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Its woes stem largely from the C Series commercial jet program it launched in 2008.That effort was scuttled by delays, budget overruns, and an (ultimately unsuccessful) trade complaint from Boeing Co., forcing Bombardier to sell a majority stake in the program to Airbus SE for a single Canadian dollar.Airbus earlier this year agreed to buy Bombardier out of the program—now called the A220—entirely for about $600 million.The huge debt load Bombardier took on to fund the plane’s development remained, however.
Having already agreed to sell its regional jet line to Mitsubishi Heavy Industries Ltd., Bombardier announced a deal earlier this year to divest its train unit to Alstom SA for $8.4 billion, including transferred liabilities.
So when Covid-19 hit, Bombardier was planning a future around just one operating unit: business jets.It’s predicted deliveries of business jets will be down 30% industrywide this year relative to 2019 and is eliminating 2,500 jobs .
The irony is that private aviation is one of the relative bright spots in the beleaguered aerospace market.The pandemic has made avoiding other people on flights more appealing than ever.
And the swift rebound in financial markets has meant that money isn’t as tight for the wealthy and corporations as it was in past downturns.Honeywell International Inc., which makes engines for business jets, has predicted private-jet flights will return to 2019 levels by next year .The International Air Transport Association says it will take until at least 2024 for global commercial passenger traffic to recover.
But the most popular private plane options this year have been smaller jets, noted Rob Stallard, an analyst at Vertical Research Partners, in an October report.That doesn’t favor Bombardier, whose sales pitch for its marquee Global 7500 model is that it’s the largest and longest-range business jet available.
New designs typically account for more than half of total market demand, said Carter Copeland, an analyst at Melius Research, in an August update on the sector.That favors companies with the youngest portfolios of business jets, such as General Dynamics Corp.’s Gulfstream division and Textron Inc.
’s Cessna unit.And Bombardier’s stressed financial situation may turn off buyers worried about whether they’ll be able to get their planes serviced years into the future, Copeland said.
Bombardier’s great unraveling was about getting time and money to rebuild around its business jet unit.The relatively shallow downturn in this market during the pandemic means it still has a shot at making that happen.But it won’t be easy.
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