It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Saturday, January 18, 2020
Bombardier's future in question after debt-reduction options being considered
BYE BYE NOT BUY BUY BOMBARDIER
BANKRUPT AGAIN
TO BE BAILED OUT BY QUEBEC INC. AND THE CANADIAN STATE?
THIS WILL IMPACT WORKERS IN THREE COUNTRIES ON THREE DIFFERENT CONTINENTS CANADA, UK, EU (IRELAND)
The future of Bombardier Inc. is being called into question after the company said it was actively considering alternatives to reduce its staggering debt.
After exiting the commercial aircraft business, selling its aerostructures unit and unloading a large tract of land in Toronto, the company said it is working to reduce debt and "solve its capital structure." Bombardier's long-term debt stood at more than US$9 billion as of Dec. 31, 2018.
"We are actively pursuing alternatives that would allow us to accelerate our debt paydown. The objective is to position the business for long-term success with greater operating and financial flexibility," it said in a news release Thursday that warned about weaker financial results for 2019.
What that means is unclear, says Walter Spracklin of RBC Capital Markets.
"What exactly this strategic alternative is constitutes the key 'wild card' in the Bombardier stock," he wrote in a report, decreasing his target price by a third to $2.
"The stock reaction reflects the ever-mounting liquidity concerns, with many investors we talked to doubtful as to whether there is a solution."
The company's language suggests some urgency that can't be resolved by just pushing out debt maturities, added Seth Seifman of JP Morgan.
"This suggests to us the potential to pursue strategic options, including a breakup and sale of all or part of the company," he wrote. "It may include one or both of Bombardier's two major businesses: bizjets and trains."
Cameron Doerksen of National Bank Financial says aviation would be the most likely candidate for sale since transportation is a better stand-alone business.
"Our math shows that if Bombardier did sell its aviation segment and used the proceeds to de-lever and reacquire the Caisse de depot's stake in Transportation, based on where pure-play rail equipment OEMs trade today, Bombardier shares could be worth $3.87," he wrote. The pension fund manager holds a 30 per cent stake in Bombardier Transportation.
The Caisse declined to indicate if it is interested in purchasing more of the transportation unit, saying only that it supports "the continuing work of Bombardier Transportation's management team to improve the subsidiary's operating performance — including the actions taken to address certain legacy projects."
Bombardier's shares plunged 31.8 per cent to their lowest level in nearly four years following its release, which pointed to a possible withdrawal from a partnership with Airbus in the commercial aircraft previously called the C Series. The stock closed down 57 cents to $1.22 in heavy trading of 60.2 million shares on the Toronto Stock Exchange.
The financial miss is mainly due to actions taken to resolve challenging rail projects, the timing of milestone payments and new orders and the delivery of four business jets slipping into the first quarter of 2020, the company said.
It said it is reassessing its ongoing participation in the Airbus partnership about two years after giving up a controlling stake in the program to Europe-based Airbus SE.
Airbus owns 50.06 per cent of the joint venture, Bombardier 33.58 per cent and Quebec 16.36 per cent after injecting US$1 billion in 2016.
While the A220 program is gaining orders as it proves its value, additional cash will be required to support the ramp-up of production, a delay in reaching break-even and lower returns over the life of the program, it said in a preliminary announcement of its fourth-quarter and 2019 results set to be released Feb. 13.
"This may significantly impact the joint venture value," Bombardier said, adding it will disclose any writedown next month.
Bombardier said it expects consolidated revenue for 2019 to total about US$15.8 billion and consolidated adjusted earnings before interest, taxes, depreciation and amortization of about US$830 million.
The company, which reports in U.S. dollars, had said in October it expected revenue between $16.5 billion and $17 billion for the year and adjusted earnings before interest, taxes, depreciation and amortization between $1.2 billion and $1.3 billion.
The company said it expects to earn zero adjusted EBITDA in the fourth quarter on about $4.2 billion in revenues with losses in transportation offset by earnings in aviation.
Consolidated free cash flow is expected to be around $1 billion in the fourth quarter, about $650 million lower than anticipated. However, the shortfall is expected to be recovered in 2020.
A total of 58 aircraft were delivered in the fourth quarter and 175 for the full year, including 11 Global 7500s.
Industry analysts called the financial warning negative with some cutting their price target for Bombardier's shares.
"The key question is how much closer is the company to solving these issues, and what comfort can we get that new issues of similar scope and magnitude will not recur," added Spracklin.
The operational issues of transportation and update on the A220 are disappointing, said Benoit Poirier of Desjardins Securities.
"Nevertheless, we note that the value of the A220 program is not currently reflected in Bombardier's stock and therefore management's decision to review its strategic options for the program should unlock value through deleveraging — even at a depressed valuation," he wrote.
This report by The Canadian Press was first published Jan. 16, 2020.
Bombardier has warned investors that it may exit its joint venture with Airbus to produce the A220 airliner (formerly the C Series).
Airbus has delivered 105 aircraft out of 600 total orders since taking over the A220 program. Frederick K. Larkin Photo
In a preliminary fourth-quarter earnings report, the Canadian OEM said it’s anticipating a US$130 million loss for the period, which may force it to sell off assets in order to pay down debt – one of which is its stake in the commercial aviation venture.
In the report, Bombardier remarked that while the A220 program “continues to win in the marketplace and demonstrate its value to airlines,” the Airbus Canada Limited Partnership (ACLP) – the name of its joint program with Airbus – had made the call for additional cash investments to support production ramp-up, in turn extending the timeline for the program to break even and potentially generating a lower profit-margin over the life of the partnership.
“With its exit from commercial aerospace, Bombardier is reassessing its ongoing participation in ACLP,” the company said in the statement.
The partnership began in 2017, when Airbus announced it would be acquiring a 50.01 per cent stake in Bombardier’s C Series commercial airline program, while Bombardier retained a 31 per cent stake and Investissement Quebec got the remaining 19 per cent. After the sale, Airbus changed the name of the aircraft to the A220, and opened up a second production facility in Mobile, Ala.
Originally, Bombardier agreed to fund up to $925 million to the A220 program over a three-and-a-half year span. Airbus Photo
In the original deal, Bombardier agreed to fund the program with up to $925 million over a three-and-a-half-year span. Since Airbus’s acquisition of the program, the company has delivered 105 aircraft out of 600 total orders.
Now, Bombardier is contemplating extricating itself from the program entirely, even though it’s invested $6 billion into the A220 venture, in a effort to shed further costs – an announcement that sunk the company’s stock by nearly 32 per cent on the Toronto Stock Exchange Jan. 16. As a result, Moody’s Investors Services — an American credit rating agency — changed Bombardier’s rating outlook from stable to negative.
Even more surprisingly, the statement is coming at the same time as Air Canada celebrates the entry into service of its first A220-300.
All of this comes after a four-year stretch that saw the Canadian OEM sell off most of its aviation assets in a turnaround plan aimed at leveling off costs, leaving the company with only its rail and business aviation divisions.
In its preliminary fourth-quarter financial report, the company also said it will be providing additional information when it reports its 2019 financial results on Feb. 13. Bombardier back to the brink after rethinking Airbus A220 deal
Siddharth Philip and Paula Sambo, Bloomberg News
Bombardier Inc.’s deal with Airbus SE to rescue its long-delayed and over-budget jetliner program was supposed to be a lifeline for the struggling manufacturer. Now the Canadian company is rethinking the joint venture, pushing the iconic train and plane maker to the brink once more.
The shares posted their biggest loss ever -- Bombardier is almost a penny stock again -- and bonds tumbled after the company said it was reassessing the A220 jet program with Airbus. Costs for the new plane are rising, and the goal of breaking even may come later than expected, likely prompting a writedown when Bombardier reports earnings next month.
“The joke continues,” said John O’Connell, chief executive officer of Toronto-based Davis Rea Ltd. “This company has been a disaster my whole career and I’m almost ready to retire.”
The possible retreat from the A220 program, formerly known as the C Series, could be another blow to Bombardier’s efforts to increase cash flow to help pay down its US$10 billion debt load. The company has already sold assets in recent years to tackle its debt, including pending deal for its CRJ jet unit with Mitsubishi Heavy Industries Ltd.
The C Series was originally pitched as a major breakthrough for Bombardier, providing a plane that was bigger than its traditional jets yet generally smaller than Airbus’s workhorse A320-family jets and Boeing Co.’s 737 planes. Yet program delays and cost overruns sent the investment soaring to US$6 billion, raising concerns about the debt, now rated six levels below investment grade.
The Open Bombardier needs to 'just deliver' what they promise: McGill's Karl Moore
Bombardier needs to 'just deliver' what they promise: McGill's Karl Moore
Karl Moore, professor of business strategy at McGill University, joins BNN Bloomberg to react to Bombardier slashing its outlook, warning on cash burn and considering pulling out of the A220 partnership with Airbus. He says that CEO Alain Bellemare has done an excellent job in a tough turnaround for the business.
Job Cuts
The delays and slow sales forced Bombardier to announce thousands of jobs cuts in 2016, with doubts over the future of the company pushing the stock to as low as 72 cents. The government of Quebec was forced to step in, investing US$1 billion for a 49 per cent stake in the C Series.
On Thursday, Bombardier tumbled anew, dropping 32 per cent to $1.22 at the close in Toronto. The shares are now at the lowest level in almost four years and the company’s market value is only about $3 billion (US$2.3 billion)..
The deal with Airbus was an elegant solution. Though Bombardier received no upfront cash for ceding its controlling stake, it allowed Bombardier to offload the risk and additional costs of developing the A220. But the latest financial plan calls for more cash to support the ramp-up, pushes out the break-even timeline, and generates a lower return over the life of the program, Bombardier said in a statement Thursday.
With few other assets left to sell, Bombardier may struggle to keep everything going. One of its two remaining businesses -- rail equipment and private jets -- may have to go, Karl Moore, an associate professor at McGill University in Montreal, said in an interview with BNN Bloomberg.
“Then you become a pure play of either transportation on the train side, or business jets,” he said. “It’s a big dramatic move for sure but one that might be necessary to solve the cash flow issue. I think that’s the question they’re giving some serious thought to right now.”
The potential end of Bombardier’s involvement in the A220 program is combining with continued woes in the company’s rail business to undermine a once-great name in manufacturing.
The company said fourth-quarter sales would be US$4.2 billion, trailing the lowest analyst estimate in a survey by Bloomberg. The results were dragged down in part by new challenges in the company’s rail division. Bombardier said it would take a US$350 million accounting charge because of problems in London, Switzerland and Germany.
Liquidity remains strong, with year-end cash on hand of roughly US$2.6 billion, Bombardier said. But the company is considering alternatives to accelerate its deleveraging and strengthen its balance sheet.
Bonds Resilient
“The final step in our turnaround is to de-lever and solve our capital structure,” Chief Executive Officer Alain Bellemare said in the statement. “We are actively pursuing alternatives that would allow us to accelerate our debt paydown.”
For Mark Carpani, a partner at Ridgewood Capital Asset Management, a larger selloff on the bonds could be a buying opportunity.
“Despite the equity reaction, the debt has a high probability of being paid in the short term,” he said.
The company’s 7.85 per cent bonds due 2027 fell 6.8 cents, the most on record but remain well above distressed levels at 95.3 cents on the dollar, yielding 8.8 per cent, according to Trace data. The US$1.5 billion in notes due 2025 dropped 5.7 cents to 96.3 cents on the dollar to yield 8.4 per cent, the highest since Oct. 31.
The company is scheduled to report full earnings Feb. 13.
WEIGH IN Which of these is the best option for Bombardier? Commercial-Jet Retreat Airbus said it would continue funding the A220 program “on its way to break-even.” The European aerospace giant owns a 50.01 per cent stake in the regional jet, with Bombardier retaining 31 per cent and state-backed Investissement Quebec holding some 19 per cent. Bombardier agreed to fund cash shortfalls for the program up to a maximum of $350 million in 2019, and $350 million cumulatively in 2020 and 2021, according to a press release announcing the venture in June 2018. Any excess shortfalls would be shared by the shareholders, the statement said.
Quebec’s economy and innovation minister declined to comment, according to a representative.
The jet added 63 orders in 2019, with 105 currently in service and a backlog of close to 500 planes. Airbus will begin producing the A220 on a second assembly line this year at its factory in Mobile, Alabama.
The Montreal-based aerospace company is thus a useful example of corporate welfare in action, the tax dollars at stake, and the regular, inflated claims about the beneficial effects of such subsidies.Bombardier’s corporate welfare began, at least federally, in 1966 when it ...
Feb 10, 2017 - The good news: At least the most recent bailout to Bombardier won’t cost us $1 billion. The bad news: Taxpayers are saddled with the federal government’s decision to offer $372.5 million in interest-free loans over four years to the Quebec-based company. ... The bailouts are meant to ...
In July 2004, Bombardier Aerospace announced its intention to develop a new family of aircraft called CSeries. In May 2007, three years after the init.
Feb 7, 2017 - ... ATR chief executive troubled by competition impact of Bombardier Inc bailout ... Bombardier initially asked Canada to match a $1 billion injection in the ... Bombardier, which briefly considered bankruptcy protection last year ...
Apr 8, 2016 - The federal government is considering giving Bombardier another billion dollars ... is seen as a good sign; the bankruptcy of a major CSeries customer, less so. ... WATCH: Bombardier announces 7,000 layoffs, wants bailout.
Nov 6, 2018 - Bombardier was getting set to disappoint investors with a $1.6 billion ... $1 billion in bailout funds from the Quebec government (Bombardier is one of ... from its bankrupt parent, Bombardier rode a business-jet boom in the late ...
On 29 October 2015, Bombardier announced a US$4.9-billion third-quarter loss and $3.2 billion writedown on the CSeries. It also cancelled its Learjet 85 program, taking another US$1.2-billion writedown and cancelling 64 outstanding orders.
Apr 4, 2017 - In the U.S., outrage over corporate bailouts has come from the ... from the Canadian and Ontario governments after its bankruptcy in 2009 and ...
Oct 19, 2017 - LIKE an airliner in service, Bombardier's C-Series programme has had ... and delays pushed it near bankruptcy in 2015, followed by a bail-out ...
Oct 24, 2019 - Airbus rebranded the Bombardier C Series as the A220 in July last year, ... the C-Series had pushed the company to the brink of bankruptcy.
Jul 5, 2019 - So it seems the smart money knows that debt – which is usually involved in bankruptcies – is a very important factor, when you assess how ...
Jun 5, 2019 - There are very few other Canadian companies that could get a bailout if they were close to bankruptcy. Bombardier is one of them. This helps ...
Apr 25, 2019 - Bombardier slashed its full-year revenue forecast by almost 8 percent ... plane production drove the company to the brink of bankruptcy in 2015.
Apr 25, 2019 - Since Bombardier flirted with bankruptcy in 2016, its attempts at resurgence and restructuring have led to multiple surges for its Class B shares, ..
Feb 12, 2019 - b) has, within the ten years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or ...
Nov 6, 2018 - Bombardier was getting set to disappoint investors with a $1.6 billion ... from its bankrupt parent, Bombardier rode a business-jet boom in the ...
Nov 11, 2016 - Bombardier Inc. was flirting with bankruptcy protection last year as it struggled with a cash crunch and high cost structure, chief executive officer ...
Republic Airways bankruptcy hurts Bombardier. Bombardier's C Series hopes were cast year another blow last week when Republic Airways filed for bankruptcy ...
MONTREAL - Bombardier Aerospace (TSX:BBD.B) risks losing an order for 10 regional jets after U.S.-based Mesa Air Group obtained bankruptcy protection as it ...
THE REAL HOUSEWIVES OF AMERICA
‘Submitting to my husband like it's 1959': Why I became a #TradWife
NOTHING TRADITIONAL ABOUT IT. THE GENDER ROLE WAS CREATED BY THE US ARMY AND THE SOCIOLOGY DEPARTMENT AT COLUMBIA UNIVERSITY FOR RETURNING ENLISTED MEN TO FANTASIZE ABOUT WHILE GETTING WOMEN OUT OF THE FACTORIES AND INTO THE HOME IN TAFFETA DRESSES, AND HEELS WITH THE LATEST IN KITCHEN AIDES.
#TradWives is a growing movement of women who promote ultra-traditional gender roles.
Search the hashtag ‘#tradwife’ on social media and you’ll see images of cooked dinners and freshly-baked cakes with captions like, “A woman’s place is in the home” or “Trying to be a man is a waste of a woman”.
The term ‘tradwife’ is particularly controversial because of its associations with the far right, especially in the United States. But many self-described tradwives reject that association.
Alena, who lives in the UK, says it’s about “submitting to and spoiling her husband like it’s 1959” - as well as supporting a return to “traditional English manners, lifestyle and values.”
Produced and filmed by Alex Gatenby
Executive Producer: Rob Brown
Commissioning Editor: Nisha Diu
17 Jan 2020
Taal: Time-lapse of lightning storm swirling round Philippine volcano
Time-lapse footage has captured a lightning storm swirling in dark clouds around the peak of the Taal volcano in the Philippines.
The volcano had spewed a giant plume of ash, prompting thousands of people to be evacuated.
Officials said the plume from the Taal volcano stretched 1km (0.6 miles) into the sky.
Image copyrightGETTY IMAGESImage captionAboriginal people have long used techniques to manage fires
For thousands of years, the Indigenous people of Australia set fire to the land.
Long before Australia was invaded and colonised by Europeans, fire management techniques - known as "cultural burns" - were being practised.
The cool-burning, knee-high blazes were designed to happen continuously and across the landscape.
The fires burn up fuel like kindling and leaf detritus, meaning a natural bushfire has less to devour.
Since Australia's fire crisis began last year, calls for better reintegration of this technique have grown louder. But it should have happened sooner, argues one Aboriginal knowledge expert.
"The bush needs to burn," says Shannon Foster.
She's a knowledge keeper for the D'harawal people - relaying information passed on by her elders - and an Aboriginal Knowledge lecturer at the University of Technology Sydney (UTS).
Much of the ancestral information she shares relates to the bush, says Ms Foster.
"It's the concept of maintaining country - central to everything we do as Aboriginal people. It's about what we can give back to country; not just what we can take from it."
'Naive' techniques of today
Country is personified within Aboriginal culture. "The earth is our mother. She keeps us alive," Ms Foster says. This relationship shifts priorities around precautionary burning.
"The current controlled burns destroy everything. It's a naive way to practise fire management, and it isn't hearing the Indigenous people who know the land best.
"Whereas cultural burning protects the environment holistically. We're interested in looking after country, over property and assets.
"We can't eat, drink or breathe assets. Without country, we have nothing."
Image copyrightCATHERINE MCLACHLANImage captionShannon Foster relays techniques passed on by her D'harawal eldersImage copyrightUTSImage captionHer great-grandfather Tom (left) and grandfather Fred (third from left) give lessons in the 1940s
Indigenous cultural burns work within the rhythms of the environment, attracting marsupials and mammals which Aboriginal people could hunt.
"Cool burning replenishes the earth and enhances biodiversity - the ash fertilises and the potassium encourages flowering. It's a complex cycle based on cultural, spiritual and scientific knowledge."
They also create a mosaic of ecologies, Ms Foster says, and this can lead to beneficial micro-climates.
"Soft burning encourages rain - it warms the environment to a particular atmospheric level, and once the warm and the cool meet, condensation - rain - occurs, helping mitigate fires."
Her Aboriginal elders in Sydney have been assessing the overgrown bush and extremely dry kindling for some time, warning that a huge fire is coming: "They compared it to a kid with unkempt hair, saying it needs nurturing."
But local authorities have forbidden them from cultural burning when they've asked for permission.
Where cultural burning is used
There's no one-size-fits-all approach to precautionary burning because the Australian landscape is so diverse from place to place.
Nonetheless, some states do integrate cultural burning with other strategies, according to Dr Richard Thornton, CEO of the Bushfire and Natural Hazards Cooperative Research Centre.
"There's a stark difference in northern Australia, where Indigenous cultural burning happens substantially. In southern states, it's sometimes done according to the needs and wishes of local communities."
Image copyrightAFP/GETTY IMAGESImage captionThe bushfire crisis has devastated Australia since September
Since Australia was colonised in 1788, cultural burning was slowly eradicated. But recent years have seen moves to reintegrate it.
Associate Prof Noel Preece, a former national parks ranger, wrote the first fire manual for central Australian park reserves.
He says cultural burning is still practised in parts of Melbourne, but largely stopped in south-eastern Australia because vegetation built up in "precarious areas" where cool burns don't work.
"That said, Indigenous people had extremely detailed knowledge of 'dirty country' that needs a good burn," says Associate Prof Preece, now of James Cook University.
Drawbacks of the ancient practice
Cultural burning, Prof Preece says, can reduce fuel on the ground from 10 tons to 1 ton. But it's only effective protection for moderate fires, so it needs to be done in conjunction with hazard reduction burns.
Even then, it only reduces hazards: "With the recent catastrophic conditions of humidity and high winds, nothing could stop these fires."
"Aboriginal people were taken off their country so there's a re-learning process which is very useful and important. But it's still early days and by itself, it's not enough," he says.
Media captionThe orphaned Australian baby bats wrapped with love
Experts agree that cultural burning has limitations, partly because colonisation led to development and human-created climate change, presenting us with a very different landscape now to hundreds of years ago.
Prof Preece has been in areas where, day after day, the conditions for cooler cultural burning weren't right.
"It'd be too moist, too cool, too hot, too dry - you have a narrow window. And with many firefighters in Australia being volunteers, they're working during the week, and you could go four Saturdays till the conditions are right."
For thicker shrub running up tree canopies, he says a hot burn is required because cool burns won't get rid of such layers of fuel.
Media captionSocial media claims that arson was a significant factor in the fires have proved inaccurate
In addition, Dr Thornton says individual Indigenous burns, undertaken by specific agencies such as Firesticks, absolutely have their place, but need to fit within community expectations if done on a larger scale by others.
"We need to ensure fire doesn't escape and burn down somebody's property. It'd undermine community views of the entire practice so we need to ensure we operate within a safety framework which is defendable."
The way forward
Prime Minister Scott Morrison has promised a "comprehensive" inquiry into the ongoing bushfire crisis which has so far killed 27 people and scorched more than 10 million hectares.
When it goes ahead, Dr Thornton stresses the need to "talk to Indigenous elders in each different area and listen".
But he says not a single Indigenous person sits on the board of the national bushfire research centre he manages.
Shannon Foster is keen to work together with government agencies, but she worries about expanding development: "It terrifies me that so much land has been decimated, developers could move in and say we might as well put this estate here; the land is cleared."
"Aboriginal people have looked after this place for so long - to see it now destroyed because nobody has allowed us to care for it is devastating," she adds.
