- Corporate Address
- Bombardier Aerospace:
400 Côte-Vertu Ouest
Canada H4S 1Y9
Bombardier is a global transportation company, headquartered in Montréal, Canada. It is present in more than 60 countries on five continents and is active in the manufacture of products, systems and the provision of services for the aviation (commercial and business jets) and rail transportation sectors. The division responsible for the company's aircraft manufacturing and related services is Bombardier Aerospace. The division is headquartered in Dorval, Quebec and ranks as the world’s third largest civil aircraft manufacturer, employing of 37,700 people. Its aircraft range includes:
- Business aircraft - Learjet, Challenger and Global aircraft families;
- Commercial aircraft - new C Series program, CRJ Series and Q-Series aircraft families;
- Amphibious aircraft - Bombardier 415 and Bombardier 415 MP aircraft;
- Jet travel solutions - Flexjet;
- Specialised aircraft solutions - Bombardier aircraft modified for special missions;
- Aircraft services and training - aircraft parts, maintenance, comprehensive training, technical support and publications, and online services.
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Garuda Indonesia is close to completing a new 10-year fleet plan outlining narrowbody and widebody growth. An overdue order for new generation widebody aircraft, along with a top-up order for 737 MAX narrowbodies, is expected by the end of 2016, potentially at the upcoming Farnborough Airshow.
The new fleet plan supports an ambitious plan to expand Garuda’s international network – both regionally and in the long haul sector. Garuda is also striving to strengthen its domestic position further with narrowbody growth.
According to CEO Arif Wibowo, the group's new overall strategy is: “To dominate the domestic market, expand regional where the opportunities are and subsidise long haul growth.” This is the fourth and final part of a comprehensive series of analysis reports published by CAPA on the Garuda Indonesia Group.
The paradox of margin expansion and unit revenue contraction will continue for most US airlines into 2Q2016 as those companies work to alleviate investor concern and set a course for a positive unit revenue trajectory. But maintaining favourable unit costs is key for the continued margin expansion forecast by the three large US airlines – American, Delta and United.
Although fuel prices have been rising, energy costs remain below historical levels, which is helping American, Delta and United to keep their unit costs in check. Excluding fuel, each airline has varying forecasts for 2016 driven by different inputs, including rising labour costs and profit-sharing.
American’s unit costs during the past year have been affected by labour contracts it reached with pilots and flight attendants in 2015. Delta and United will also likely need to weather labour cost increases as both companies are in the process of negotiating contracts with different employee groups. Many US airlines face uncertainty in their cost performance in the future as they work towards favourable contract terms that preserve their efforts to contain costs. And so the wheel turns.
During the mid-2000s the term hybrid business model entered the North American aviation business vernacular as low cost airlines became more sophisticated, adding elements to their strategy outside the boundaries of the traditional low cost blueprint pioneered by Southwest Airlines. Fast forward to 2016, and the term hybrid is becoming outdated, as low cost airlines in North America have adopted many of the same product attributes as full service airlines, and as those airlines have blended in many low cost elements.
North American airlines can now be categorised into four business models – full service airlines; low cost, high value airlines; ultra-low cost airlines; and Southwest, which still aspires to the low cost paradigm but does not offer the product attributes of more upscale low cost airlines. jetBlue has pushed the boundaries of low cost product evolution with its successful Mint experiment, featuring a fully lie-flat business seat, but no other North American low cost airline has (yet) decided to follow suit. Canada's low cost model, WestJet, has hybridised, adding a regional fleet in Westjet Encore, expanding its competitive bandwidth against its main domestic opponent and going long haul on the Atlantic.
In the less mature Latin American aviation market, the low cost airline model is still evolutionary, with the exception of Mexico where three low cost airlines and one full service airline are competing to lure passengers from bus travel. Brazil and Colombia also have low cost airline representation, but the spread of the business model is generally slower in South America, partially due to challenges from the cumbersome regulations that the start-up companies face in bringing their visions to fruition.
Air Canada plans to deploy the bulk of its 2016 capacity growth to international markets, after having cut some capacity in Western Canada during 2015. The airline is less exposed to that region than rival WestJet, which is headquartered in Western Canada and is projecting steep unit revenue declines in early 2016 due to weakness from lower demand in the oil and gas sector.
Air Canada embarked on the year 2016 by placing a letter of intent to purchase 45 Bombardier CSeries jets. In parallel, the Quebec government (which now has a stake in the CSeries) dropped a lawsuit against the airline related to aircraft maintenance performed in the province. However, Air Canada contends that it faced no political pressure to place an order for the beleaguered CSeries. Air Canada’s order gives the Canadian manufacturer a dependable national customer now that Porter’s order remains in doubt, and the aircraft's other North American customer, Republic Airways Holdings, has entered bankruptcy protection.
After trading at a discount for most of 2015 Air Canada has opted not to provide yield, unit revenue or capacity guidance on a quarterly or annual basis. The company’s rationale for the decision is a focus on its long-term strategy laid out to its investors in mid-2015, with specific ROIC, ratio and EBITAR margin targets. The company has emphatically stated that if short-term investors are not happy with the new policy, they are free to look elsewhere.
Alaska Air Group is making subtle changes to its business in 2016, which include the introduction of a premium economy product and a decision to enlarge its fleet of larger regional jets, as the airline positions itself to compete more effectively with its rivals.
There are also nuanced changes in Alaska’s competitive landscape in 2016. Although Delta Air Lines remains a fierce competitor in Alaska’s Seattle hub, most of the competitive capacity additions that Alaska faces in early 2016 stem from other airlines, including expanded competition with ULCCs. For now, Alaska does not foresee a need to segment fares to compete more effectively with ULCCs, but concludes that it would be an easy change to its business model, if necessary.
The company is sticking to its previous projections of 8% capacity growth in 2016 even as unit revenue pressure continues through the first half of the year. As a result, Alaska’s stock value compressed in early 2016, but regained some traction in late-Jan-2016. The fluctuations have not deterred Alaska’s inherent belief that it can post solid revenue growth with an annual expansion of ASMs between 4% and 8%.
Canada’s second largest airline WestJet is starting 2016 by battling undervaluation by the market while still enjoying its stature as one of the few airlines globally to hold investment grade status. The dive in WestJet’s stock price is driven by trepidation over the airline’s planned growth. During 2016, its capacity expansion could reach 11%, well above Canada’s projected GDP growth of 1.7%.
Investors also seem jittery about WestJet’s planned long haul expansion to London Gatwick with Boeing 767 widebodies given the existing capacity in the market. Rival Air Canada has responded by adding new service to Gatwick on its low cost subsidiary rouge. WestJet seems undeterred by the added competition, and stresses its long haul experiment with four widebody aircraft is a low risk proposition.
The airline is also touting flexibility to scale down its growth projections should conditions worsen. But for now WestJet believes its expansion in 2016 is warranted given its strong financial position and numerous quarters of profitability. For now, the company sees no reason to scale back its ambitions.