It’s the end of the work week and we continue with our news update series related to previous Supply Chain Matters posted commentaries or news developments.
Another Bombardier C-Series Program Delay
Supply Chain Matters has featured past commentaries concerning Bombardier and its efforts to make its presence as an aircraft provider in the single-aisle market and compete with the likes of an Airbus or Boeing. The company’s C-Series of aircraft were designed to offer prospective air carriers an technologically advanced single aisle aircraft at perhaps a more cost competitive option for airlines. However, like many other commercial aircraft programs, the C-Series has suffered a series of milestone setbacks. The first maiden flight of the C-Series was in September 2013, nine months behind its original schedule. In December, the aircraft and diversified transportation equipment provider replaced its head of aviation sales due to lagging booked orders.
There are reports of continued setbacks regarding the C-Series program. This month, Bombardier re-started ground tests following a test failure of the aircraft’s innovative geared turbofan engines designed and produced by Pratt & Whitney. The company further announced that it will not feature the C-Series at the Farnborough International Airshow that occurs in July, forgoing a major sales opportunity. The revised plan is to introduce the smaller CS100 version of the C-Series in the second-half of 2015, with the larger version six months later. Thus far, about 15 percent of test activity has been completed.
The company has scaled-down its expectations of orders to a number of 300 expected orders by the time the aircraft enters operational service. Air Canada had been evaluating the C-Series as a potential replacement for 25 existing Embraer aircraft has now indicated it will not order any of the aircraft.
Airbus Loses Huge A350 Order
An update to our ongoing Supply Chain Matters commentaries regarding Airbus’s A350 supply chain which completed its maiden flight in June of 2013. A major new program development includes some disappointing news.
Business media reported last week that Airbus suffered one of the industry’s largest plane cancellations. Emirates Airlines elected to walk away from a previous deal to acquire 50 A350-900 and 20 A350-1000 aircraft after the airline reevaluated its long-term capacity needs. Emirates is apparently concerned that capacity at its Dubai hub could be an impediment to long-term growth, and that larger capacity aircraft should be part of its fleet strategy.
According to a published report by the Wall Street Journal, the A350 order was placed in 2007 and had a list price value of $16 billion. The cancellation represents a 9 percent hit to the A350 current order backlog. That will add some sting to the A350 supply chain ecosystem.
According to the WSJ, Emirates is the most influential buyer of Boeing’s 777 and Airbus’s A380 super jumbo aircraft. In November, Emirates boosted its A380 order commitment to 140 aircraft.
The order cancellation also effects engine provider Rolls Royce who indicated that its order book would fall by about 3.5 percent or $4.4 billion as a result of the Emirates decision.
UPS Appoints New CEO and Other Senior Management Changes
Earlier this month, UPS announced that David Abney, currently the company’s Chief Operating Officer, will be the transportation provider’s new Chief Executive Officer. Scott Davis, who has served as the company’s Chairman of the Board and CEO since 2008, will retire from UPS and will assume the role of non-executive Chairman. Both appointments are effective September 1, 2014.
In conjunction with the appointment of a new CEO from the ranks, UPS announced further senior management appointments. Alan Gershenhorn was appointed Executive Vice President and the company’s first Chief Commercial Officer, effective immediately. Gershenhorn will lead development and implementation of broad strategic growth and innovation initiatives focused on creating distinctive customer value. These include new market development, innovative future products and solutions, increased speed-to-market and stronger customer engagement across the entire UPS portfolio. Gershenhorn, a 35-year UPS veteran, previously served as chief sales, marketing and strategy officer.
UPS also announced the addition of Kate Gutmann to lead the provider’s global sales solutions and customer engagement strategy. Her new role as Senior Vice President of Worldwide Sales and Solutions was created to further market penetration through broader customer relationships. Gutmann is a 24 year UPS veteran.
Mitch Nichols, a 27-year UPS veteran and current president of UPS Airlines, was promoted to a newly created position on the Management Committee as Senior Vice President of Transportation and Engineering. His responsibilities will include UPS Airlines, transportation, engineering and sustainability.
Brendan Canavan, currently president of UPS Asia Pacific, will replace Nichols as president of UPS Airlines. Nando Cesarone, a 24-year UPS veteran, was promoted to President of UPS Asia Pacific.
Rhonda Clark will become the company’s Chief Sustainability Officer (CSO). Amy Whitley was named as the company’s first Chief Diversity & Inclusion Officer. Whitley will oversee global strategies to ensure that UPS leverages the talents and unique perspectives of a diverse workforce. She will also serve as vice president overseeing strategic human resources programs.
Tesla Motors Releases its Patents to Industry Rivals
Tesla Motors announced that it is offering open access to its patents related to its electric car technology to other automotive providers. CEO Elon Musk indicated that the offer is intended to spur wider development of electric powered vehicles that currently only make-up less than one percent of the new car and truck market. BMW is already interested, confirming that it has met with Tesla to discuss the success of electro-mobility on the international level.
Musk hinted at another reason for this announcement. Readers will recall tesla’s bold announcement to build a “gigafactory” in the U.S. to produce the company’s smaller battery packs for the industry. A sharing of Tesla developed IP can insure that the planned U.S. battery factory can be a potential supplier for other manufacturers.
Kinaxis Completes its IPO
Supply chain planning technology provider Kinaxis announced that it has completed its public offering of the company’s stock in Canada. Kinaxis issued 5,000,000 common shares and an aggregate of 2,739,715 common shares were sold by certain selling shareholders at a price of Cdn$13.00 per share. Canadian business media reports identified the selling shareholders as Boston based HarbourVest Partners and Alberta Trust of Montreal, both of which retain a 30 percent ownership stake.
The initial public offering and secondary offering resulted in aggregate gross proceeds of Cdn$65.0 million to Kinaxis and Cdn$35.6 million to the selling shareholders, for total aggregate gross proceeds of Cdn$100.6 million. Kinaxis’ common shares will be traded on the Toronto Stock Exchange under the symbol “KXS”.
Kinaxis CEO Doug Colbeth indicated to media that proceeds from the IPO will be utilized to pay down $30 million in debt and strengthen the company’s balance sheet. He did not rule out acquisition of other companies if that makes sense for Kinaxis’s business. Kinaxis reported a net loss of Cdn $9.7 million in 2013. In the first quarter of 2014, the company reported revenues of Cdn $15.6 million and a net income of Cdn $2 million.