The final phase of Bombardier‘s aviation business restructuring is approaching the finish line. The company announced today a definitive agreement to sell its aerostructures business to Spirit AeroSystems. The deal includes facilities in Belfast, Casablanca and Dallas. Spirit will pay $500 million in cash and assume liabilities in excess of $700 million as part of the deal.
This transaction represents another strategic milestone in the reshaping of our portfolio to focus on our strong business aircraft and rail franchises. We are confident that Spirit’s acquisition of these aerostructures assets is the best outcome for customers, employees and shareholders, and we are committed to ensuring a smooth and orderly transition.– Alain Bellemare, Bombardier President and CEO
For Bombardier the move follows the sale of its CSeries (now A220) line to Airbus. Then the Q400 turboprop business to Viking Air. Mitsubishi’s SpaceJet program purchased the Bombardier global support network over the summer. The aerostructures business was the final component to move.
The world flies with Spirit
Spirit AeroSystems is a relatively unknown player, especially given its outsized influence on the commercial aerospace market. The company is responsible for the manufacture of every Boeing 737 fuselage and other structural components. Indeed, the company depends on Boeing for roughly 80% of its revenue. Such a high dependency on a single outside customer brings tremendous risk, even if that customer is seen as “too big to fail.”
By diversifying its customer base Spirit can reduce the impact to its business of future single vendor challenges. Plus, the technology and expertise it is acquiring could prove helpful. With the Spirit AeroSystems sales team behind it and the in-house composite systems design and manufacturing expertise available, the potential for growth beyond the existing product suite in Belfast and Casablanca could prove a big win for the new owners.
Earlier this year the Belfast facility pushed hard to add work for outside parties beyond just the A220 wings with its advanced composites design and assembly capabilities. That move came, in part, as a hedge against the uncertain future of the A220 line. With the Airbus sales team now showing strong results with new customers, however, the market for those products appears stable across the mid-term horizon.
Just how Brexit plays out and what that means for moving raw materials to the facility or the manufactured goods back to Europe remains to be seen.
Bombardier’s refocused future
With these businesses now divested the Bombardier Aviation operation is firmly focused on the business aviation segment. The company will continue to manufacture the LearJet, Challenger and Global families of business jets. It will also now depend on Spirit AeroSystems in part for the manufacture of parts and systems related to the construction of those jets as well as ongoing support for the in-service fleet.