Others Caught In The Undertow

[BoeingBoy]

An article on Bombardier's financial health...

Article

Pertinent part:

Analyst Cameron Doerksen of Dlouhy Merchant believes the low stock is a function of the troubles at two American airlines, which happen to be Bombardier's biggest jet customers.

US Airways and Delta Airlines together had 102 jets on order at the end of June, or 40 per cent of Bombardier's Regional Jet firm orders. Both airlines are on the verge of bankruptcy -the second time for US Airways.

Doerksen says a Chapter 11 filing of either airline could trigger a downgrading of Bombardier by credit rating agencies, which would further depress the stock.

Doerksen says the shares could become attractive to buy at $2 to $2.50. The stock hit $2.55 last week, the lowest point in nearly a decade.

"Until there is more clarity on how the situation at US Airways and Delta play out, we would avoid Bombardier shares altogether," Doerksen advised his clients.

Jim

 

[Phantom Fixer]

Jim,

Interesting article, but Bombardier is but a fraction of the companies being exposed to U's failures as you know.

I would hate to have to be forced to calculate all the companies U's leadership (both past and present) have put in jeopardy.

Most only think about the Aircraft and Engine Leasing companies...but not even counting the contract Express affiliates , I'm sure the numbers of others whom will be shortchanged will go easily into the thousands.

Sure..U's Leadership and Employee's have an obligation to provde a safe service..but it's up to the leadership to insure that it's done in a manner to meet the obligations of doing so. This is an area where employee's can only help , by not componding costs with injuries , mistakes or wastefullness of resources...but beyond that , it's their job to lead and react to the strategic concerns that make or break the abilty to make a profit.

U has lived within the confines of it's lmited wisdom for far too long...and in the darkest hour we are seeing signs of a breakout in this old way of thinking , sadly it's linked to the employee's bankrolling it with concessions that may or may not be forthcoming?

 

[WorldTraveler]

US is the majority of Bombardier's order book; Delta has relatively few CRJs on order at this point and it is probably not likely that they would start eliminating the ones they have from their fleet should they go into Ch. 11.


Several analysts have said a shakeout is coming in the regional carrier industry and it only makes sense given that there will likely be a reduction in the number of hubs - which is where most RJs serve. While there are point to point markets for RJs there may not be enough to support all of the RJs that could become available, esp. since most of the point to point markets involve NYC, WAS, BOS, or CHI on one end or the other and those cities have very little running capacity at any of their airports.

 

[BoeingBoy]

Phantom,

I agree - Bombardier is only a large example. There are undoubtedly hundreds or thousands of small companies that will be hurt in the next BK, just like in the last. Other than something in some local paper, most will go un-noticed.

Jim