Bombardier has agreed to sell its three areas of aerospace plants, including the historic Belfast wing factory. The sale will be to U.S. company Spirit AeroSystems in a deal valued at $1.1 billion.
The former Canadian aircraft maker Bombardier is to receive $500 million in cash from Spirit. Bombardier will assume some $700 million in liabilities, including pension obligations and new project advances which are repayable to the government.
Also, Spirit AeroSystems is buying a smaller facility at the Moroccan port of Casablanca and an MRO facility (Maintenance, Repair, and Overhaul) shop in Dallas, Texas.
Bombardier selling to Spirit AeroSystems was a firesale
Not including (and adjusting for) an earnings margin of 12% before tax, interests, and depreciation. The three sites are expected to generate revenues of around $1 billion. That does not include (and adjusting for) an earnings margin of 12% before tax, interests, and depreciation.
That makes this sale a firesale! There will be no workforce adjustment as part of this announcement. The Belfast-plant employs two-thirds of the 4,000 workers.
The British government is breathing a bit easier
The company’s arrival comes as a relief to the British government and to the workforce in Northern Ireland. Bombardier provided a shadow over the future, which is the pillar of its country and aerospace sector.
It is also an important time for the British Conservative government given this area is a stronghold for the DUP (Democratic Unionist Party, an ultraconservative group from Northern Ireland), with the status for Brexit still in flux.
When is the transaction expected to close?
The Montréal based company Bombardier said that it is expected to close in the first half of next year, which will give liquidity to its turnaround program.
The company courted with bankruptcy in 2015 following the heavy investment of it is C-Series aircraft, in which rival Airbus bought a majority stake of its program. The new name for the C-series aircraft became Airbus A220.
Bombardier CRJ new cabin design
Part of Bombardier’s Plan to exit the Commercial Aviation Business
This would officially mark the exit of Bombardier from the Commercial Aviation Business. They have already sold the CRJ Business to Mitsubishi. Furthermore, they sold their C-Series to Airbus (now rebranded as the A220) and offloading their de Havilland brand to Longview Aviation.
Bombardier rides into the sunset of Commercial Aviation with a win in their hands as the A220 is one of the most after sought planes in the market today.
Bombardier CRJ product video
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Featured Image: Bombardier CRJ 900.