Bombardier & Quebec Government Moving More CSeries Work out of Mirabel, Quebec, Canada to the US
Bombardier and Quebec Government To Keep Paying Airbus to Take 50.01% of the CSeries and Its Control
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7:30 (11:30 UTC) - April 17, 2018 - Quebec, Canada
by Sylvain Faust, Fliegerfaust.com
CSeries interior completion at Bombardier Wichita
When Mirabel CSeries production is suffering from quality issues mainly with the aircraft interior from one of its supplier, i.e. Zodiac Aerospace, I learned that management is thinking to move "at least some" CSeries interior completion to Bombardier facility in Wichita.
As you know this means flying those empty/green CSeries aircraft from Mirabel, Quebec to Wichita, Kansas and back to Mirabel for flight test completion and delivery. (my first reaction is, what will it change in quality when the interior will still come from Zodiac Aerospace, if that's the reason?)
As for flying "green" CSeries to Wichita for interior completion, additional "technical" steps would be required (ballast/weight balancing the center of gravity since nothing is installed inside the aircraft, seats, toilets, galley…) as well as legal (special flying permit, different from the one for pre-delivery test flights).
More Jobs in the United States
Planning once again to create more jobs in the USA as President Donald Trump is asking, but with Quebec Taxpayers paying for part of it, once more Bombardier and the Quebec Government CSeries shareholders are at work!
Justin Trudeau, Donald Trump and Quebec Prime Minister Philippe Couillard
This would also mean that work (job creation) that was supposed to be done in Quebec, Canada (CSeries assembly facility located at Mirabel Airport) will not be created, once again, in Canada, but in the US. This is added to the already announced new CSeries assembly facility in the US (Mobile, Alabama) paid by the CSeries "business" (Bombardier and Quebec Government under the "C Series Aircraft Limited Partnership") instead of expanding the current one at Mirabel airport, Quebec, Canada. (more on this CSeries "business" below).
What a Deal!
Brand new tools are ordered by Bombardier and on standby to be delivered to Airbus Mobile facility in Alabama as soon as the deal with Airbus is closed should you ask. This is all paid by Bombardier Inc. (cash) and the Government of Quebec (by ownership dilution) for the first 3 years after the deal is signed where Airbus gets control (50.01%) of the CSeries business for $0, no cash down, no commitment, on a "best effort" basis from what we're told. This deal will cost Bombardier and Quebec an additional $1 billion (US$700 millions), and an additional bonus to Airbus currently valued at $141 million. Read below.
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…source: https://www.bombardier.com/en/media/newsList/details.binc-20171016-airbus-and-bombardier-announce-c-series-partnershi.bombardiercom.html
And There's More!
From that same source/page, additionally Airbus is also receiving warrants to allow for the purchase of 100 million Bombardier Inc. B shares at a price of $2.29 valid for up to 5 years after the closing of the deal. The "market" value of those 100 million warrants with a strike price of $2.29, as of yesterday April 16, 2018, with Bombardier B shares price at $3.70 is: $3.70 – $2.29 = $1.41 profit per share. This $1.41 * 100 million = $141 million "as of today" given to Airbus on top of all what you just read above on this page.
Basically, 50% of the CSeries, $1 billion over the next 3 years of CSeries expenses paid by Bombardier (cash) and Quebec Government (dilution), those 100 millions warrants/shares having a profit of $141 million as of today already (the deal is not closed still). Think… How badly much has been the CSeries to accept such a deal?
The CSeries is way too expensive to be able to sell it without dropping the price to a point where Bombardier is losing money, this is where Airbus will make a difference by cutting the cost of the parts to make a CSeries. Already, just for the APU from Honeywell, Airbus got a 30% lower price than paid by Bombardier.
How Bad Could It Be
By becoming a supplier also, Bombardier (wings, cockpit, engineering, BFTC services) there will be a way for the company to make some money with the CSeries, this is too bad for Quebec Government having no shares in Bombardier Inc. Quebec did not invest in Bombardier Inc part of the $1.3 billion investment in the CSeries like just did Airbus (100 million warrant/shares in Bombardier Inc.). Who is bright, Airbus or Prime Minister Couillard of Quebec and his fantastic team?
For the many of you who know about Mirabel Airport area, you know all about its huge vacant space all around for easy and cheap expansion. Mirabel-Montreal Airport (YMX/CYMX) is the official "Industrial" airport facility under the Management of "Aéroports de Montréal" (ADM) who also manage the Pierre-Elliot-Trudeau/Dorval Airport (YUL/CYUL).
ADM: "Aéroports de Montréal is a private, not-for-profit and financially independent corporation responsible for the management, operation and development of Montréal–Trudeau and Montréal–Mirabel international airports" source https://www.admtl.com/en/adm/company
So, the question is "Why?" Why is Philippe Couillard Premier Minister of Québec favorable for all this? Why his Minister of Economy, Science and Innovation Dominique Anglade responsible for the management of Quebec Government ownership of the people of Quebec CSeries shares, why is she favorable for this? New CSeries aerospace jobs created in the United States instead of Quebec?
Is it just because Bombardier Inc., under the control of the Beaudoin/Bombardier family with over 50% of the vote of the corporation (but with less than 14% of its ownership), is favorable for it? Is that it?
What else will the citizen of Quebec, Canada lose with the CSeries/Bombardier/Quebec Government transaction with Airbus else than jobs? What about that $1.3 billion of taxpayer's money invested in the CSeries instead of Bombardier Inc.? Keep reading…
Quebec Prime Minister Couillard said many times that the CSeries is the future of aerospace for Quebec and did not want to invest in Bombardier Inc. but only in the CSeries. The reason is not what you're told, it's because he was not allowed by the Beaudoin/Bombardier family!
Also, Couillard does not sound like well informed aerospace person since he was never made aware of another fabulous aircraft program at Bombardier Inc. called the "Global 7000/8000" which is going to be the cash cow for Bombardier in terms of profit… and a very high-tech aircraft now the larger luxury business jet with the longest range on the planet! Bombardier just created another 1000 jobs in Montreal for it. How many new CSeries jobs were created in Canada since the investment of $1 billion in the CSeries by Quebec Government?
Couillard Government did as they were told, not to ask Bombardier Inc. shares but to only invest in the CSeries. Consequences? The stock price of Bombardier Inc. at the time of the Quebec investment in the CSeries was $2.21. Today, April 16, 2018, the stock price is $3.70, an increase of 67.42%.
That $1.3 billion invested by Quebec would now be worth $2.18 billion, an increase of $876,460. Instead, you want to know how much is worth the Quebec taxpayers $1.3 billion that was put in the CSeries? I did the calculation for you down in this article…
Once again, "Se faire passer un sapin?" like we say in French in the Province of Québec. And the "Je Me Souviens" (Quebec official motto meaning "I remember") Oh Really? Please do when you go vote next time. (https://en.wikipedia.org/wiki/Je_me_souviens)
The New Kingpin
Will Airbus, the soon new "Kingpin" of the CSeries program, give the population of Quebec and the rest of Canada some explanations behind those "PRO CANADA" decisions? How many more are to come?
As for my friends in Wichita, I'm sure you will be doing a great job! Maybe you will also be completing the Mobile, Alabama CSeries assembled aircraft? Why not! Is there any minimum number of employees to have for Bombardier in Wichita in relation to some local grants? There's not much going on with the Learjet assembly in Wichita these days.
CSeries Limited Partnership…Someone lied or… I MUST be reading this wrong?
When Quebec Government invested $1.3 billion in the CSeries Bombardier Inc. did agree to some conditions.
Here are a few: (CSALP is "C Series Aircraft Limited Partnership" owned by Bombardier Inc. and Quebec Government)
"As part of the agreement, the strategic, financial and operational headquarters for the CSALP, along with the assembly, manufacturing, engineering services and research and development activities of the CSALP, will remain in the Province of Québec for at least 20 years"Source Bombardier: https://www.bombardier.com/en/media/newsList/details.binc-20160623-bombardier-announces-the-signing-of-a-definitive-a.bombardiercom.html?
Now… tell me who is not holding on their part of the deal?
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Sylvain Faust. Fliegerfaust.com