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 Aerospace (commercial and business jets) and Rail transportation equipment, systems and services.
Bombardier Aerospace ranks as the world’s third largest civil aircraft manufacturer. Its aircraft range includes:
- Business aircraft - Learjet, Challenger and Global aircraft families;
- Commercial aircraft - new CSeries 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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Bombardier’s 2014 is about two aircraft programmes, one all new and one that is 31-years old this year.
The company’s new CSeries narrowbody, delayed again at the beginning of 2014, will be the main focus of airline, investor and media investor attention.
However, the Q-Series turboprop has the potential to be Bombardier’s most important aircraft programme this year, with a major deal brewing in Russia.
Management at the “new” American remains bullish in the early days after the creation of the new entity following the merger of US Airways and American Airlines. Solid revenue trends for 4Q2013 and FY2013 are reported underneath a lot of merger related noise baked into its combined financial results.
Now that all the regulatory hurdles have been cleared, work is well underway at American in numerous areas including network changes entailing a rebanking of the Miami hub slated for late 2014 followed by similar moves in Dallas/Fort Worth and Chicago O’Hare. The carrier also somewhat surprisingly expects to be profitable at its Los Angeles hub in 2014 now that the combining of US Airways and American has resulted in the merged carrier narrowly becoming the largest airline in the historically fragmented market.
With the merger producing a strong cash balance in excess of USD10 billion for the new American, investors are already pressing management over potential shareholder returns and the proper cash levels the company should carry going forward. Investor curiosity over rewards and cash management could be an indication that the investment community is closely watching both the merger execution and whether promised synergies of more than USD1 billion are delivered on time. American already expects an additional USD400 million in revenue benefits from some network changes occurring in 2014 and beyond.
The not-quite-friendly competition between Boeing and Airbus, as to who can take the most orders and deliver the most aircraft, has seen mixed honours awarded for 2013.
Boeing announced its full year tally last week, delivering 648 aircraft and taking 1,355 orders net of cancellations (1,531 gross). Airbus announced its own orders and deliveries at the beginning of this week. The manufacturer delivered 626 aircraft for 2013 and announced firm orders of 1,503 aircraft (1,619 gross).
But the more important statistic is simply the enormously successful year for both major manufacturers, with ATR, Bombardier and Embraer also experiencing solid growth in 2013 orders and deliveries.
Fuel prices and strong travel demand have pushed the numbers up, but 2014 is less likely to create new records as massive backlogs outweigh production rates.
Canada’s second largest carrier WestJet is continuing to outline bold ambitions for 2014 after launching its regional subsidiary Encore in 2013, along with a new premium economy product and fare bundles designed to appeal to leisure and corporate customers alike.
So far WestJet has made nothing but positive declarations about Encore’s performance, which is the expected response from the early days of a new undertaking. But 2014 is the year when the industry is watching for meaningful trends to indicate whether Encore will deliver on WestJet’s expectations, which likely include obtaining a nice chunk of the USD2 billion value the carrier estimates that Canadian regional domestic and short-haul transborder operations fetch.
WestJet shows no signs of slowing down in 2014 as it marks the milestone of introducing its first long-haul international operation when new service to Dublin commences in Jun-2014. It has reportedly outlined encouraging booking trends on the new flights, and indicated more trans-Atlantic service may be in the offing. It is inevitable WestJet would set its sights on international service beyond transborder services, given the revenue potential and the opportunity to challenge Air Canada’s leading status in the international long-haul market.
Its sometime lookalike in the comparable Australian market, Virgin Blue/Virgin Australia, has undergone a complete transformation from LCC to full service airline so as to address this market segment. WestJet is taking a more cautious approach.
With 2014 forecast by IATA to be yet another year in which Europe is the least profitable major region for airlines, strategies for survival continue to be under focus. The larger network carriers have not only been hit by LCC competition on short haul, but also have faced growing competition from the Gulf carriers and Turkish Airlines on long haul. Smaller full service carriers have also been hit by the growth of ‘superhubs’, forcing them to cut back their long haul networks.
Although margins are improving, they remain slim and profits are unevenly divided. A few European LCCs make decent returns, while the majority of full service carriers (FSC) make little or no profit and several (particularly the smaller ones) are loss-making. More bankruptcies cannot be ruled out.
CAPA’s World Aviation Summit in Nov-2013 explored some of the strategic options for Europe’s FSCs in a panel session moderated by Professor Rigas Doganis and including senior executives from Aer Lingus, Lufthansa, Transavia, Virgin Atlantic, Vueling and Bombardier.
After reaching a point during 2013 when it could finally issue some return to shareholders for the first time in roughly a decade, Delta Air Lines is now starting to benchmark itself against other industrial transportation companies alongside its airline industry peers.
In a broad sense Delta’s new benchmarking mechanisms are the culmination of nearly a decade’s worth of work to clean up its balance sheet and develop a strict policy of ensuring every expenditure meets its return on invested capital targets.
The result of those efforts is a prediction by Delta that 2014 will mark the carrier’s second year of profitability of more than USD2 billion, and its fifth year of profits in excess of USD1 billion. Obviously Delta has some road ahead in achieving it stated goal of reaching and sustaining investment grade, but it is encouraging it has reached a point where it can outline a seemingly realistic plan of reaching those targets.
Delta's contrarian strategy, in ageing fleet, no growth and business diversification raises longer term questions, but for now the noises are mostly positive.
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