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Canadian Investing / Bombardier Aerospace


Subject:  Re: New Learjet 70 and 75 Date:  6/16/2012  3:01 PM
Author:  jammerh Number:  2864 of 2882

Hi Norm, yes. Between these new products, the recent rail order for $650-billion for San Francisco, and the huge ("largest order in history") for business jets from Netjets - which I'm still trying to fathom - things definitely appear to be lining up nicely.

I'd have preferred they stick with the Rockwell Collins avionics. Cessna is the real competitor to watch in the low-to-mid range BJs. It's under new management, and recently switched to the Garmin product.

Do you have any insight on the Netjets deal? Seems there could be a lot going on behind closed doors. It might be interesting to know why Netjets cancelled the Hawker, and Gulfstream orders. I was under the impression they also cancelled an order to Cessna, but it appears they've at least renewed that effort.

As you realize, Netjets is the big player in Fractional Jetshares, despite recent incremental gains in marketshare by Flexjet. One might expect it took something to change their preference for practically any-manufacturer-but-Bombardier.

Presumably it cost Netjets something to cancell the original outstanding orders then a few months later place huge orders with Bombardier and Embraer - with the Bombardier portion alone worth $7.3-billion if all options are exercised.

Even more peculiar, it seems investors are not giving this order much weight. In speculating why this might be I can only imagine it could have something to do with the context. Since Netjets cancelled the orders with its original suppliers, they may be giving less credibility to the new orders.

Also, as you may realize if you've been following this from the Netjets/Berkshire perspective, I'm wondering if recent management changes might have something to do with it.

Bombardier definitely has a lot more to gain by selling aircraft to Netjets. This deal includes a 15-year agreement for maintenence on the aircraft.

In the end it, at least in terms of results, it should matter little whether Bombardier makes money selling CSeries, Regional Jets, Business Jets, Rail equipment, or some combination of each.
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