I'll repeat the story, as it seems to be fast becoming a prophecy.
A few years before Pan Am finally went under, they sold-off their Crown Jewels to investment banks in order to continue airline operations. These were the property portfolios and the HQ buildings in New York.
At the time, a (very) few wise voices suggested that they instead get rid of the airline which had been on life-support for years and keep the real estate. History shows what eventually happened.
The same is now happening with Bombardier. The Rail Transport Division has always been the cash-cow of the Corporation and its profits, and more importantly free-cash generation, provided the internal funds that were burned up in the initial part of the C Series financing. When that was gone, they turned to debt providers, shareholders, the QC Govt, then QC pension funds, then Federal Govt.... 2.5 years of delay costs a vast amount of money.
Don't forget, it is not just the QC Govt which is now on the hook. It is virtually every worker in QC whose contributions are now vested by their so-called pension 'trustees' in the C Series. (Now, there's a class action lawsuit if ever there was one!)
I have no doubt that the C Series is an excellent product technically, but the simple fact is that financially it is a dead-duck. Airbus and Boeing will never allow it to gain the production volumes and margins it needs to become viable. Even the most optimistic forecasts show that the project as a whole will not get its head above water for decades, if ever.
The question is: will Bombardier see the writing on the wall and cut its C Series losses now and try to hang on to the Rail Division... or will the latter be sacrificed as a politically expedient way by Tinky Winky & Co of postponing the inevitable for 2-3 more years???
I think I can predict the outcome: Rail Division to be sold off shortly, Govt life support to be forthcoming..... and in 2020 it will all die a death anyway.
Anyone up for a bet?
