A top Wall Street analyst views Bombardier’s pending sale of the CSeries programme to Airbus as a key step in the Canadian manufacturer’s larger plan to exit the commercial aircraft business.
Speaking to the Pacific Northwest Aviation Alliance conference near Seattle on 13 February, Merrill Lynch senior equity analyst Ron Epstein traced the agreement to the hiring of chief executive Alain Bellemare in February 2015.
“When the new management team came in place, one of their goals was to, how do I say, de-leverage the company from its reliance on commercial aviation. They quickly put Bombardier on a path to become a transportation and business jet company,” Epstein says.
“My expectation is, if you roll the clock forward that’s what we’ll see from Bombardier,” he adds.
In October, Airbus agreed to acquire a 50.01% stake in the CSeries joint venture in a non-cash transaction. Airbus and Bombardier expect the deal to close in the second half of this year, if approved by anti-trust authorities.
The partnership was proposed two years after Bombardier narrowly avoided bankruptcy, with its ambitious CSeries programme over-budget, behind schedule and struggling to attract orders.
After ushering the CS100 and CS300 into service and closing two loss-making orders in 2016, Bombardier continued to struggle with ramping up production, delivering only half of the originally planned 35 deliveries in 2017.
Bombardier continues to sell the Q400 turboprop and CRJ900 regional jets to airlines, but the company has proposed no new commercial products to replace them.
Airbus did not pay Bombardier cash for the majority stake in the CSeries, but the partnership between the two companies may provide other benefits, Epstein says.
Bombardier’s aerostructures plant in Belfast has been selected to build engine nacelles for the Airbus A320neo, he says.