risky” part of development is done. That, of course, does not mean that a plane becomes a commercial success.
More on this story at this link.
Bombardier has orders for 243 of its 603 C Series aircraft, which are facing significant delays after a 2013 maiden flight and cost overruns, with about Can$2 billion more than the Can$3.4 billion initially planned.
The French-speaking province of Quebec announced a US$1 billion investment in Bombardier to help the fledgling jetliner program get off the ground after the Canadian company posted a US$4.9 billion third quarter loss.
A commercial success will take years of Government funding.