Airbus-Bombardier Mirabel Update!
4 Days to End of First Quarter
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Unlock to all at 14:35 (18:35 UTC) - April 2, 2018 - Quebec, Canada
09:15 (13:15 UTC) - March 28, 2018 - Quebec, Canada
by Sylvain Faust - Fliegerfaust.com
(the above image is related to what the Mirabel CSeries factory was supposed to be... more here)
Where are we vs the 8 days ago update posted on Fliegerfaust.com
SWISS 55025 CS300 finally left early yesterday morning to Switzerland. HB-JCJ is the new registration.
Friday March 30, Korean Air next CSeries MSN 55024 should be leaving Mirabel for South Korea. SWISS next CSeries, MSN 55023 is waiting for its client acceptance flight and delivery.SWISS just left yesterday with MSN 55025. Let's see how quickly they can manage to take delivery of another CS300 ready for them.
If we include Korean Air MSN 55024 to March deliveries the number of CSeries deliveries for Q1 would be 5 aircraft.
This provides an average aircraft delivery rate of 1.7 per month for the first quarter of 2018.
With the delivery problems of SWISS 55021 (carpet) and Korean Air (KAL) 55022 (smoke/vent/glass cockpit overheating, see previous update for details) behind them, we are now experiencing the unclogging of the delivery process pipe with the aircraft that were advancing in the assembly process behind those two.
What to expect?
Still, as I mentioned before, we are on the road for a 3.5 aircraft per month average for March, April, May, June or better. Let's see if we see at least 3 CSeries deliveries in April which should help confirm this new higher delivery rate.
Space the final frontier
With no investment at Mirabel CSeries facility to improve the current situation, Korean Air as asked that their assigned CS300 MSN 55037 not to be left outdoor in between the process of completion. The CSeries company is paying Nolinor Aviation at Mirabel to store the CS300 in their hangars. They are facing Pratt & Whitney Boeing 747SP hangars.
If you hear someone saying that the slow delivery of CSeries is due to the slow delivery of Pratt & Whitney PW1500G engine… please… please… let them know this is pure BS. I've told you this many times…
Here's a quote from a very well informed source: "There are absolutely no delays to the PW1500G deliveries to Bombardier. In fact engines are hanging on the aircraft for about 100 days prior to first flight. Right now there are eight aircraft with engines which have not flown plus four aircraft in flight testing. More engines are piling up in the CSeries factory with space getting sparse."
For a long time Normand Hamel articles and some of mine did explain what some of the problems are at Mirabel CSeries factory. The main one is SPACE! The so called "new factory" was never built as per the original plans, Bombardier was short of cash and almost bankrupt because of the CSeries higher than intended expenses. Using a mix of the new so called "CSeries Building" and some of the old CRJ hangers and outdoor parking space generated complex "aircraft movement" logistics, including some aircraft incidents (requiring dismounting, remounting, collisions/repairs, etc.).
For a list of Normand Hamel article simply go to his section page on Fliegerfaust and keep scrolling down… they are all there, 10 articles. https://www.fliegerfaust.com/community/normandhamel
Here Comes Airbus, the Savior.
I've learned that Airbus is in the process of hiring more workers for Mirabel CSeries.
Airbus (yes, already) is actually doing multiple interviews with current Bombardier Commercial Aircraft (BCA) employees. The CSeries Limited Partnership (company) is already temporarily (dual roles, CRJ and CSeries) employing some BCA employees under an existing service agreement adding to the existing CSeries staff.
Airbus is in the process to add more employees by creating new positions in Mirabel offering them first to BCA staff. Mainly creating new jobs in the following departments; contracts, logistics, finance, human resources…
Before May 31 2018 - Here comes the Airbus CSeries!
The completion of the transaction giving for free to Airbus the control over Bombardier and Quebec Government CSeries, we are told, will be before Ma 31, 2018.
The Bombardier CSeries will then be named "Airbus CSeries".
All Bombardier Mirabel Airport facilities will become "Airbus facilities".
Airbus is also taking over 100% of the CRJ and CSeries facility meaning the CRJ assembly will be finding a new home soon down the… runway. Will Bombardier built a new space in Mirabel airport YMX? Montreal Trudeau airport YUL? St-Hubert airport YHU…or will be sold to a new manufacturer?
I've been asked about the cost of the CSeries program to Bombardier Inc. shareholders. First, let's agree Bombardier Inc. spent US$7 billion on the program, more less (still another $700 million more paid by Bombardier Inc. over the next 3 years after the $0 deal with Airbus is completed, as per the agreement).
"Bombardier will continue to fund the plane's early production through the limited partnership as well as any cash shortfalls up to $700-million over the first three years of the deal. Airbus also obtains warrants for 100 million subordinate voting shares in C Series parent Bombardier Inc. and the right to buy Bombardier's stake in the partnership at a later date." https://www.theglobeandmail.com/report-on-business/bombardier-sells-majority-stake-in-c-series-to-airbus/article36610340/ (basically Bombardier Inc is putting another $1 billion into the program for Airbus to take control of it for $0)
Since Bombardier Inc. will be then left with 31% of ownership of the CSeries (
http://www.airbus.com/newsroom/press-releases/en/2017/10/airbus-bombardier-cseries-agreement.html) for $7 billion invested, what is the real value the program should have to recoup the investment?
$22.6 billion dollars
Using the rule of three provides a total value/cost for the CSeries program of $7B * 100 / 31 = $22.6 billion dollars…$22.6 billion of which Bombardier Inc. paid $7 billion (for 31%) and Quebec Government $1 billion (about 17%*) and Airbus $0 for a little over 50%. Think about this… Anyone in "sciences molles", as we say in French" i.e. soft science, who do not get this?
As for Quebec Government, "on paper", if you really think the CSeries program is worth $22 billion, it would mean the Quebec investment would be worth $4.3 billion. If you believe this, Bombardier Inc. shareholders will get 100% of their invested money back with no gain minus the financing cost (borrowing) for all those billions.
Now, go find someone who would pay $22 billion for the CSeries program. No Body!
What is the CSeries program worth then? Pick a number… and Bombardier Inc. shareholders have 31% of that…
Let's say I'm a very nice person and do give the CSeries program a value of $10 billion. It would mean Bombardier Inc. shareholders will get $3.1 billion so losing 50% of their investment. The Quebec Government about $1.5-$1.7 billion not losing any money and making some, again, if I'm nice and assuming a $10 billion valuation.
QUESTION: How nice will Airbus be when comes the time of the execution of buying the rest of the Bombardier Inc. and Quebec shares of the CSeries? Let me know who is lovelier then, me or Airbus.
Airbus has started to take care of business in Mirabel… More is actually going on, stay tune for more on this very soon. Like what? What about an old CS100 who was just moved back in the assembly process? Can you guess the MSN?
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Sylvain Faust, Fliegerfaust