Recap On Bombardier Cry For Help

Karl Moore who is an airline industry analyst made mention that the huge well-known aerospace company, Bombardier are not out of the danger zone yet as they still need the government to back them up although things seem to be looking positive for them so far. An agreement was made by Bombardier to make a provision of 75 CSeries jets to Delta Air Lines with an addition of 50 extra planes preferably.

The company is still in need of financial support and requested for $1billion US from the government which has not yet be granted to them. The CEO of Bombardier, Alain Bellemare said that they would be very much grateful to have the federal government on board with them to help propel the project and financially contribute toward the CSeries jet, ensuring that there won’t be any hurdles along the way.

On a CBC Radio’s show called ‘The House’, the president of the company, Alain gave two solidified reasons why the company needs support even though this week’s report has been encouraging. This was what he had to say: “One is that they are building an aircraft that’s costing a bit over $30 million to build the new CSeries. But they don’t get that revenue until they deliver the planes, and they’re not going to start delivering them until towards the end of June and July,”  followed by him concluding, “As well, when you make the first ones, you’re not as good at them. It’s called the learning curve. The more you make over time, the better you get at it. So the first ones are particularly more expensive. So there’s a cash flow problem there.”

With regards to the company’s financial issues, Moore said that the reason why the company hasn’t gone forward with seeking loans from any monetary institution is that there has been some lack of efficient managing which has caused them to go into debt, thus, it will not tell well in order for banks to approve them with any loan or financial assistance.

This was what he had to say:

“One is that they are building an aircraft that’s costing a bit over $30 million to build the new CSeries. But they don’t get that revenue until they deliver the planes, and they’re not going to start delivering them until the end of June to July,”. He added

“As well, when you make the first ones, you’re not as good at them. It’s called the learning curve. The more you make over time, the better you get at it. So the first ones are particularly more expensive. So there’s a cash flow problem there.”

Speaking on the company’s financial issues, Moore said that the reason why the company hasn’t gone forward with seeking loans from any monetary institution is that there has been some lack of efficient managing which has caused them to go into debt, thus, it will not tell well in order for banks to approve them with any loan or financial assistance.

A professor who is part of the Desautels faculty of management at McGill University agreed that with the government helping the company and supporting them, they will be able to to get back up and get reliable clients to join them.

Following the report of the Delta Airlines deal that took place this week, Marc Garneau who is the Minister for the Federal Transport told reporters that there has been no officially sealed agreement as there is still an ongoing discussion between the company, Bombardier and the federal government itself.

We will just have to see if the government will go ahead and lend a helping hand to the company.