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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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143 total articles
The three large US global network airlines – American, Delta and United – continue to tout the strength of their balance sheets; the results which they’ve achieved during the past few years by the use of various tools, including free cash flow generation and debt reduction.
Delta is using its newly minted investment grade status to tap markets for creative ways to fund its hefty pension obligations during the next two to three years. American is also working to ensure pension compensation coverage by lifting its liquidity targets as rules allowing favourable minimum funding contributions expire in 2017.
Each of those airlines is bracing for fairly substantial capital expenditures during 2017, largely driven by aircraft acquisitions, but American, Delta and United have no plans to compromise their balance sheet progress irrationally in order to support fleet revamps.
For Latvia's national airline, 2016 was a pivotal year. Riga-based airBaltic completed a multi year restructuring programme, increased its passenger numbers for the first time in five years, secured a capital increase and a private investor, and became the launch customer for the Bombardier CS300. On 28-Mar-2016 it further celebrated its successes by announcing a return to positive EBIT, alongside a net profit, for last year.
It has achieved its turnaround in the face of strong competition from foreign LCCs, justifying its positioning as a "hybrid LCC". Data provided to CAPA confirm that its unit cost level is also broadly consistent with the LCC tag. It is now seeking further investment from a strategic investor – preferably another airline. It also faces a decision about the replacement of its Dash 8 turboprop fleet.
AirBaltic CEO Martin Gauss told CAPA that the airline plans for passenger growth to accelerate from 12% in the past year to 16% in 2017, taking traffic levels back above 3 million passengers. For an airline based in a country inhabited by only 2 million people, this suggests that airBaltic has been making some judicious network decisions.
Canada’s WestJet is maintaining a reasonable level of confidence that its unit revenue growth will outpace cost inflation in early 2017, as it attains positive unit revenue in 1Q2017 for the first time in eight quarters. Improving conditions in the province of Alberta and growing ancillary revenue are helping to lift WestJet’s unit revenues in early 2017.
WestJet’s return on invested capital has been falling during the last few months, dropping out of its targeted range of 13% to 16%. The airline is not offering a specific timeframe to post an improved ROIC performance, but believes a better operating environment in Alberta should create a favourable scenario to attain targeted return levels.
After WestJet’s pilots endorsed a new deal in late 2016 that allows for the expansion of the airline’s widebody operations, speculation grew about a potential aircraft order from the company in the not too distant future. But WestJet is taking a cautious approach to its widebody evaluations, as current capital expenditures could reach CAD920 million (USD703 million) in 2017 and investors are looking for definitive progress in restoring historical ROIC performance.
As Latin America begins a slow climb from economic weakness that has plagued the region during the past two years, airlines operating within, to, and from the area’s largest market Brazil are hoping conditions in the country’s domestic market stabilise during 2017, after the country’s recession has shattered demand in Latin America’s largest market.
Brazil’s two largest airlines Gol and LATAM Airlines Brazil remain cautious about the country’s domestic environment, at the end of 2016 concluding that excess capacity remained on domestic routes, despite their own capacity reductions within Brazil’s domestic network. Additionally, neither airline seemed particularly bullish that pricing in the Brazilian market had started to stabilise.
The country’s third and fourth largest airlines, Azul and Avianca Brazil, each have fairly robust aircraft order books, which triggers questions about each company’s growth strategy for the short and medium term. Azul is expanding its international footprint in South America, including possibly examining the establishment of a larger footprint in Uruguay. Avianca Brazil’s major shareholder is turning its attention to other Latin American markets, and the airline’s strategy going forward remains somewhat unclear.
Canada’s two largest airlines are embarking on 2017 with a tilt toward international expansion. Air Canada is continuing its march toward building a global competitive network that rivals those of its North American global airline peers, and WestJet is setting the stage to expand a long haul trans-Atlantic network. As has been the case during the past few years, the bulk of Air Canada’s capacity expansion will be directed into international markets in 2017; WestJet is pledging slower system capacity growth after its expansion in 2016, which coupled with unit revenue pressure has created some investor anxiety.
Both airlines are beginning 2017 with higher valuations as Canada’s economic growth should settle towards 2% in 2017. Although the country’s economic growth forecast is not stellar, it is at least stable. Canada’s province of Alberta is climbing out of a recession after the region’s economic weakness had created challenges for Canadian airlines during the last year.
Two aspiring Canadian ULCCs are attempting to launch operations in 2017, joining NewLeaf Travel – which has recently cancelled new routes after encroachment by WestJet. Canada’s first low cost airline has pledged to compete fiercely with the start-ups, and its actions are reinforcing that declaration.
WestJet forges crucial deal with pilots for long haul expansion, but unionisation threat looms large
Canada’s second largest airline WestJet has eliminated uncertainty over its widebody expansion as 2016 has come to a close, reaching a deal with its pilots that allows the company to move forward in adding Boeing 767 widebodies to its fleet. The latest agreement follows a rejection of an earlier agreement by Westjet's pilots in Nov-2016, which placed in doubt the company’s ability to fully execute its long haul ambitions.
At the same time as pilots rejected the previous offer the Air Line Pilots Association (ALPA) was amping up efforts to unionise WestJet’s pilots. Independent entities have attempted to unionise the airline’s pilots in the past, but ALPA’s scale and resources offer a different level of heft to a potentially unionised workforce at WestJet.
Although WestJet can now move forward in crystallising its long haul strategy, the threat of unionisation among the company’s pilots and flight attendants looms large, and the airline could be a prime target for larger, more powerful unions.