Aviation Week & Space Technology

Podcast: Boeing Versus Bombardier

Discuss this Video 15

on Sep 18, 2017

Very well presented and it seems an obvious case of the kettle calling the pot black! Both sides receive government support in one form or the other that is difficult to quantify and compare. The crux of the matter is about the availability of capital for developing a new aircraft, the cost of capital, the technology base available for developing a new line of aircraft and the pre-existing sunk investment in such technology. Its also about how one defines 'new'. Cost of capital, in turn, depends on the macro economics of a country and who in the world can be an arbiter of the national economics of different countries? Who can be a world arbiter on national inflation rates of individual countries or the exchange rates of different countries that are significant determinants of the cost of capital? Can anyone argue that the inflation rates in the US are absolutely right and that the US dollar is priced absolutely right? If we use Purchasing Power Parity exchange rates instead of the US dollar, what would the aviation world look like and how competitive would Boeing products be?

on Sep 18, 2017

Very well presented and it seems an obvious case of the kettle calling the pot black! Both sides receive government support in one form or the other that is difficult to quantify and compare. The crux of the matter is about the availability of capital for developing a new aircraft, the cost of capital, the technology base available for developing a new line of aircraft and the pre-existing sunk investment in such technology. Its also about how one defines 'new'. Cost of capital, in turn, depends on the macro economics of a country and who in the world can be an arbiter of the national economics of different countries? Who can be a world arbiter on national inflation rates of individual countries or the exchange rates of different countries that are significant determinants of the cost of capital? Can anyone argue that the inflation rates in the US are absolutely right and that the US dollar is priced absolutely right? If we use Purchasing Power Parity exchange rates instead of the US dollar, what would the aviation world look like and how competitive would Boeing products be?

on Sep 18, 2017

It is, certainly, a complicated story, and precedes the Bombardier/Delta deal.
Originally, Canada signed on to the F-35 team with a promise of Canadian engineering business (and eventual F-35 purchase). This sole source purchase annoyed members of parliament, and coupled with the F-35s severe production problems, took it out of discussion. Then, Canada decided that a purchase of the Super Hornet would compliment their existed fleet on a "temporary" basis (What!) until other aircraft (Typhoon, Gripen, etc.) could be evaluated. A purchase of the Super Hornet from Boeing's rapidly slowing-down production would be a 'life-saver' for Boeing and, now, Canada has put that yet-to-be decided purchase, sensibly, on hold. Checkmate!

Not to mention President Trump's (We-don't-need-you) decision to cancel the NAFTA accord.

on Sep 18, 2017

Mrs. May should be more concerned about the consequences of the erratic Brexit issue

on Sep 18, 2017

It's not either/or. Most people are capable of handling more than one thought at a time.

on Sep 18, 2017

Canada gave up it's aircraft industry in 1959. Now they only assemble planes from parts made in other countries. Howard Hughes used the second produced jet liner in the world (2 weeks after the comet) as a private aircraft for years and it never crashed. Canada returned to being a colony but of what country??

on Sep 18, 2017

You should check your history. We gave up our domestically-designed fighter industry. Our aviation industry as a whole did not go away then, no matter what you might wish to believe.

You had to be online to post that comment, so why not do some research first? By the way, Hughes only had the Jetliner for about six months, not "for years". (Something else that's easily looked up online.)

on Sep 18, 2017

I'm keeping my fingers crossed for Boeing losing this battle. Boeing dumped prices themselves on many of its products (their latest attempt was now-converted United order for 737-700s), yet when another company does the same thing, they take them to the tribunal. Pot calling kettle. Go Bombardier!

on Sep 18, 2017

fmr boeing employee here. The irony of this suit by Boeing is that the concepts of "dumping" and predatory pricing rules are generally designed to prevent incumbents from driving out weaker competition, the way standard oil used to do in the refining industry. If someone discounts heavily to break into a market- that is a fairly standard and acceptable practice and could be a very sound commercial strategy. It is a bit ironic for a member of a duopoly to use anti-trust rules against a much smaller competitor.

Of course what complicates all of this is the Canadian gov bailout of Bombardier, which Embraer already successfully complained about in WTO. They are on much shakier ground on that front I think.

on Sep 20, 2017

Okay, this whole debacle seems closely reminiscent of the Avro Arrow Termination that Prime Minister Diefenbaker and PC Government at the time killed back in 1959. But the PC government were NOT solely responsible. Did the USA, stand to benefit from the 1957 cancellation . . . YES. Canada was coerced into buying a faulty missile system known as BOMARC. Canadians were told that if Canada cancelled the Arrow and equipped with BOMARCS, then the USA would be more than pleased to defend Canada with US interceptors, either as a PERMANENT BASING or a forward deployment in Canada. I am not Anti-American. But let’s face facts, the playing field has NOT been FAIR for many decades since the “Defense Production Sharing Program” of the 1950’s and the USA knows this, yet plays on it willingly. As a nation we Canadians have not fully recovered.
It is my hope that Prime Minister Trudeau will look back through history and see that the USA does NOT Play Fair, nor want a level playing field.

on Sep 20, 2017

Well said! But we as a nation we can't continuously blame the Americans for our problems. Time to grow up, and play ball.

on Oct 11, 2017

My comments below after >>>

Okay, this whole debacle seems closely reminiscent of the Avro Arrow Termination that Prime Minister Diefenbaker and PC Government at the time killed back in 1959. But the PC government were NOT solely responsible. Did the USA, stand to benefit from the 1957 cancellation . . .

>>> Cancellation was Feb 20, 1959 - not 1957. In a paper given in Chicago on the 20th anniversary of the cancellation I convincingly argued that all of NATO was harmed by the demise of Avro.

>>> Actually the Americans lent Avro all kinds of help with the Arrow including a B-47, use of Langley and other wind tunnels, access to weapon systems and so on. As for the cancellation, we silly finance-dominated Canadians did this to ourselves.

>>> The study done for the federal govt recommended BOTH missiles and aircraft, not one or the other.

YES. Canada was coerced into buying a faulty missile system known as BOMARC. Canadians were told that if Canada cancelled the Arrow and equipped with BOMARCS, then the USA would be more than pleased to defend Canada with US interceptors, either as a PERMANENT BASING or a forward deployment in Canada.

>>> Actually NORAD was set up for several reasons, of which intercepting Russian bombers was just one. You are over-focusing and being Arrow-centric, thus losing perspective.

I am not Anti-American.

>>> Glad to hear it. Nor am I. I am a Canadian economic nationalist, but am also very fond of Americans.

>>> The Americans, and Brits, were actually astonished when Canada cancelled the Avro CF-105 Arrow which was the greatest blunder in Canadian history. No one was expecting that to happen.

But let’s face facts, the playing field has NOT been FAIR for many decades since the “Defense Production Sharing Program” of the 1950’s and the USA knows this, yet plays on it willingly. As a nation we Canadians have not fully recovered.

>>> Canada shot dead its finest aerospace company because the pecuniary and short-sighted Tory Government of John Diefenbaker was dominated by finance weenies who thought the planes were too expensive. Finance finance ueber alles!!!

>>>I delivered a lecture in Ottawa on the 50th anniversary of the cancellation which showed - in astonishing detail - how Avro would have most likely sold about 5000 Arrows worldwide had we persevered, along with a slightly stretched bomber / recce derivative called the CB-107 Giraffe. Most folks forget that while the CF-105 Mk 1 was flight testing and the Mk 2 was being rolled out the engineers at Avro did not stop designing. Indeed, by February 1959 the next three Marks were almost fully designed and also the Mk 1A derivative was being design-locked preparatory to a British buy of five for the Royal Aeronautical Establishment. That is why the Brits quickly offered to buy all remaining aircraft right after the cancellation.

It is my hope that Prime Minister Trudeau will look back through history and see that the USA does NOT Play Fair, nor want a level playing field.

>>> If the Trudeau government perseveres the C-Series should sell many hundreds, maybe thousands, of aircraft all over the world.

Best regards,

Dan Perley
dperley@mtc-stm.ca

on Sep 20, 2017

Kettle calling the pot black? Why of course, the Boeing company over the years has played every dirty trick in the book, and some! Can't complain here about Bombardier. Why aren't they complaining about the massive monetary intervention of the Chinese Government into Comac?

on Sep 22, 2017

One of the speakers mentioned that Boeing can leverage their defense business to obtain more favorable funding, therefore that counts as government support, which has great advantage over Bombardier's $1B government support. However, Bombardier's commercial aircraft business is only 16% of their total business, while for Boeing, 69% is commercial aircraft. So in relative terms, Boeing's non-commercial aircraft business provides less leverage, although in real terms. Boeing's total business is almost six times that of Bombardier.
Another important factor is that Bombardier $1B subsidy requires no deliverables, other than what was already promised. It's de facto free money. For Boeing, their government revenues have deliverables that they must satisfy to get paid.

on Sep 25, 2017

@Delta-flyer "Bombardier $1B subsidy requires no deliverables..."

Quebec's $1B is an equity infusion for a 49.5% ownership of the CSeries program.

Quebec only paid about 35 cents on the dollar, which was about the market value at the time. (That was the value used during Airbus discussions a few weeks earlier).

Currently (with both CS100/300 certified + exceeding specs!) Quebec can probably sell this equity to a lower costs juridiction (China?), with a profit.

So I don't agree to call this $1B a "subsidy". Actually, it was a quite smart investment at a critical time, that's now turning out to be profitable in many aspects...

Still, if the ITC shuts the door to the US market, Quebec / BBD might decide to sell this program to a country less subject to US bullying.... A new CS500 FAL in China would be a win win result for everyone (And no, we'll never let Boeing buy this program; we remember what they did to DeHavilland Canada ...).

What about having every future Chinese commercial airliners programs equipped with composite wings, (built in the ultra efficient Belfast wing plant)?

(FWIW, BBD Transportation has already a very strong presence/relationship in China)

Such a purchase by China would save them many years / $ in their attempt to catch western commercial aircraft manufacturing know how.

Good luck bullying the Chinese then...
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PS: as more than 50% of the CSeries is US made, a new buyer might be required to alter somewhat the supplier/vendor list...

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