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Bombardier announced it has entered into a definitive agreement to sell its Downsview property in Toronto to the Public Sector Pension Investment Board for $816 million (US$635 million).
The deal is subject to customary closing conditions and is expected to be finalized in the second quarter of 2018, Bombardier announced on May 3, 2018.
Bombardier intends to continue operating from Downsview for up to three years after the deal closes, with two optional one-year extension periods.
In parallel with this development, Bombardier announced it has entered into a letter of agreement with the Greater Toronto Airports Authority (GTAA) for a long-term lease of about 38 acres of property at Toronto Pearson International Airport.
Bombardier intends to open a new centre of excellence and final assembly plant for its Global business jets at Pearson.
“As part of Bombardier’s five-year turnaround plan, we have been reviewing our facilities worldwide to ensure we have the most efficient and cost effective operations necessary to support our growth objectives,” said Alain Bellemare, president and CEO of Bombardier Inc.
“Today, we only use about 10 per cent of a 370-acre site at Downsview and bear the entire cost of operating a 7,000-foot runway. So, we are very pleased to have reached agreements with PSP Investments and the GTAA.
“Together, they allow us to monetize an underutilized asset, further streamline and optimize our business aircraft operations, and will support further economic development and job growth in the Greater Toronto area.”
Bombardier’s Downsview facility employs 3,500 people and is dedicated to the manufacture and assembly of the Q400 turboprop and Global business jets.
Downsview is also part of an aerospace hub that includes a new $78 million aerospace campus for Centennial College. The provincial and federal governments allocated $44.2 million toward that project in 2016.
Bombardier has been at Downsview since 1992, when it acquired a de Havilland operation from Boeing that had been on the property since 1928.
In 2004, Bombardier said it was “committed” to the Downsview aircraft plant, which at one point was Toronto’s single largest industrial employer.
There was no immediate word on how Bombardier’s Downsview workforce will be affected by the sale, which also raises questions about the future of the Q400 program.
With a backlog of 50 planes, the Q400 has about 25 per cent of global market share for the segment, second to European rival ATR, according to Reuters.
Bombardier also announced that nearly all regulatory approvals have been obtained for an agreement to cede control of its C Series program to Airbus.
That transaction is expected to close before the end of the second quarter of 2018, sooner than originally planned.