Why Bombardier selling spree?
 

It's now almost every week that I see news about Bombardier selling their aviation assets. They sold aerostructures division to Spirit, they sold the wiring facility, Belfast, Morocco. Have I missed something? Is Bombardier getting out of aviation business?

Yes you did

https://edition.cnn.com/2019/06/26/b...ets/index.html

Same with their surface transport divisions

https://www.cbc.ca/news/canada/thund...offs-1.5350676

This is the fallout from Boeing's anti-competitive attempt to block the C-series sale to Delta which was ultimately ruled unfair.

https://www.defensenews.com/industry...as-bombardier/

Nothing wrong with competition, but when it gets this nasty, it is yet another reason not to fly on a Boeing. Unfortunately the ruling in favour of Bombardier was too late, the C-series had already been sold to Airbus.

No, Bombardier bailing on the commercial airline business has little to do with Boeing's unfair trade complaint.
It has everything to do with the C-Series development nearly bankrupting Bombardier, with little hope that the program would become cash-flow positive for many years.

Turns out building and selling large commercial jetliners profitably is hard - really hard. So hard that only two companies in history have made money building and selling jetliners larger than 100 seats.

Old joke:

"How do your create a billion-dollar aerospace company? Invest a trillion dollars!"

LOL... From the guy from Everett Washington.

Although I would not put all the blame on Boeing for Bombardier's financial problems (because of the C Series), it had to do a lot with it.

Many cost overruns because of poor management for sure, new tech aircraft with new cockpit avionics, FBW and totally new engines that had major problems during their own development which actually delayed the aircraft for a year.

Yes, lots of new tech/features (and virtually nothing in common with their previous regional/bizz jets). Billions of dollars over budget, without the reserves and cash flow to absorb the hit.
Which apparently is now Boeing's fault :confused:

It would be really beneficial for all manufacturers to start installing Garmin avionics. By working with Garmin on certification for larger aircraft types they would save a fortune and have highly capable systems. Instead they choose to go their own way or pay Rockwell/Honeywell billions on proprietary tech that is so far behind the times. This would be a massive cost and time saving for training pilots and allow the industry to create fit for purpose solutions without worrying about compatibility. What Garmin has done in terms of avionics standardisation is way better than Boeing/Airbus or Rockwell/Honeywell. It's a shame these relationships are politically bound together.

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You're joking, right? Let's say Airbus use Garmin avionics in their next product. This would probably kill off any chance of a fairly simple CCQ from other Airbus FBW aircraft and vice versa. Don't see where the cost savings would come from...

So, a lack of MBAs and the transition away from steam-power broke Bombardier. OTOH, the opposite is true for Boeing

the C series was never meant to compete with regional aircraft. It filled a much needed space. The -300 has no comparable, and the -500 will compete with the 737 market with a new aircraft.
E2's are old designs rehabbed. Not really competition and not really selling.

BBD and EMB both thought the US scope clause would change, and it did not, laying waste to their business plans and driving both to seek buyouts. Airbus had its foot on BBD's neck just as hard as Boeing did. Airbus's choice to use the PW GTF on A320neo largely undermined the market for BCS, and of course Airbus fought for every sale it could against BCS. BBD asked Boeing to look at the books for BCS twice and make an offer, and both times Boeing said thanks but no thanks. I still wonder what they saw that made them so skiddish. Airbus only bought in to BCS when offered half of the program for $1. While it is a nice aircraft BCS is not very compatible with A320, and I doubt Airbus is as ready to walk away from the A320 gold mine as many seem to suggest.

This is true and makes Airbus' next steps plain - announce (and build) a new A32x series:

• The A325 as an A320+, long enough for 200 pax in LCC single-class layout
• The A327, an A321 with a new CFRP wing and centre-wing-box allowing a taller undercarriage, and
• The A329, a stretched A321 with room for 250 pax in 2- or 3-class layout and the new wing (the taller legs to make this variant OK for tail-strike protection)

All of them have a new cockpit based on the A220, and common type rating with the A220. They also have PIPed engines, plus maybe some aerodynamic clean-ups to offer in total a small but significant fuel-burn advantage per seat
And launch the A220-500, to cover the gap at the bottom of the new range caused by the absence of replacements for the A319neo and A320neo
Keep producing the A320neo, A321neo and A321XLR (at ever-increasing price, of course) for as long as airlines want to value commonality with their existing fleets above anything else.

Kick Boeing while they are down, make them either commit to an FSA half an engine generation too soon, or be faced with a completely uncompetitive B737MAX for the best part of a decade

The A320 flight deck has considerable commonality with the A330 and A350, and there are literally thousands of A320 series aircraft currently flying worldwide.
Why in the world would Airbus throw that away to base a new narrow body around the C-Series?

I appreciate the responses, but I must have formulated my question unclearly. I understand that Bombardier is moving out of the commercial aircraft segment. And I understand why... or I think I do. But even for their private jets they still need aerostructures and wiring. And they sold both of those. Or do they have more somewhere? It looks like a fire sale of all aviation assets. Is Bombardier closing its aviation business altogether? Or just shrinking and concentrating it?

They might just desperately need the money?

And who nows what A220 rate increases are brewing behind the scenes? This might be the same supply chain getting readied and needing expansion, therefore requiring major investments and new buyers?

Or, see what good thinks Bombardier made with A220 and integrate those things into the existing design to maintain commonality and CCQ with A320/330/340/350/380.

Airbus is not stupid enough to throw away a mature, well-designed and well-tested product with millions of hours of safe flight, just because they purchased a product line for free that might be slightly better than one of their current products.

It is a different cockpit and even some different cockpit philosophy. Finally there should be commonality between A220 and A320 families. Not sure if downgrading the more modern A220 setting is the way to go.

Probably the best is to look for Bombardier financial filings to see what happened.
From FIRST QUARTERLY REPORT Three-month period ended March 31, 2019

19. ACQUISITION OF A BUSINESS
On February 6, 2019, the Corporation acquired the Global 7500 aircraft wing program operations and assets from
Triumph Group Inc., for a nominal cash consideration. This transaction will strengthen Bombardier’s position as a
leading aerostructures manufacturer, to enable the company to leverage its extensive technical expertise to
support the ramp-up of the Global 7500 aircraft, and secure its long-term success. Bombardier will continue to
operate the production line and integrate the employees currently supporting the program at Triumph’s Red Oak,
Texas facility.

So they bought that, sold other fabrication, product lines, training group. This and the other report I looked at said they thought biz jets were solid.

https://ir.bombardier.com/en/financial-reports

Maybe it's on the basis of internal ROI?

Bombardier never developed anything but private jets. The RJ's were an scale up of the Challenger program. Developing the C series was always an ego trip and people who looked at it knew it. The way the family controlled the company through super shares meant the usual due diligence never happened.
I am told the plane is a great success with customers and is hitting or exceeding the fuel numbers so technically it hit the mark. But like every airframe it was late and over budget. The project never passed the smell test but the sustained drop in oil prices simply made the plane uneconomical as a capital expenditure. The saving delta on the fuel does not justify the price with oil at $50 a barrel. Oil was over $100 a barrel when the project started and was expected to go up.
Even if oil was at $150 Bombardier would have had to sell to A or B , but they could have gotten some real money. There is no place in the market for a single product manufacturer to challenge the duopoly.
As Warren Buffet said, if anyone knew how unprofitable aviation was going the be they would have taken Orville and Wilbur out behind the dunes and shot them!