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Bombardier Sells A220 to Airbus, Exits from Commercial Aviation

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Bombardier Sells A220 to Airbus, Exits from Commercial Aviation

Bombardier Sells A220 to Airbus, Exits from Commercial Aviation
February 13
14:53 2020

MIAMI – Canada’s Bombardier announced on Thursday the sale of its A220 stake to Airbus and the Quebec government, effectively exiting commercial aviation.

According to a statement, Bombardier will receive US$591 million from Airbus for its 33.58 percent stake in the joint Airbus Canada Limited Partnership (ACLP).

Earlier this week, Bombardier entered into an agreement with Airbus and the Government of Quebec to transfer its shares in a move to improve Bombardier’s cash position.

Initially, the agreement included cash proceeds of ~$600 million from Airbus, of which $531 million was paid upon closing with the balance to be paid over 2020-21, and the elimination of all future capital requirements for the A220 program, estimated at ~ $700 million.

The agreement also included the transfer aerostructures activities and employees supporting the A220, highly considered by operators and travelers for its fuel savings, quiet engines, and cabin features, and the A330 in St-Laurent, Québec to Airbus subsidiary Stelia Aerospace.

A220 Air Canada Taxiing

Thursday’s transaction increases Airbus’s share in the A220 to 75 percent, while the Quebec government retains a 25-percent stake that it plans to sell to Airbus in 2026, three years later than scheduled.

“This transaction supports our efforts to address our capital structure and completes our strategic exit from commercial aerospace,” Bombardier chief executive Alain Bellemare said.

Bombardier reported a loss of $1.61 billion for 2019. The company will use the funds from Thursday’s sale to pay down its more than US$9 billion debt.

A year struggling to cut losses


In June of last year, the Montreal-based company, in the midst of a significant restructuring process, had exit-stage-left on commercial aviation to set its sights on the more lucrative industries of mass-rail transport and business jets.

Consequently, the final sale of its CSeries program (at the time rebranded the A220) to Airbus earlier in 2019 and the closing of a multi-million dollar deal with Canada Longview Aviation for the sale of its Q400 turboprop aircraft marked the beginning of the end for Canada’s prime airplane manufacturer.

In hindsight, the struggling train and plane maker was attempting to mitigate costs and plug the drain of a seemingly unending money-losing commuter jet business unit.

Alexandre Gouger

Bombardier invested in a ten-year period large sums to develop three new aircraft, including more than US$6 billion on the A220, to compete against behemoths Airbus and Boeing. But the C-Series program drove the company to the brink of bankruptcy before it was bailed out by the Quebec government.

The agreement announced earlier in the week provided for the cancelation of 100,000,000 Bombardier warrants owned by Airbus. With Thursday’s deal, Bombardier will be spared from having to make a US$700 million investment in the joint venture over the next year.

The company reported on Thursday a US$1.6-billion net loss for fiscal 2019 on revenue of US$15.7-billion.

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About Author

Daniel Sander

Daniel Sander

A Scottish Avgeek, based near Glasgow, Scotland. Has a massive passion for Aviation, runs a YouTube channel with over 7,000 Subscribers, Studies Tourism Management and writes for Airways during his free time.

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