Archive For September 12, 2017

Bombardier Aero-Perspectives – Presentations

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Here are copies of what the Aero-Perspectives attendees were handed today.  Our videos are coming later.

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Bombardier Aero-Perspectives – Patrick Baudis

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Patrick Baudis is Bombardier’s VP Marketing.  He provided the following presentation today (AeroPerspectives 2017 – Markey Dynamics & Portfolio Strategy).

The slides that we would highlight are these:

This is a very interesting perspective.  These airlines are A320 and A319 operators.  And the images suggest a pretty obvious trend for these carriers. (Might we consider all three as Bombardier targets?)

Followed by this chart.

Boeing and Bombardier may be in a fight, but the logic clear.  Game changing is disruptive and the new generation is exactly that.  This chart fits rather nicely with our earlier story about the 787 and the C Series being somewhat alike. At least in the view of Air Canada.

Then, boom.

Well played Mr. Baudis! And then some more supportive evidence C Series Program Director, Istifan Ghanem.

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Bombardier’s 20-Year forecast – initial impression

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As part of its first Aero-Perspective Day (“Media Day”) Bombardier published its latest 20-year forecast.  This forecast, like all of these from the OEMs, reflects how they see the world and are invariably upbeat.

The forecast is long and too much to review here in total. We want to share a few slides that caught our attention.  Take a look at their 2015 forecast on oil prices.

In today’s forecast, we see a different image.  Oil prices fell more than Bombardier expected in 2015.  No surprise there – very few expected such a drop.  Now, look at where the prices are expected circa 2030.  In 2015 it was expected to be around $115/BBL.  In the latest forecast, it is expected at $100/BBL (EIA) or closer to $80/BBL (OPEC & World Bank).

This is a significant difference.  And one that does not help Bombardier sell its fuel efficient C Series; much higher oil prices help the C Series.  Bombardier has to talk up the C Series’ other advantages more than fuel burn.  (Of course, this challenge applies to the Embraer E2 as well as MAX and neo)  As the second chart notes “the demand for more fuel-efficient and segment-optimized aircraft will increase.”  Indeed, this is likely to be the key message for the C Series – remember how Air Canada sees the C Series: “It’s kind of like the 787“.

Another chart speaks to “right-sizing”. The theme here is very similar to that put forward by Embraer.  We noted this thinking at Embraer from a visit to Brazil.

It seems the “horses for courses” thinking is coming back.  Airbus and Boeing will dispute this thinking, and make the case that the need for larger aircraft trumps the argument.  But they have to since they do not compete in the 100-130 seat segment. At 150 seats the C Series (CS300) is more of a threat because it can serve markets at lower or equivalent operating costs.

The thinking that markets are too small serve efficiently and should be abandoned is, perhaps, wrong.  Smaller aircraft can serve these markets at efficient costs.  Absent market aberrations like scope clause, of course.  Besides if people are willing to pay to fly, why not offer them service?

Bombardier is right to point to this as a big opportunity for their business.  They are not alone in seeing this market, which only underscores it as a segment that they (and Embraer) are best qualified to exploit.

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Bombardier Released it’s 2017-2036 Market Forecast

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Bombardier released its new 20 year Market Forecast from 2017-2036 today in Montreal.  The forecast calls for strong opportunity in the 60-150 seat segment, with 5,750 deliveries in the 60-100 seat segment and 6,800 deliveries in the 100-150 seat segment.

The full forecast can be downloaded here.

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Premium #344 – Does United Technologies acquisition of Rockwell Collins really make sense?

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