Bombardier Divests A220 Program

Bombardier Divests A220 Program

Under an agreement with Airbus and Canada's Quebec provincial government, Bombardier said it will transfer its shares to Airbus and the provincial government due to over 9 billion US dollars in debt.

Airbus will now acquire the remaining Bombardier shares at a cost of nearly USA $600 million.

The deal boosts Airbus' stake in the program from just over 50 per cent to 75 per cent, while Quebec's share jumps from 16 per cent to 25 per cent.

"The strategy was always to exit commercial aircraft, and we've done that very successfully, while protecting jobs".

Bombardier has given up its share in Airbus Canada Limited Partnership, which builds the A220 aircraft in Quebec, Canada.

"We have options and we are going to continue looking at our options to see if there (are) ways that we can accelerate the deleveraging phase of the turnaround plan", he said on a conference call.

"The CSeries was a cash drain, ' Bombardier chief executive Alain Bellemare said on February 13".

"We are looking at our strategic options".

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The agreement takes effect immediately, bringing to an end to Bombardier's involvement in commercial aerospace.

The news comes as Bombardier reported a loss of US$1.61 billion for 2019 as rumours continue to swirl around the potential sale of one of its two main divisions later this year.

While its business jets are now at full production, analysts highlight the cyclical luxury market of private planes in comparison to the relatively stable field of rail auto and network construction, which is fuelled by government infrastructure projects.

The company lost $1.61 billion in 2019 and finds itself with total debt of $10 billion.

Bombardier underestimated development costs of its plane which rose to $6 billion, and completed years behind schedule.

Multiple reports have suggested that France's Alston is in talks to purchase Bombardier's rail division for just under US$7 billion.

Quebec Economy Minister Pierre Fitzgibbon called the new deal a "win-win" for all partners.

Get the business news and analysis that matters most every morning in our Star Business email newsletter. "And, we are confident that the A220 program will enjoy a long and successful run under Airbus' and Québec's stewardship".

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