Bombardier published this press release today. Essentially, Bombardier announced that it is consolidating three aerospace units into one to be called Bombardier Aviation. And divesting a number of its aerostructures operations, including those in Belfast and Morocco. Alain Bellemare and team are looking to streamline and focus the aerospace side of the organization on business jets as they prepare to address the heavy debt load incurred while developing the C Series and Global 7500.
We’ve been watching this evolution take place over several years now. The C Series found a home with Airbus. The Q400 is on its way to Longview, and the CRJ program remains under a strategic options review. Last fall, the company made two additional moves telegraphing its pivot to business jets. It combined its central engineering function within its business aircraft segment and acquired the Global 7500 wing operations from Triumph. So, today’s announcement should not be that surprising.
The obvious two questions from the announcement are: (i) what about the CRJ and (ii) who are the potential buyers for the operations Bombardier is looking to sell? Airbus is obviously top of the Belfast list given the amount of work they already have coming from that facility. Spirt and or MHI might also see this as an opportunity to diversify their current Boeing heavy portfolio. And, surely some big players in private equity will see value in the assets. Aerostructures, after all, remains a very fragmented market, really the last such segment in commercial aerospace. And, rarely does such a large opportunity with Belfast’s wing capabilities and Morocco’s cost structure come to the market. Bear in the mind the state of the supply chain and how many firms in the supply chain are being snapped up. These facilities should be an easy sell at full retail.
As for the CRJ, we still think a partnership with or sale to a new commercial aircraft OEM looking to gain solid customer relationships, an established aftermarket business and, most importantly, aircraft certification experience make a lot of sense. One thing is clear following the Boeing 737 MAX situation, aircraft certification expertise has become more valuable. We’ll see what happens here, but if no deal can be had it looks like Bombardier is prepared to put the CRJ into a leaner more streamlined organization.