Embraer rejects rumour Air Canada...

Blastor · Post by **Blastor** » Sat Mar 19, 2005 9:41 am

Embraer rejects rumour Air Canada
could cancel aircraft order for Bombardier

Allan Swift
Canadian Press

Friday, March 18, 2005

MONTREAL (CP) - Air Canada could be under pressure to cancel a large airplane order with Brazil's Embraer and instead be the launch customer for a new aircraft proposed by Bombardier Aerospace, a Wall Street analyst said Friday.

Heidi Wood, an analyst with Morgan Stanley Dean Witter. said there are rumours the Canadian government and other political parties are putting pressure on Air Canada to cancel Embraer and back Bombardier's CSeries.

In a conference call with Embraer management, Wood said the pressure is on because of the $700 million in financing aid Ottawa and the Quebec government are to grant Bombardier to get its new CSeries aircraft off the ground and assure it will be assembled in Quebec.

Mauricio Botelho, chief executive of Bombardier's arch rival Embraer, said a cancellation is highly unlikely for the 90 aircraft - including options - ordered by Air Canada, with deliveries starting this year.

"I don't believe this is likely to happen," Botelho said in a conference call to discuss his company's fourth-quarter results.

Botelho noted that Embraer won the orders in 2003 and 2004 on the merits of its aircraft against bids from Bombardier, Airbus and Boeing. Bombardier also got orders for 90 aircraft.

"At that time there was strong pressure from the government and from political entities in Canada to back their local industry, but that did not happen because of the value of our airplane," said Botelho.

He added that deliveries for the two ordered models will start this year, whereas the Bombardier CSeries - if it goes ahead - could not begin deliveries for another five years.

Air Canada spokeswoman Isabelle Arthur also said the rumours "are unfounded. We have no plans to cancel our Embraer aircraft order."

Eyebrows were raised when Air Canada split its regional jet orders between Bombardier and its Brazilian-based competitor.

The airline announced in December 2003 a deal for 45 Embraer 190s, seating 93 passengers, with options for another 45, for orders totalling $2.7 billion.

The Montreal-based airline followed up with an order in November 2004 for 15 Embraer 175s, seating 75 passengers, with an option for 15, for a combined value of $1 billion.

Air Canada thus became the launch customer for the Embraer 175 allowing the Brazilian manufacturer to go forward with that program.

Bombardier, with an aircraft assembly plant right next to Air Canada's head office, makes aircraft in both those classes.

This week Bombardier's board of directors approved an "authority to offer" for CSeries, meaning the company can start looking for a launch customer for the aircraft that would carry 110 to 130 passengers in two aircraft models, to compete with some smaller Boeing and Airbus models.

Botelho said CSeries has lots of hurdles to overcome. "They say it will have a 15 to 20 per cent reduction in operating costs; we do not see where is the technology that will allow this significant reduction."

Bombardier spokesman John Paul Macdonald, in a report published Friday, complained that the federal government, despite months of talks, has still not come up with a promised loan-guarantee package for the sale of its regional jets to Air Canada.

The opposition Bloc Quebecois also issued a statement Friday denouncing the federal Liberal government for dragging its feet in negotiations with Bombardier over financial aid for the CSeries.

"The federal government rapidly came to an agreement with General Motors to grant $500 million to the Ontario auto industry," charged Bloc MP Paul Crete.

In return for government help, it is expected Bombardier would build the final assembly plant for the aircraft near Montreal, that would require 2,500 workers.

Embraer delivered 148 jets in its fiscal year ended Dec. 31, an increase of 47 per cent.

Sales reached a record $3.4 billion US while net income doubled to $380 million, also a record.

© The Canadian Press 2005

complexintentions · Post by **complexintentions** » Sat Mar 19, 2005 10:50 am

God Bombardier is shameless...whining about the Portage military training contract, when they've had their snout firmly in the government trough for eons, and now this.

AC is poised to be a powerhouse again, but only if they keep making decisions, including equipment acquisition, based on sound financial and operational needs, not political meddling.

C'mon Air Canada, stick with the original plan and go with what's best for the company and it's employees, not what's best for a bunch of Quebec execs and Liberal political hacks!!

Panama Jack · Post by **Panama Jack** » Sat Mar 19, 2005 11:19 am

Spoken in the language that Liberals should be able to understand:

smokeater · Post by **smokeater** » Sat Mar 19, 2005 1:43 pm

complexint... if AC wanted to do what was best they wouldn't have Teplinsky splitting up 705's/175's, thats as dumb as it gets. IMHO.

complexintentions · Post by **complexintentions** » Sat Mar 19, 2005 3:57 pm

smoke,

sorry, not sure I understood your comment? could you expand?

My main point was simply, AC really needs to keep thinking like a for-profit business instead of a being a political pawn and cash cow for the Liberals...if Emb's are the best plane for the job (I'm not saying they are or aren't), then Bombardier and their political lobbyists stay the hell out of it.

smokeater · Post by **smokeater** » Sat Mar 19, 2005 4:10 pm

I think were on the same page........the best for AC, it doesn't make good business sense buying two types of 75 seaters though, thats all im trying to say.

complexintentions · Post by **complexintentions** » Sat Mar 19, 2005 5:03 pm

fair enough! yep, that's what I was getting at!

Jaques Strappe · Post by **Jaques Strappe** » Sun Mar 20, 2005 7:54 am

What a load of Crap. I can't believe what so called journalists will write. The rumour is complete rubbish, we are already running courses on the EMB. Air Canada is NOT the launch customer for the 175 either.

Air Canada invited its' super elite customers to view and give input on the Embrarer, Bombardier, Boeing 717 and Airgus 318 in CYUL, collecting their opinions to help with aircraft choice. The Bombardier product, not surprizingly scored very low.

As for buying them, ( splitting the order ) that is yet again another example of politics interfering with the way Air Canada IS ALLOWED to do business.

The Bombardier is nothing more than an old 601 with a few plugs in it. No wonder they are not doing very well and need to design an entirely new airplane. It is just too bad that Air Canada has to buy them or endure the wrath of the Liberals.

Blastor · Post by **Blastor** » Sun Mar 20, 2005 9:55 am

Notwithstanding the above, if WJ had to play under the same rules [as Big Red] they would go the JG way in an instant. Level playing field? What level playing field?

Bombardier has been hiding with their head in the sand for a long time now.

Sounds familiar?