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Canadian Investing / Bombardier Aerospace


Subject:  Re: New Learjet 70 and 75 Date:  7/20/2012  4:32 PM
Author:  jammerh Number:  2877 of 2881

Hi Norm, in response to your last post. As usual, I agree with most of what you said, but here are a few points that come to mind in reading what you wrote:

"Fractional jet share operators have to factor in the cost of flights to reposition aircraft and crews somehow. Some of it probably counts as usage within the hours allocated to each fractional share, and some of it undoubtedly is mitigated by the fact that one customer will want to go to a location from which another customer wants to depart at about the same time, or at least a location that's close enough so the "dead head" to reposition the plane and the flight crew is short. Also, the wording of the customers' "fractional ownership" contracts can provide flexibility by requiring the customers to specify time windows of several hours in duration rather than specific times."

Yes, according to what I read they employ complex mathematical algorythms in an effort to minimize flights to reposition aircraft still it's a sizeable cost for any fractional jet share operator. It seems to me that the larger the company, the easier it would be able to do this. Would you agree?

If that's the case Netjets would have a definite advantage in terms of its size and number of clients. Last time I looked Netjets still had a whopping 75% marketshare compared to Flexjet and Flight Options sharing the bulk of the remaining 25%.

Me: "You'll see more turboprops in North America if fuel costs rise dramatically in the years ahead."

You: "Not if a significant percentage of passengers refuse to fly on them!"

I see some similarity between this problem and the one seperating regional jets and larger commercial jets. Yes, there will be periods in which these aircraft types experience something of a resurgence in demand, but in other respects they're up against it in terms of having specific advantages and disadvantages.

Fuel prices are one of a number of factors in this equation - with each factor waxing and waning in terms of importance over time. Turboprops haven't died yet, neither have regional jets.

And while it can be difficult to predict where industry trends will take these two commercial aircraft types in the years ahead, the fact that Bombardier apprears to be losing ground in both turboprops (to ATR) and regional jets (to Embraer) isn't encouraging.

As I see this ATR has a distinct advantage in terms of having an edge with european carriers which - due to their particular flying requirements and shorter routes (along with perhaps higher fuel prices) - seem to have developed a greater appreciateion for turboprops.

Embraer's biggest edge, from my perspective, comes in the form of its lower labour costs. Embraer has effectively leveraged this advantage to elbow its way to becoming a major competitor in business jets in recent years.

Just a few years ago it had no product line-up in this category aside from the Legacy, a con