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- Bombardier Aerospace:
400 Côte-Vertu Ouest
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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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Canadian airline WestJet during 2H2015 marked the second anniversary of its regional subsidiary Encore, an airline designed to allow WestJet to tap new sources of revenue within the Canadian domestic market and flesh out its schedule to make it more desirable for the business passenger segment.
WestJet has stuck to its plans for Encore expansion, launching in Western Canada and then setting its sights on the Eastern region of the country culminating with a push from Halifax in 2015. Encore’s network composition is a mix of stand-alone stations and markets where it operates alongside mainline narrowbodies to improve schedule integrity.
Encore is fuelling at least half of WestJet’s capacity growth in 2015, and WestJet management has found itself defending Encore’s growth amid a shaky Canadian economy, stressing that the growth was justified given the regional operator’s stimulative effects. That growth continues in 2016 when Encore enters its first US transborder market, Boston.
Canadian airlines WestJet and Air Canada are busy preparing for upcoming aircraft deliveries as part of significant planned fleet changes at each company as they work to create the proper fleet profile for their respective business models.
WestJet recently marked a milestone with the delivery of its first Boeing 767 widebody, marking a time of rapid change at the airline during the last three years that also included the introduction of 70-seat Bombardier Q400 turboprops.
Air Canada in the short term is focussed on expanding its Boeing 787 widebody fleet, but is also preparing to add 737 Max narrowbodies beginning in 2017, the same year WestJet is adding the new next generation narrowbody to its fleet.
Each airline has also been working to line up financing for its upcoming deliveries, with WestJet tapping Export Development Canada and Air Canada capitalising on the EETC market that opened up to Canadian airlines in late 2012.
Canada’s two major airlines have adopted divergent - but ultimately converging - paths during the last few years to lay the foundation for expanding margins and ensure sustained positive financial results. WestJet has opted to create a product mix to attract a higher percentage of business travellers while attempting to avoid alienating its core cost conscious customer base. Air Canada has decided to increase its reach among leisure passengers.
Overall, each airline’s respective strategy appears to be paying off in the form of solid returns, margin expansion and increased profitability. But both airlines in the short term are facing unit revenue and yield pressure for different reasons.
Similar to most US airlines, WestJet and Air Canada continue to deliver strong top-line results even if unit revenues remain under pressure. But if oil prices, which are slowly ticking upwards, suddenly start to rapidly rise, Canada’s airlines may need to revisit their capacity projections as overall supply in some regions is exceeding GDP growth.
The three large US global airlines are continuing their quest to shed inefficient 50-seat jets in favour of larger gauge aircraft, a trend sweeping the US industry with nearly every major airline undertaking some form of seat densification on existing aircraft or taking delivery of jets configured with a higher number of seats.
United and Delta are opting to replace their 50-seat jets with a mix of new and used aircraft, and American appears to be adding new jets to replace its 50-seat aircraft. Based on current fleet projections American is moving more slowly in culling its 50-seat regional jets while Delta has been the most vocal and aggressive in shedding the smaller aircraft.
Even with the big push to shrink the 50-seat jet fleet, some US majors are extending contracts with their regional partners covering a small number of those aircraft. Perhaps in a few markets lower fuel prices improve the economics of the jets; but overall airlines are marching ahead to rid themselves of aircraft that were a mainstay in regional operations a decade ago.
Canadian hybrid carrier WestJet has settled into another ambitious year during 2015 as it adds more service to Europe and introduces Boeing 767 widebodies into its fleet. That expansion accompanies further growth of its regional subsidiary Encore, which is growing in Canada’s eastern provinces.
But depreciation of the CAD against the USD and some economic pressure in Canada’s western provinces where WestJet has a large presence are posing challenges for the airline in 2015. At the same time WestJet is facing oversupply in the Caribbean and Mexico, which is creating pricing pressure in those regions.
With its underlying financial strength, WestJet should be able to withstand most of the challenges its faces in 2015 as the company continues to evolve from a traditional low-cost airline to a global competitor. This CAPA analysis of WestJet’s strengths, weaknesses, opportunities and threats continues a series of SWOT reports on global airlines.
Canadian airline Porter received a boost in early 2015 with the sale of its terminal at its largest base and headquarters Billy Bishop Toronto City Airport. The sale no doubt helped to shore up Porter's finances at it awaits a decision by the city on whether it can move forward with operating Bombardier CSeries narrowbody jets from the airport.
The city is not likely to render a decision until late in 2015 as studies of the proposal, that includes a runway extension, continue. But Porter’s rival Air Canada has recently raised staunch opposition to the operation of jets at the airport even as the airline in the past reportedly cited interest in using jets at the airport closest to Toronto’s city centre.
As Air Canada formally (and unsurprisingly) launches opposition to Porter’s plans, Porter is operating in a status quo scenario while likely facing some of the same challenges other Canadian airlines face in 2015 – primarily pressure from the decline of the CAD against the USD.