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> Mitsubishi Heavy Industries Ltd.’s new airliner is testing the skies just as rivals are moving to sell off their manufacturing operations for jets with up to

by nolok 8y ago

> Mitsubishi Heavy Industries Ltd.’s new airliner is testing the skies just as rivals are moving to sell off their manufacturing operations for jets with up to 160 seats. Boeing Co. is set to buy 80 percent of the Embraer SA’s commercial operations in a joint venture, while Bombardier Inc. last year sold control of its C Series airliner project to Airbus SE and is exploring “strategic options” for its regional-jet operations. This is completly misleading on the Bombardier's part, they're not looking to sell off anything. Boeing got bitter after losing to them a deal with Delta Airlines so they asked and got a ridiculous tariff in place on the canadian plane for sales in the USA. Instead of accepting the loss of that market / selling off, Bombardier doubled down on that path and they made the "Avions C-Series" joint venture with Airbus (ownership 50.01 % Airbus, 30.99 % Bombardier Inc., 19 % Québec gov), where Airbus got half+ ownership for a symbolic euro and Bombardier got access to the Alabama plant so their sales to US customers would not be affected by tariffs (also, access to Airbus network for maintenance, training, ...). The plane is now sold as the Airbus A220, which coupled with the A320 Neo is a no small part of the threat that made Boeing take so many shortcuts on the 737 Max so it could have the training advantage. A newcomer is always great for competition, and a revival of Japan's ability in that area is great, but claiming they come in a field that their competitors is leaving is simply untrue, the A220 is more alive and dangerous as competition than Bombardier could have ever dreamt to be "alone"; and Airbus is now free to concentrate on other areas and let Bombardier does what it does best, instead of having to field their own plane at that range. The only losing party was Boeing, which from where I stand is Karma (not saying Bombardier was not getting subsidies, but saying any of Boeing/Airbus/Embraer/Bombardier/... complaining about subsidies to the others is ridiculous, especially the two big ones who have their hands in military contracts)

toyg 8y ago
> for a symbolic euro The world of business sometimes reads like a novel.
- AnthonBerg 8y ago
  In my experience, the business side of startups is just making stuff up. That is to say it feels that way. The world of business kind of is a giant ambling collaborative novel.
- ckastner 8y ago
  That symbolic Euro is important because it makes the deal a purchase instead of a gift. Legally, the consequences are significant. There are numerous situations when paying nothing for something is entirely reasonable, for example when you are getting nothing (or even worse) in return (eg: bailout), or when you are giving something else in return (eg: future cooperation, access to new technology, access to a new market, etc.)
666lumberjack 8y ago
Boeing really shot themselves in the foot there, although as I understand it they asked for an 80% tariff and the US government instead imposed a 300% one. A reminder of the dangers of protectionism, perhaps, although admittedly the original 80% tariff might still have been enough to force Bombardier into the Airbus partnership.
- nolok 8y ago
  Especially since Boeing had already spent good money to get the Embraer plane in their lineup, and their actions "gave" its biggest competitor to Airbus for free. And in the other side of it, the deal will also majorly benefit Bombardier overall, obviously compared to no deal, but even long term compared with going on their own; Airbus is now pushing the plane hard like a normal part of their lineup, it doesn't compete with another Airbus plane since they didn't have one there yet (they were like Boeing except they snapped the Embraer one first). And the plane having access to the entire Airbus network is a big big plus (which is pretty much why it was instantly renamed A220, making it clear to customer it was a long term fully supported Airbus plane not a temporary off shot). Even the Québec gov is happy since the deal protects all the jobs and manufacturing locations, only difference is final assembly done in Alabama, and only for US customers. Also, Airbus was supposed to make their own and then compete directly with Bombardier too. Making two ennemies ally with each other is a really dumb move, and good luck taking it back once they both start reaping the benefits of that alliance.
- basetop 8y ago
  Extreme protectionism can be dangerous for sure. But the Bombardier example and protectionism in aerospace isn't a negative example of protectionism. It actually shows that protectionism works. The US benefited by having bombardier planes being built in the US. More jobs, more work for american workers and more taxes for the government. It's a win-win situation. You could argue that Boeing lost out, but they really didn't either. Bombardier, Airbus, Boeing and the entire aerospace industry in every country exists primarily due to protectionism. Without canadian government support and market protection, bombardier could not exist. Without EU protection, Airbus cannot exist. Boeing or other aerospace companies would have underbid bombardier and airbus out of existence because they produced their own planes. It's why China and Japan also use significant protectionism to protect their aerospace industry. They, like the US and EU, all "encourage" their own national carriers to buy from national manufacturers. As others have noted, aerospace industry is inherently dual function just like satellite/GPS industry. They, by their innate nature, serve both the civilian and military industries. I know we are told "protectionism" is bad from a young age, but the modern industrial world ( starting with the US ) was created by protection. Almost every industry in every industrial nation owes it's rise to protectionism. If you have the time, you should read up on the history of US protectionism in the 1800s, which set the example that every major economy from china to germany to japan to south korea followed to become major economic players. Without protectionism, we don't have Airbus, Bombardier, etc. Without protectionism, we also don't have Samsung, Toyota, Sony, Volkswagen, etc. Without protectionism, every industry in the US would have been bought up or controlled by the wealthier british industrialists. The first act of Congress was an act of protectionism - a tariff. https://en.wikipedia.org/wiki/Tariff_of_1789 https://en.wikipedia.org/wiki/Tariff_of_1789
gsnedders 8y ago
> Airbus got half+ ownership for a symbolic euro And Airbus didn't even take on the huge debts the programme has accrued. They get none of the pain of the development and half the profit from sales. (Also I believe Airbus's network for sales was also considered significant by Bombardier; they may lose a fair bit of the profit from sales, but I think Bombardier were hoping Airbus's networks would increase sales sufficiently that it'd be a net gain for them.)
- nolok 8y ago
  > Also I believe Airbus's network for sales was also considered significant by Bombardier Absolutely, there is a reason why it got renamed to A220 instantly. In passenger planes Airbus/Boeing is like the "nobody got fired for buying IBM/Microsoft" of the IT world. Also, their potential customers are much more likely to already have Airbus planes, so with that change you don't need another suppliers for parts and maintenance etc ... It's the same vendor.
  - zymhan 8y ago
    Boeing does not make a plane small enough to compete with the A220, really. The A220 competes with the ERJ-175/190 series. An A319 carries slightly more passengers than the largest A220, and the smallest 737NG carries 30-50 more passengers. Boeing has never competed in the small regional jet market, and their recent attempt at a partnership with Embraer is their response to the A220.
    - mrguyorama 8y ago
      Boeing produced the 717 until 2006, which would have directly competed with small regional jets
      - zymhan 8y ago
        Yes, this is true, but the 717 was acquired from McDonnell Douglas as the MD-95, so it wasn't an organic design. Their ending of production is another indication that they aren't interested in the market.
decasteve 8y ago
It’s a Bloomberg article which is fast becoming synonymous with inaccuracy or just being outright wrong. I usually skip them altogether but maybe it’s time we start flagging these articles. I’m of the opinion that most Bloomberg articles are a waste of time for HackerNews.
- rootusrootus 8y ago
  Bloomberg specifically tries to push stories that move the markets. That alone makes me take their articles with a grain of salt.
- wastedhours 8y ago
  Interesting view - other than the issues the community had around that server hacking piece, what article has been outright wrong vs just having a heavy editorial slant (as most publications now do)?
  - scarejunba 8y ago
    They’ve always been low quality. I remember when they said something weird about the Indian Railway budget and I looked it up and they’d completely misinterpreted the stats (which were well apparent to a thinly sliced goat leg, let alone a trained journalist).
  - verall 8y ago
    This is just more anecdata, but I notice a small minority of Bloomberg articles, including the server hacking piece, where it seems that some competent journalists tried pretty hard to break a real story. (edit for clarity- Clearly they got a lot in the server hacking piece wrong, but in the situation it seems like they were intentionally misled, and were really not expecting so many of their "sources" to be basically repeaters of the same falsehoods) BUT, most of their articles seem like extremely low quality drivel. They fail to get basic facts or ideas about the situation correct, and/or they sound like someone shit out a 1-sentence long opinion and then expanded it into a page or 2. I haven't been flagging these and don't think most do, but maybe we should start.
  - 8y ago
Xixi 8y ago
Note that Airbus has the option to buy the whole program from Bombardier Inc. and the Québec government. I'm trying to find out the exact terms. There is some speculation that Airbus doesn't want to push the CSeries/A220 too much until then, as it will only make the remaining 49.99% of the program more expensive. EDIT: after some research digging through the related thread on airliners.net [1], this is what I found: "After 7.5 years (which is pretty fast), Airbus has a call option for all of BBD's shares in the joint venture at the then current market value (and BBD has a put option similarly, which it would exercise if things didn't work out). So basically, Airbus can buy the whole shebang in 7.5 years." Since the announce was made in October 2016, in 6 years Airbus can trigger its option to acquire Bombardier's shares. Not completely sure about Québec's shares though. [1] https://www.airliners.net/forum/viewtopic.php?f=3&t=1376389&start=100 https://www.airliners.net/forum/viewtopic.php?f=3&t=1376389&...
Gpetrium 8y ago
I have a different take on winners and losers (from left to right): Airbus > Mitsubishi > Boeing > Bombardier Airbus - Gained a brand new aircraft for close to nothing, allowing it to sell at a discount that Boeing may not be able to do. Can wait to make key strategic sales for after they purchase Bombardier's 30.99% stake. Mitsubishi - Learned what to do and not to do from the Bombardier saga. Also learned that there is a potential market for a third competitor. Boeing - Staved off a potential third competitor which could dilute the profitability of the segment. Didn't want to make the same mistake when it didn't consider the Airbus could become the giant it is today decades ago. (As of today, lost 15% stock from its previous peak, although it may be due to a variety of other problems, including the China/US trade spat) Bombardier - Was forced to sell off its new jet for close to nothing.
zymhan 8y ago
This is not entirely true. Bombardier was having financial issues with the C Series and is in fact considering selling off the CRJ business. They're already spinning off the Dash 8 Q400. https://en.wikipedia.org/wiki/Bombardier_Dash_8#Sale_to_Longview/Viking_Air https://en.wikipedia.org/wiki/Bombardier_Dash_8#Sale_to_Long... This section on Wikipedia gives a succinct overview of the multiple financial issues Bombardier has faced with the C Series. https://en.wikipedia.org/wiki/Airbus_A220#Program_support https://en.wikipedia.org/wiki/Airbus_A220#Program_support
- gimmeThaBeet 8y ago
  Yeah, I don't know enough about planes to say whether or not the C Series / A220 is good or competitive. That part seems almost secondary to the softer issues. Bombardier put a lot of time and money into the development, and then way more money and way more time. And Quebec is clearly, lets say, highly interested in making sure that planes are built, and that some of them are made in Quebec.

by nolok 8y ago

toyg 8y ago

> for a symbolic euro The world of business sometimes reads like a novel.

AnthonBerg 8y ago
In my experience, the business side of startups is just making stuff up. That is to say it feels that way. The world of business kind of is a giant ambling collaborative novel.
ckastner 8y ago
That symbolic Euro is important because it makes the deal a purchase instead of a gift. Legally, the consequences are significant. There are numerous situations when paying nothing for something is entirely reasonable, for example when you are getting nothing (or even worse) in return (eg: bailout), or when you are giving something else in return (eg: future cooperation, access to new technology, access to a new market, etc.)

666lumberjack 8y ago

Boeing really shot themselves in the foot there, although as I understand it they asked for an 80% tariff and the US government instead imposed a 300% one. A reminder of the dangers of protectionism, perhaps, although admittedly the original 80% tariff might still have been enough to force Bombardier into the Airbus partnership.

nolok 8y ago
Especially since Boeing had already spent good money to get the Embraer plane in their lineup, and their actions "gave" its biggest competitor to Airbus for free. And in the other side of it, the deal will also majorly benefit Bombardier overall, obviously compared to no deal, but even long term compared with going on their own; Airbus is now pushing the plane hard like a normal part of their lineup, it doesn't compete with another Airbus plane since they didn't have one there yet (they were like Boeing except they snapped the Embraer one first). And the plane having access to the entire Airbus network is a big big plus (which is pretty much why it was instantly renamed A220, making it clear to customer it was a long term fully supported Airbus plane not a temporary off shot). Even the Québec gov is happy since the deal protects all the jobs and manufacturing locations, only difference is final assembly done in Alabama, and only for US customers. Also, Airbus was supposed to make their own and then compete directly with Bombardier too. Making two ennemies ally with each other is a really dumb move, and good luck taking it back once they both start reaping the benefits of that alliance.
basetop 8y ago
Extreme protectionism can be dangerous for sure. But the Bombardier example and protectionism in aerospace isn't a negative example of protectionism. It actually shows that protectionism works. The US benefited by having bombardier planes being built in the US. More jobs, more work for american workers and more taxes for the government. It's a win-win situation. You could argue that Boeing lost out, but they really didn't either. Bombardier, Airbus, Boeing and the entire aerospace industry in every country exists primarily due to protectionism. Without canadian government support and market protection, bombardier could not exist. Without EU protection, Airbus cannot exist. Boeing or other aerospace companies would have underbid bombardier and airbus out of existence because they produced their own planes. It's why China and Japan also use significant protectionism to protect their aerospace industry. They, like the US and EU, all "encourage" their own national carriers to buy from national manufacturers. As others have noted, aerospace industry is inherently dual function just like satellite/GPS industry. They, by their innate nature, serve both the civilian and military industries. I know we are told "protectionism" is bad from a young age, but the modern industrial world ( starting with the US ) was created by protection. Almost every industry in every industrial nation owes it's rise to protectionism. If you have the time, you should read up on the history of US protectionism in the 1800s, which set the example that every major economy from china to germany to japan to south korea followed to become major economic players. Without protectionism, we don't have Airbus, Bombardier, etc. Without protectionism, we also don't have Samsung, Toyota, Sony, Volkswagen, etc. Without protectionism, every industry in the US would have been bought up or controlled by the wealthier british industrialists. The first act of Congress was an act of protectionism - a tariff. https://en.wikipedia.org/wiki/Tariff_of_1789 https://en.wikipedia.org/wiki/Tariff_of_1789

gsnedders 8y ago

> Airbus got half+ ownership for a symbolic euro And Airbus didn't even take on the huge debts the programme has accrued. They get none of the pain of the development and half the profit from sales. (Also I believe Airbus's network for sales was also considered significant by Bombardier; they may lose a fair bit of the profit from sales, but I think Bombardier were hoping Airbus's networks would increase sales sufficiently that it'd be a net gain for them.)

nolok 8y ago
> Also I believe Airbus's network for sales was also considered significant by Bombardier Absolutely, there is a reason why it got renamed to A220 instantly. In passenger planes Airbus/Boeing is like the "nobody got fired for buying IBM/Microsoft" of the IT world. Also, their potential customers are much more likely to already have Airbus planes, so with that change you don't need another suppliers for parts and maintenance etc ... It's the same vendor.
- zymhan 8y ago
  Boeing does not make a plane small enough to compete with the A220, really. The A220 competes with the ERJ-175/190 series. An A319 carries slightly more passengers than the largest A220, and the smallest 737NG carries 30-50 more passengers. Boeing has never competed in the small regional jet market, and their recent attempt at a partnership with Embraer is their response to the A220.
  - mrguyorama 8y ago
    Boeing produced the 717 until 2006, which would have directly competed with small regional jets
    - zymhan 8y ago
      Yes, this is true, but the 717 was acquired from McDonnell Douglas as the MD-95, so it wasn't an organic design. Their ending of production is another indication that they aren't interested in the market.

decasteve 8y ago

It’s a Bloomberg article which is fast becoming synonymous with inaccuracy or just being outright wrong. I usually skip them altogether but maybe it’s time we start flagging these articles. I’m of the opinion that most Bloomberg articles are a waste of time for HackerNews.

rootusrootus 8y ago
Bloomberg specifically tries to push stories that move the markets. That alone makes me take their articles with a grain of salt.
wastedhours 8y ago
Interesting view - other than the issues the community had around that server hacking piece, what article has been outright wrong vs just having a heavy editorial slant (as most publications now do)?
- scarejunba 8y ago
  They’ve always been low quality. I remember when they said something weird about the Indian Railway budget and I looked it up and they’d completely misinterpreted the stats (which were well apparent to a thinly sliced goat leg, let alone a trained journalist).
- verall 8y ago
  This is just more anecdata, but I notice a small minority of Bloomberg articles, including the server hacking piece, where it seems that some competent journalists tried pretty hard to break a real story. (edit for clarity- Clearly they got a lot in the server hacking piece wrong, but in the situation it seems like they were intentionally misled, and were really not expecting so many of their "sources" to be basically repeaters of the same falsehoods) BUT, most of their articles seem like extremely low quality drivel. They fail to get basic facts or ideas about the situation correct, and/or they sound like someone shit out a 1-sentence long opinion and then expanded it into a page or 2. I haven't been flagging these and don't think most do, but maybe we should start.
- 8y ago

Xixi 8y ago

Note that Airbus has the option to buy the whole program from Bombardier Inc. and the Québec government. I'm trying to find out the exact terms. There is some speculation that Airbus doesn't want to push the CSeries/A220 too much until then, as it will only make the remaining 49.99% of the program more expensive. EDIT: after some research digging through the related thread on airliners.net [1], this is what I found: "After 7.5 years (which is pretty fast), Airbus has a call option for all of BBD's shares in the joint venture at the then current market value (and BBD has a put option similarly, which it would exercise if things didn't work out). So basically, Airbus can buy the whole shebang in 7.5 years." Since the announce was made in October 2016, in 6 years Airbus can trigger its option to acquire Bombardier's shares. Not completely sure about Québec's shares though. [1] https://www.airliners.net/forum/viewtopic.php?f=3&t=1376389&start=100 https://www.airliners.net/forum/viewtopic.php?f=3&t=1376389&...

Gpetrium 8y ago

I have a different take on winners and losers (from left to right): Airbus > Mitsubishi > Boeing > Bombardier Airbus - Gained a brand new aircraft for close to nothing, allowing it to sell at a discount that Boeing may not be able to do. Can wait to make key strategic sales for after they purchase Bombardier's 30.99% stake. Mitsubishi - Learned what to do and not to do from the Bombardier saga. Also learned that there is a potential market for a third competitor. Boeing - Staved off a potential third competitor which could dilute the profitability of the segment. Didn't want to make the same mistake when it didn't consider the Airbus could become the giant it is today decades ago. (As of today, lost 15% stock from its previous peak, although it may be due to a variety of other problems, including the China/US trade spat) Bombardier - Was forced to sell off its new jet for close to nothing.

zymhan 8y ago

This is not entirely true. Bombardier was having financial issues with the C Series and is in fact considering selling off the CRJ business. They're already spinning off the Dash 8 Q400. https://en.wikipedia.org/wiki/Bombardier_Dash_8#Sale_to_Longview/Viking_Air https://en.wikipedia.org/wiki/Bombardier_Dash_8#Sale_to_Long... This section on Wikipedia gives a succinct overview of the multiple financial issues Bombardier has faced with the C Series. https://en.wikipedia.org/wiki/Airbus_A220#Program_support https://en.wikipedia.org/wiki/Airbus_A220#Program_support

gimmeThaBeet 8y ago
Yeah, I don't know enough about planes to say whether or not the C Series / A220 is good or competitive. That part seems almost secondary to the softer issues. Bombardier put a lot of time and money into the development, and then way more money and way more time. And Quebec is clearly, lets say, highly interested in making sure that planes are built, and that some of them are made in Quebec.