The Feb/Mar issue celebrates the A220 at Air Canada and Harbour Air’s ePlane. We profile Conair and fly the Kodiak 100 amphib. Plus: Imagine being alone in the air!
Bombardier’s ties to its former C Series commercial airliner are now completely cut.
The company announced on Feb. 13 that it has transferred its shares in the Airbus Canada Limited Partnership (ACLP) to Airbus and the Government of Quebec’s Investissement Quebec (IQ). ACLP, the Mirabel-Que.-based manufacturer of the Airbus A220 (formerly the C Series), is now 75 per cent owned by Airbus and 25 per cent by IQ.
As part of its massive financial and operational restructuring efforts, Bombardier has been divesting assets in order to raise funds for debt reduction purposes. Related to this sale, Bombardier received US$531 million from Airbus and is expected to receive approximately US$60 million more by the end of 2021.
While the C Series program had a slow start, it has proven to be a most exciting aircraft. Airlines around the globe have taken note of the A220’s cost efficiency, its range and its comfortable cabin. So far, 658 A220s have been sold and 107 have been delivered. In order to get the remaining aircraft to their customers in a timely fashion, and in anticipation of additional orders, ACLP is increasing the A220 production rate. This will require additional funds for capital expenditures and working capital requirements. By exiting ACLP, Bombardier will no longer have to contribute approximately US$700 million to that effort over the next 24 months.
Bombardier’s departure from the A220 program is the latest in a series of moves that has seen the company back away from the production of commercial airliners. It began in early June 2019 with the sale of the Q400 turboprop airliner program to Longview Aviation Capital Corp. The Bombardier Q400 has since been renamed the De Havilland Dash 8-400 and continues to be built at Downsview Airport in Toronto, Ont.
Later that same month, Bombardier announced that it had reached an agreement to sell its CRJ regional jet program to Mitsubishi Heavy Industries (MHI) of Japan. After the deal closes, likely by mid-2020, MHI will own the maintenance, support, refurbishment, marketing and sales activities (as well as the type certificates) for the CRJ family of airliners. The CRJ production line at Mirabel, Que., is expected to close after the final aircraft on order is completed during the second half of 2020.
The next move came last Halloween, when Bombardier agreed to sell it aerostructures business to Spirit AeroSystems Holding. This included aircraft components and systems manufacturing activities in Belfast, Northern Ireland; Casablanca, Morocco; as well as the aerostructures maintenance, repair and overhaul (MRO) facility in Dallas, Texas.
Today’s ACLP announcement completes a series of steps taken by Bombardier to reduce its role in the A220 program. Four years ago, Bombardier owned 100 per cent of what was then named the C Series program. The development of the two models (CS100 and CS300) proved to be an ambitious and expensive undertaking – in terms of both engineering and financial resources.
On June 30, 2016, IQ acquired a 49.5 per cent interest in the program when it pledged US$1 billion in equity. Bombardier later saw its 50.5 per cent interest diluted to 33.55 per cent when Airbus acquired a 50.01 per cent interest on July 1, 2018. IQ’s interest slipped to 16.44 per cent at that time.
With the sale of its remaining shares of ACLP, Bombardier has exited the commercial aviation industry. This will allow management to focus on its two remaining businesses:
- Bombardier Aviation (100 per cent owned) – the largest producer of business jets is currently marketing its Global7500, Global 6500, Global 5500, Challenger 650, Challenger 350 and Learjet 75 Liberty models.
- Bombardier Transportation (67.5 per cent owned) – one of the largest manufacturers of mass transit and inter-city trains.
Since Bombardier first became involved in aerospace, with the acquisition of Canadair in 1986 and the subsequent purchases of de Havilland Canada, Learjet and Short Brothers, it has created exciting new products that have gone on to capture significant shares of their respective markets. These have included the CRJ series of regional jets, the Q400 turboprop airliner, and the Challenger and Global families of corporate jets.
The C Series was to have been the next in a series of aeronautical successes for the company. It was an ambitious undertaking for what had always been an entrepreneurial company. Unfortunately, it took a toll on the company’s balance sheet and has now been sold off as part of Bombardier’s significant financial restructuring.
Bombardier’s loss is certainly Airbus’s gain. Today, Green Africa Airways of Lagos, Nigeria, has announced that it has signed a memorandum of understanding (MOU) for 50 A220-300s. It is yet another indication that the largest jet aircraft ever designed and built in Canada is poised to take a meaningful share of its target market.