Bombardier to sell Belfast wing factory, dumping key parts of profitable Aerostructures unit

May 2, 2019, © Leeham News: Bombardier today reported its first quarter earnings, which were lower than originally expected by analysts and previewed last week.

But the big news are plans to sell its Belfast, Northern Ireland, wing factory and its aerospace facility in Morocco.

The Belfast plant produces wings for the Airbus A220 (nee C Series). This plant and the Morocco facility were reorganized previously into an Aerostructures unit that has been profitable.

Bombardier now labels these plants as non-core to its business.

The CRJ program, which is for sale, has been put into a new Bombardier Aviation business unit that includes the business jets.

First quarter results

Bombardier last week announced that its 1Q financials were lower than previous guidance. Today’s earnings release affirms last week’s announcement.

BBD’s results were boosted by the closing of the sale of its training unit, adding $516m to the results. The company used $1bn in free cash flow. For the full year, Bombardier now projects revenue of $17bn, which is $1bn lower than its previous guidance.

Revenues for the CRJ/Q400 programs were just $241m, with only four aircraft delivered in the first quarter. The Q400 program has been sold to Canada’s Viking Air. Closing is expected mid year. Bombardier expects 30 airliner deliveries for the full year. Bombardier forecasts revenues of $1.15bn and a loss of $125m for the year for this business unit.

Moving toward growth

CEO Alain Bellemare said that this year, like last year, is a transition cycle. Bombardier is now moving toward a growth cycle, he said.

There will be two strong pillars for growth, he said: Bombardier Aviation and Bombardier Transportation. The Global 7500 is key to the growth for Aviation.

He said Bombardier is focused on building backlog for the CRJ even as it continues to “explore strategic options” for the program.

“Right sizing” Aerostructures is the best use of capital, Bellemare said. Remaining Aerostructures operations will be consolidated into Bombardier Aviation.

“Bombardier Aviation is well positioned to become the best business jet unit in the world,” he said, and maximize the CRJ program.

Bellemare said that the future of Bombardier is with business aircraft and rail. “Clearly we are divesting out of commercial,” he said. “We want to focus on business aircraft moving forward.”

37 Comments on “Bombardier to sell Belfast wing factory, dumping key parts of profitable Aerostructures unit

    • if Spirit bought them, they would have all the pieces to become a new OEM….

      • I suspect that anyone buying the Belfast plant would want a long term contract with Airbus for the wings.

        And if Airbus is also bidding for the plant wouldn’t that give them a lot of leverage !!

        That leaves aside the whole problem of Brexit, which is fundamentally stuck because of the unresolvable issues over Northern Ireland, leaving the status of Belfast somewhat of an issue.

        • Brexit is not a problem for aerospace, Airbus gets structures and parts from outside the EU now , even Spirit in US is a supplier just as Boeing gets parts from EU countries. Anyway the Carbon fibre wing plant exports to Canada not France.
          So much gobbleygook about Brexit effect when there is none in this instance.

          • The UK will not be part of CETA after Brexit, so it matters

          • Rest In Peace flybmi, 400 job losses including mine, thanks largely (though not exclusively) to loss of intra-European routes (Brexit) and high(er) fuel prices caused by the decline in value of the UK pound Sterling (Brexit).

            Brexit IS a problem for aerospace (in the UK).

          • Flybmi?
            “Why did it close?

            The airline was heavily loss-making, and no-one was prepared to put in extra funding. The average passenger load per flight was just 18, meaning even the small regional jet planes(Emb135/145) flown by Flybmi were less than half-full”
            You cant expect to continue when theres a long period of allways losing money. Independent.co.uk

    • You would think that Airbus would be interested in buying the wing factory, it would be one way to reduce production costs for the A220 if they can get it for a reasonable price.

      I think the Morocco plant produces A320 NEO thrust reversers as well, so it may well make sense for AB to buy the business.

      • I wonder what a reasonable price is? High tech wing factory. Maybe 2 Billion?

        • Airbus has been exiting the structures plants it does own, firstly turning them into a subsidiary business and long term plan is to find buyers.
          Stelia Aerospace for example, which is based on the SOGERMA business in Toulouse its self and some other units such as Aerolia

          • Aerostructure manufacturing is not core to Airbus. Airbus Group still owns Premium Aerotec and Stelia Aerospace though. It divested from Alestis Aerospace recently (had to step in to secure A350 Belly Fairing) and hopes to do so for PFW Aerospace for quite a time (had to step in before inevitable brankruptcy to secure supply chain, i.e. the manufacturing of detail parts like tubing & ducting as part of single source contracts). PFW is on the list of “to be disposed of”…
            Stelia Aerospace is the result of Airbus’ Aerolia (itself an announced “divestments” from some A-F sites like Méaulte), merging with EADS Sogerma.

    • Will not be surprised if an existing German Airbus structures supplier like Premium AEROTEC unless GKN with some UK goverment support want to buy it to protects its own manufacturing to Airbus in the UK.

      • Agreed, Airbus will not buy it unless forced to

        Belfast is also in the problem laden UK

      • I would say that PAG has more than enough own problems (just about to layoff 30% if its Augsburg workforce). But Stelia could be interested, as they could strengthen their business with BBD and utilize on their existing African footprint (although Algeria).

        • Yes, many structures manufacturers have to invest in Composites and robots with matching fixtures, Composite ovens and NDT robotic Equipment. Those who think they can cut, bend and drill 2024T3 alu and similar Alloys only will disappear.

  1. How long before they start selling the remaining Business jet businesses one by one?

    • Why do that . Its hugely profitable even if the smaller Lear branded jets are slow sellers the heavy iron are the size of small airliners and makes more money

      • DHR:

        Because BBD is listing Business Jets and Trains as the two key groups they want to anchor the com,many arround ?

  2. The the BBD/AB JV was structured to present almost no risk to AB. To date is has been almost all BBD money. But if AB buys the wing plant that large financial commitment to the program will mean they are willing to take risks and actively work to make the program a success. Not just harvest whatever revenue it throws off.

    It may also hint at their thinking about a future A32x wing.

    • Agree. I noted Airbus’s commitment on the most recent Bjorn report. With Boeing buying Embraer, you would think Airbus would throw in the towel and get serious about what the Boeing / Embraer tie-up means. Long term it could mean synergies from the 70 – 90, 100 – 160 and ultimately the large NSAs. Boeing is obviously tied-up with the MAX issues, but they could look like a winner down the road, especially if Airbus rests on its laurels. Business schools could study this situation in the future.

  3. With the major wing factory just over the water in Wales it might make sense for Airbus but I guess they will want to know the Brexit outcome first.

  4. No doubt GKN will look. They have a broader customer base so it might be a win win.

  5. Probably they are asking Airbus to take charge, Airbus answering “wait till Brexit is finished and we know whats going on”….Bombardier getting nervous

  6. Any suggestion whether the sale of the physical site also involves sale of the IP assoicated with it? My recollection (I’m not 100% on this) is that Bombardier retained their wing IP (ie the bit that Airbus would, I guess, be interested in rather than any ‘metal bashing’ operations) when they divested the C series to Airbus.

    • Its was a JV , not divested as Bombardier still owns 50% of JV, and only includes Mirabel final assembly line ( with structures made in various other places) and of course marketing and in service support.
      There is an option for Airbus to ‘buy’ the rest of the JV

  7. I bet Shenyang bids on it as part of a AB JV. That will give give them expertise in modern composite wing manufacturing to go with their capabilities in LiAl fuselage construction. Airbus strengthens their position in China.

    • EU/US would not like that so the UK have to wait until after Brexit is completed.
      The UK risk of being a post industrial society after Brexit with advanced engineering companies being sold or moving out making the UK becoming a rainy Greece, we will see.

  8. Obviously, Bombardier will sell only tangible assets and in one sale both those in Belfast and Morocco. Why ? Tom Enders, the former CEO of Airbus, has stressed more than once: manufacture in England will add costs of 20 to 40% because of the Brexit’s giftedness, which, as we can see, will happen, certainly, it’s a matter of time! What a nice niche to sell all this. And tell the British government (which has put subsidies in this production unit) all jobs will be maintained, or almost. And Belfast, it’s a British province, let it be said! Airbus will never agree to buy the Belfast plant. I believe Bombardier will transfer wing manufacturing to its new Texas site. Indeed, let’s not forget that Bombardier retains the intellectual property of wing technologies. And it would be easier for Airbus to buy its wings in US $ And eventually to get the new wings for its A321XLR(or A322) project to Alabama …. So Airbus would avoid a direct commercial war with Boeing, the case of C-Series in front, and considering the monstrous difficulties that will meet the Chicago giant: all will be united for Boeing and against the competition.

    • Can’t find Enders saying Brexit will add costs 20_40%
      To be honest doesn’t make sense in a real way, after all Airbus gets major components from US now ..which is outside EU.

  9. And what is the net profit on the sale of a Global? 50% of the average selling price of 50 mm $? So, 10 Global aircraft sold per quarter = $ 250 million profit? Multiply by 4 quarter = $ 1 billion? 80 Globals sold per year in 3 years = $ 2 billion? In 5 years, the debt will be reduced to a fair proportion, only with Globals … The question now is what is the future of the new entity “Bombardier Aviation” in the commercial aviation sector. Unless the future that concerns them will further the idea of ​​private aviation, a new sector that will make flying cars … BRP (Bombardier Recreational Products / Ski-Doo, Sea-Doo, etc.), the other company owned by the Bombardier family, it already has know-how in this area and could come back, one day under Bombardier’s umbrella … to become a big manufacturer of a flying taxi-car, or a luxury flying limousine. ..

    • Thanks. Quite a few. (The Learjet 75 is a minor derivative of the Learjet 45.

      Learjet 45 fleet grounded circa 2003 due crash caused by fastener in tail.

  10. Why bother having any aviation work?

    It should be synergistic, the expertise and technology spread across product lines, moving from one project to another as Boeing did with 757 and 767 (which were timed differently enough to do that to substantial degree).

      • https://en.wikipedia.org/wiki/Learjet_45 indicates wings built by deHavilland Canada (subsidiary of Bombardier) with fuselage and tail built in Belfast – sounds backwards.

        Tail parts of the deHavilland Dash7 and Canadair Challenger were at one time built by Canadian Aircraft Products in Richmond BC, IIRC, it changed name to Avcorp Industries and relocated to nearby Delta BC.

        • Airframer.com lists the following “fuselage sections” made by Bombardier Belfast
          Learjet 70/75 – Complete fuselage
          Bombardier Challenger 300 series – Centre fuselage
          Bombardier Challenger 605 – Centre fuselage
          Bombardier CRJ200/Challenger 850 – Fuselage central section, fore & aft fuselage plugs
          Bombardier CRJ700/900/1000/550 series – Forward & centre fuselage (CRJ700 NextGen); complete centre fuselage (CRJ900 NextGen); complete centre fuselage (CRJ1000 NextGen)
          Bombardier Dash 8 Q Series – Fuselage (Q400)
          Bombardier Global series – Horizontal stabilizer & forward fuselage
          Learjet 40 XR – Complete fuselage
          Learjet 45 XR – Complete fuselage

        • Right Keith, Bjorn’s article does say that the Q400 (fka Dash 7) program has been sold to Viking Air.

          Viking Air, which may now have more than one corporate name, had parts fabrication and aircraft repair/refurbishment at Victoria International Airport, and final assembly for the new Twin Otter at Calgary International Airport, where rebuilding of Twin Otters has long been carried out. (High crash rate on the frontier it seemed when I saw Field Aviation’s facility years ago.) I expect the same division of work for the new variant of the CL415 forest fire suppression aircraft. The Dash 7 program factory is in Ontario.

          At this time labour in Victoria is a seller’s market, sometimes Viking has run classes including to bring people with aptitude up to a needed skill level.
          Calgary at this time may be a buyer’s market because of the slump in the oil industry resulting from low prices and limited conduits to export oil (big political fight in Canada).
          Toronto I don’t know, often there are many people wanting to leave Quebec because of its oppressive language laws and corruption.

  11. Have there been any orders for the CRJ-550 or is this just a makeover for existing planes?

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