Bombardier to review A220 program stake after financial bump
The Canadian aerospace and transportation manufacturer, Bombardier, announced its preliminary financial results for Q4 2019 and the full year. With the results being below guidance, as the company indicates, it is “actively pursuing strategic options to accelerate deleveraging.”
Preliminary results indicate that the company expects to earn a total revenue of $4.2 billion in Q4 2019 and $15.8 billion in 2019. Bombardier’s aviation division, which mostly generates cash with the delivery of business aircraft, brought in $7.5 billion in revenue during the year, while during the last quarter, it brought in $2.4 billion. It delivered a total of 142 business jets in 2019, including 11 of its newest flagship, the Global 7500. Commercial aircraft division delivered 33 CRJ aircraft.
However, the transportation division has faced challenges during 2019. The company was forced to take a $350 million charge related to projects in the United Kingdom.
All in all, the company expects to make an Earnings Before Interest and Taxes (EBIT) loss of $130 million in Q4 2019, while full-year results should stand at $400 million, much below its predicted forecast of $700-$800 million.
Exiting commercial aviation
During the year, Bombardier started the sale procedures of its commercial aircraft assets, including aircraft programs. In June 2019, the Canadian manufacturer sold the CRJ program to Mitsubishi Heavy Industries, which also aims to enter the regional jet market.
The same month, the Canadian company also announced that Longview Aircraft Company of Canada Ltd. purchased the Dash 8 Q400 program. While the sale of the latter is completed, the former is still pending governmental approval, according to the manufacturer’s latest statement.
The deleveraging of its Aerostructures factory in Belfast to Spirit AeroSystems is also pending approval. Bombardier expects both deals to close by mid-2020, providing an additional $1.1 billion of cash, states the press release.
With its intentions very clear to abandon commercial aviation, the Canadian company publicly stated its intentions to take a look at its 33.5% stake in the Airbus A220, formerly known as the Bombardier CSeries, program. Airbus’ intentions are also very clear: it plans to increase its A220 output by the middle of the decade in Mobile, Alabama alone.
“[…] the latest indications of the financial plan from ACLP calls for additional cash investments to support production ramp-up, pushes out the break-even timeline, and generates a lower return over the life of the program.”
Currently, Airbus owns 50.6% of the A220, while Investissement Québec has a 16.3% stake.
In 2019, the European manufacturer delivered 48 of the former CSeries aircraft.
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