Bombardier forms Bombardier Aviation, divesting aerostructures

After releasing its financial results for the first quarter of 2019, Bombardier revealed it will consolidate its aerospace assets into a single, streamlined, and fully integrated Bombardier Aviation business unit, which will be led by David Coleal.

As the company moves to optimize its global manufacturing footprint, Bombardier will pursue the divestiture of the Belfast and Morocco aerostructures businesses. “These are great businesses with tremendous capabilities,” according to a company statement.

“We are very excited to announce the strategic formation of Bombardier Aviation,” said Alain Bellemare, president and CEO, Bombardier Inc. “It is the right next step in our transformation. The consolidation will simplify and better focus our organization on our leading brands, Global, Challenger, Learjet, and the CRJ.

“With our clear vision for the future of Bombardier Aviation, we will focus our aerostructures activities around our core capabilities in Montréal, Mexico, and our newly acquired Global 7500 wing operations in Texas,” Bellemare continued. “Collectively, these facilities provide Bombardier with all the skills, technologies, and capabilities to design, produce and service the current and next generation of aircraft.”

Business Aircraft revenues totaled $970 million on 24 aircraft, as deliveries ramp-up through the year to reach full year guidance. Aftermarket service revenues grew at 20% year over year, and Business Aircraft announced the expansion of its Singapore Service Centre by 2020. Backlog increased to $14.9 billion, mainly driven by Global 7500 orders.

Commercial Aircraft revenues reached $241 million in the quarter, reducing year-over-year as a result of the C Series [A220] Aircraft Limited Partnership with Airbus starting Q3 2018 as well as lower deliveries. Aircraft deliveries for 2018 were 35, with net orders of 47, giving a backlog of 97 airplanes.

In February 2019, Commercial Aircraft launched the CRJ550 aircraft with a new type certificate based on the CRJ700. With a 3-class cabin, it is designed to replace the existing fleet of aging 50-seaters. United Airlines will be the launch operator of this new model.

Commercial Aircraft lowered expected deliveries for the year to approximately 30 aircraft as a result of the Q400 divestiture, which is now expected mid-year.

Revenues at Aerostructures and Engineering Services grew year-over-year to $470 million as it continued to ramp up the Global 7500 and the A220 programs. External revenues increased year-over-year to 43% of total revenues as A220 components are now third-party sales.

Since closing the acquisition of the Global 7500 aircraft wing program on Feb. 6, 2019, Aerostructures and Engineering Services has focused on integrating the Red Oak, Texas facility to support the ramp-up of the Global 7500.

Bombardier’s Transportation division has faced ramp-up challenges that have hurt the bottom line. Bellemare stated, “Despite the current industrial challenges we are facing, the business fundamentals at Bombardier Transportation remain very strong. We have a refreshed product portfolio, a broad global customer base, and a strong $34-billion backlog. The team is making steady progress addressing our challenging legacy projects, however, it will take us a few more quarters to manage these projects to completion.”

In the fiscal year ended Dec. 31, 2018, Bombardier posted revenues of $16.2 billion.