Chapter 426: Take down Bombardier!
"One dollar?" Ryan Valette's face was full of anger. "You want to buy our aircraft business for one dollar. How could you come up with such a ridiculous idea?"
In the conference room, Ryan Valette listened to the purchase price offered by Xu Cang and laughed out of anger.
As Ryan Valette said, Xu Cang acquired Bombardier Group's aircraft business for just one dollar, which made Ryan Valette feel greatly insulted.
"Won't I also assume your corresponding debts?" Facing Ryan Valette, whose face was red with anger, Xu Cang was really relaxed and contented: "Your large commercial aircraft business is simply a money-loser. You invested so much money in research and development, but in the end you didn't sell many. Isn't this a bottomless pit of burning money? The business jet business still has some profits, but once the two offset each other, there is basically no profit, and you even have to pay a lot of money. My offer of one dollar is good, and I haven't asked you to pay for it."
Xu Cang’s meaning was very simple. He would take over the debts incurred by Bombardier in its aircraft business, which was actually a considerable amount of money.
However, as for the valuation of the aircraft business itself, Xu Cang said one dollar is enough.
Although it sounds outrageous, what Xu Cang said does make some sense.
The C Series aircraft had too much research and development investment, which was a desperate move by Bombardier. This would result in huge sunk costs, so Bombardier had no choice but to continue investing money in it, and the debt continued to pile up.
In this situation, you either have to find another buyer decisively, or just hold on.
Obviously, Bombardier can't hold on any longer and can only choose the first option.
Ryan Varet's blood vessels were about to burst. Xu Cang had previously demonstrated the excellent performance of the CS300 in Europe. After that, the sales of Bombardier's C Series aircraft suddenly expanded a lot, and it seemed that they were on the right track.
Xu Cang single-handedly cut off cooperation with AVIC, causing Bombardier's aircraft costs to soar and the cost management of the C series aircraft to collapse.
However, Boeing sued Bombardier for anti-dumping, which directly cut off Bombardier's possibility of entering the United States. Europe is Airbus's home base, and sales to Europe are also subject to many restrictions.
The world's two largest aircraft consumer markets can no longer be relied upon, which directly shattered Bombardier's remaining confidence.
However, all this is thanks to Xu Cang.
Even so, Xu Cang is still making sarcastic remarks!
"What, you think it's not enough?" Xu Cang said with a smile: "You can add some more, double it, two dollars?"
Ryan Valette's face gradually darkened: "Xu Cang, since you think our aircraft business is so worthless, aren't you afraid that we won't sell it?"
Qin Xin frowned and called softly, "Xu Cang."
In her opinion, the price offered by Xu Cang was really outrageous. Bombardier's aircraft business was already in its pocket, so there was no need to make things more complicated.
"You still have some resentment towards us." Ryan Valette said coldly.
Xu Cang laughed and said, "You don't think I'm just arguing out of pride?"
"Isn't it? Your price is an insult to us." Ryan Valette roared.
But he soon realized something when he saw Xu Cang's expression. Although Xu Cang had a smile on his face that was somewhat meaningless, he looked somewhat sincere, which was the most terrifying thing.
"Do you really think our aircraft business is worth that price?" Ryan Valette looked at Xu Cang in disbelief: "Do you really think so?"
Xu Cang sighed, "I received a phone call just before I came to the United States, and everything changed. The value of your aircraft business, or the aircraft design and assembly technology it carries, has been greatly discounted. The transaction between me and you now does not involve any technical things, but is simply a commercial exchange based on weighing the benefits. The C Series aircraft will lose money for at least a long period of time. Business jets can make money, but after all, the industry ceiling is there and the room for growth is limited. One dollar, this is my valuation of your aircraft business."
Xu Cang's voice was so sincere, but it was the truth that was the most harsh.
Ryan Valette knew the underlying logic behind Xu Cang's need for Bombardier, which was to use Bombardier's experience and technology in aircraft design and manufacturing to fill the gap in large aircraft design and manufacturing in his own country.
This is a rigid demand, and as long as it is a rigid demand, it can become a bargaining chip.
Previously, Ryan Varet thought that even if he agreed to sell the aircraft business, he would get a generous enough price. But unexpectedly, Xu Cang was no longer interested in Bombardier's aircraft design and manufacturing. Wasn't this a ghost?
Such a change was beyond the understanding of not only Ryan Valette but even Qin Xin was caught off guard.
Xu Cang patted the back of Qin Xin's hand and said soothingly, "I'll tell you later."
Qin Xin didn't say anything else, just nodded obediently.
In fact, the phone call Xu Cang was talking about was the call Lin Ming made before departure.
In Xu Cang's original conception, the research speed of domestic engines would only be slightly slower than that of domestic large aircraft. In the transition period between the emergence of domestic large aircraft and the commercialization of domestic engines, the batch of PW6000 engines that Xu Cang had stored would be used temporarily.
The plan is to wait until the domestic engines come out and then use the domestic power system on domestic large aircraft.
The problem is...the domestically produced engines are having problems now.
Even with the help of a complete set of drawings, according to Lin Ming, it would take three to five years just to fully understand the drawings, plus the time for subsequent reproductions, it would probably take ten years.
Xu Cang's plan for domestically produced aircraft is anchored on the time node of domestically produced engines, because the difficulty of self-development of fuselages and related systems is simpler than that of engines.
This is the reason why many other domestic products are ridiculed as "only making the shell". Aircraft engines, the top products in the industry, are the core of the aircraft and are the most likely to be used as bargaining chips.
At this point, Bombardier perfectly demonstrated to Xu Cang what sanctions are.
Xu Cang can tolerate a certain time lag between the localization of aircraft and engines, but this time lag cannot be too long. Otherwise, this kind of thing can easily become a weakness.
For example, China has spent a huge amount of money to acquire Bombardier's aircraft business. AVIC already has some foundation, and with the support of Bombardier's aircraft industry, it can basically complete all the work on the fuselage within three years.
However, according to Lin Ming, domestically produced engines will not be available until ten years later. What about the seven years in between?
Once the aircraft is built, it cannot just sit there, so we can only turn to foreign engines. Perhaps those foreign manufacturers will not stop supplying, but it is definitely not impossible for them to extort money, raise the price, and pass off inferior products as good ones.
From this perspective, the effect of the hard work of acquiring Bombardier's aircraft business to supplement its own business is not obvious. Instead, it will cause an exaggerated time gap in the progress of the two sides.
As a result, the value of Bombardier's aircraft business is much smaller. It is better for it to calm down and take its time, since it has to wait for the progress of the engine anyway.
Xu Cang thought that three years was an appropriate time difference that was acceptable.
In other words, it will take at least seven years to conduct research on the organism alone.
Compared with the elementary school level of aircraft engines, the design of aircraft fuselage is still at the high school level in China. It will definitely be useful if you make up for it.
In addition, more than seven years is enough time for Xu Cang to calmly plan his plans instead of relying solely on Bombardier.
Boeing also had a hard time after 9/11 , and Airbus was also dealing with a class-action lawsuit over delayed A380 deliveries.
At the same time, the industry's pessimistic forecast of the industry's prospects also provided various conveniences for Xu Cang's layout. He was confident that he could obtain better aircraft design and manufacturing information from Airbus and Boeing.
Before, he had always been obsessed with Bombardier because compared with Airbus and Boeing, Bombardier's weaknesses were more obvious, its size was smaller, and it was easier to control.
However, his previous miscalculation of the development progress of domestic engines made Xu Cang feel that he did not have much time.
But after the actual discussion, Xu Cang realized that he would have to wait for a long time, so the problem of time urgency no longer existed.
In this case, Bombardier's aircraft business really only has a commercial purpose.
With this understanding, Xu Cang spoke very firmly, because he really didn't care whether Bombardier was sold or not.
"Perhaps the situation has changed too quickly, but that's how wonderful things are." Xu Cang pondered for a moment and pursed his lips: "Mr. Valette, Bombardier has lost most of its value to me. One dollar, this is your real price in my heart. If you are willing to accept it, everyone will be happy. If you are not willing to accept it, it doesn't matter. Just find another buyer."
Xu Cang stood up and said, "Besides, this price shouldn't be considered insulting, right? Isn't this kind of symbolic price very common?"
"Those are others, we are Bombardier!" Ryan Varet snorted.
Xu Cang smiled and said, "Mr. Valette, don't be too confident. It's easy to get slapped in the face."
In fact, the reason why Xu Cang asked for one dollar was mainly because Airbus later acquired Bombardier's aircraft business.
That’s right, even without Xu Cang’s influence, according to historical development, Bombardier still could not sustain its investment in large commercial aircraft, and would eventually sell its large commercial aircraft business to Airbus at a symbolic price of one dollar.
Of course, unlike this transaction, Bombardier's subsequent transactions with Airbus in history did not involve business jets.
After acquiring Bombardier's C Series aircraft, Airbus changed it to the A200 series aircraft, and the sales volume is quite good. This shows that if it were not for some other factors, Bombardier's C Series aircraft might really grow up, at least the quality of the aircraft itself is not a problem.
From a purely commercial perspective, Bombardier's C Series aircraft is profitable, otherwise Xu Cang would not have made a special trip to Canada after learning about the progress of domestic engine development.
Even the largest model of the C Series, the CS300, has a smaller passenger capacity than the 737-700 and A319. Strictly speaking, the C Series aircraft are actually an order of magnitude smaller than the mainstream Airbus and Boeing narrow-body aircraft, and they are not in the same class.
Of course, Airbus and Boeing are used to being overbearing. I just think that your 319 and my 700 are aircraft of the same size, so what can Bombardier do? It will also be hit.
However, if the C Series aircraft could fall into Xu Cang's hands, Xu Cang might be able to convince Boeing and Airbus to give up their suppression of the C Series.
Once the C Series aircraft is free from the pressure from Airbus and Boeing, it may grow into a good series of aircraft with 110-130 seats.
It is definitely not an easy task to convince Boeing and Airbus, and it will definitely take a huge amount of energy and financial resources. Therefore, Xu Cang must acquire 51% of Bombardier Business Jets' shares to make up for the loss. The two are tied together and neither can be missing.
Bombardier's most profitable division, that's no joke.
"How is it? Are you acceptable?" Xu Cang dusted off his clothes and looked very relaxed.
Ryan Valette's face turned blue and red, like a magic trick. However, it didn't matter whether he was angry or not. The biggest problem was that Xu Cang didn't seem to think highly of Bombardier.
In this case, the biggest bargaining chip is gone. What bargaining power does Bombardier have?
So far, Bombardier's debt has reached 4.3 billion US dollars. Debt is not terrible, but there is no future. Banks are unwilling to lend money. Even Bombardier cannot afford such a huge debt.
What’s even worse is that these debts are still increasing, and the longer we delay, the more passive we will become.
He had wanted to sell it for a good price before, but now it is only worth one dollar. No one can understand why. However, Ryan Valette controlled his emotions very well.
He discovered a very important problem, or rather he believed a premise, that is, Xu Cang was definitely not a good person.
Even though Bombardier's business of business jets can make money, it cannot make up for the problems caused by large commercial aircraft. What's more, Xu Cang only holds half of the shares of the business jet business, which means that the profits will be discounted.
Under such conditions, Xu Cang is still willing to acquire Bombardier's aircraft business, which means that Xu Cang has the ability, or at least he believes that he has the ability to revive Bombardier's large commercial aircraft business.
"Can you find a way to turn around the C Series aircraft?" Ryan Varette asked suddenly.
Xu Cang glanced at Ryan Varet silently and said with a smile: "As long as you are willing to accept the acquisition, Boeing's anti-dumping petition will be withdrawn, and the order with Delta will remain normal. Although it will be impossible to enter the US market for a period of time, this time will not be too long. In addition, AVIC will continue to cooperate with you, and finally our domestic ARJ21 market will give way to CS300!"
Ryan Valette paused for a moment, then quickly became ecstatic, but immediately turned to disappointment: "No, we don't have enough engines."
"Now the situation has changed, and I can free up some engine orders. Give me some time, and I can convince Airbus to give up its sanctions against you, at least in the field of engines."
"You convinced Airbus?" Ryan Valette was overjoyed. "Really?"
Xu Cang shrugged: "Airbus is having a hard time right now, what's impossible?"
Ryan Valette licked his lips, was silent for a moment, and quickly said, "Xu Cang, do you think this is okay? The commercial large aircraft business is the same as the business jet business. You symbolically invest one dollar to purchase 51% of the shares, and the remaining 49% will continue to be held by us. Of course, in this case, you only need to bear half of the debt. What do you think of this plan?"
If what Xu Cang said can really be realized, then the C Series aircraft will not only be able to come back to life, but also achieve a leap forward. It will be freed from the encirclement of Boeing and Airbus, once again have the cheap supply of AVIC, and at the same time gain access to the vast Chinese market. This is undoubtedly a bright future.
Of course, the premise of all this is that Xu Cang is willing to help.
Therefore, the commercial large aircraft business must give Xu Cang more than half of the shares, otherwise why would Xu Cang contribute? Even if the control is given to Xu Cang, based on the future prospects of commercial large aircraft, half of the profit is also considerable .
Ryan Varette is confident that he can convince the board to accept this plan.
As a result, Ryan Valette's idea was very beautiful, but Xu Cang rejected it without even thinking about it: "Although ARJ21 is just a transitional model and will not be developed in depth. However, if I transfer the market of ARJ21 to CS300, what can you provide? That's it, you want to share half of the profits, you are dreaming!"
In essence, the market positioning of ARJ21 is indeed awkward. The passenger capacity of more than 90 seats is a bit too small, while the passenger capacity of 110 to 130 seats of CS300 is more suitable for regional routes.
In addition, from a technical point of view, CS300 is still superior to ARJ21, which can also reduce its scope of application and maintenance costs .
However, no matter how bad the ARJ21 is, it is still his own aircraft. Replacing the ARJ21 with the CS300 is equivalent to handing over the vast secondary route market. Bombardier wants to share half of the profits without doing anything. How can Xu Cang accept it?
Ryan Valette said hurriedly: "What about 40 percent?"
Xu Cang raised two fingers: "Twenty percent, one fifth. You just need to drink the soup, but if you still want to eat meat, can you please position yourself clearly, huh?"
After saying that, Xu Cang shook his finger and said, "Remember, this is the bottom line. Don't push it any further."
Ryan Valette's face flushed red, but when he met Xu Cang's gaze, he quickly calmed down: "Okay, we accept it!"
