The Insider - What's Going To Happen at Bombardier - A Must Read...
Bombardier Sold its Ville St-Laurent Estate in Montreal? Soon!
11:30 (16:30 UTC) - December 4, 2018 – by Sylvain Faust for Fliegerfaust
Also read my follow-up article here: Bombardier Going Private? My New Insider Update!
Bombardier Sold its Ville St-Laurent Estate – Moving To Mirabel?
I'm hearing that this is a GO at Bombardier corporate level. We might have news about the sale of the Ville St-Laurent estate, the only property of substance left from the Canadair acquisition by Bombardier in 1986. Remember, the whole Cartierville airport was tossed in as part of the deal.
Sources are telling me that we might hear the official announcement this week, -maybe in time for the Bombardier Investment day in New York Thursday December 6, 2018, 2:00 PM (19:00 UTC). At the end of this article, you'll find a link to a site where you can find a ringside seat to observe this extravaganza unfold live.
Did you know: The Norseman aircraft were produced at Cartierville airport
Bombardier St-Laurent Facility
Bombardier Ville St-Laurent Facility at the bottom left, below the residential area called Bois-Franc. See other picture for the "before" picture when this was Cartierville Airport.
And just below, you can refresh your memory with an extract from my article from last week on Fliegerfaust. ( https://www.fliegerfaust.com/airbus-a220-news-2621763995.html)
I hear rumours that Bombardier could be moving (what is currently done at its Ville St-Laurent factory) to Mirabel, leasing land around that airport again. That would make it easy to ship not only to Airbus A220 Mirabel factory but also to load on cargo aircraft to ship to Mobile, Alabama I would say.
One thing for sure, if Bombardier divests itself from still more of its Ville St-Laurent real estate, --this time selling off all what is left--, this will be adding cash from real estate already owned by the company as with the land sold in Toronto at Downsview airport. Bombardier closed the old Cartierville airport in 1988, converted and sold that land into a very popular residential area, called "Quartier Bois-Franc". As a consequence, the value of the property at Ville St-Laurent has drastically increased. That factory and airport were part of the deal with the acquisition of Canadair by Bombardier in 1986. The "new factory to be" would be located on a land having a much lower value.
Bombardier Aerostructures & Engineering Service (BAES) - Where The Action Is
Bombardier's work at its Ville St-Laurent facility is under the company's BAES division (Bombardier Aerostructures & Engineering Services), a sector where Alain Bellemare, CEO of Bombardier Inc, is focussing greatly. Why, you asked? The plan is to become the #2 in the world of aerostructure manufacturing, just next to Spirit Aerosystems. Nothing less.
Did you know Boeing is also a customer of Bombardier (BAES)? Spirit Aerosystems generates $US7 Billion in revenue per annum.
Airbus is now the de facto largest income generator to the division and Bombardier wants to leverage this even higher, as it is such a profitable business. Acquisitions are not to be excluded to provide more clout even faster to the division. Bellemare wants to further improve what the company is already great at, -i.e. cater to the needs in design and build of the aerospace majors, who prefer to focus on final assembly and selling aircraft (Airbus, Boeing etc.).
I will say it again: the aerostructure component business is a much more profitable endeavor than selling commercial aircraft to airlines. (at least at Bombardier!) The Belfast facility with its famous composite wing currently supplying Airbus for its A220 (yes, Bombardier is a supplier and making a profit as such) will also be leveraged with additional contracts… Did I mention Airbus, again? Expect more work being done at BAES in Mexico, Morocco, USA, UK and Canada. In case you missed it, Bombardier kept the intellectual property of the A220 (CSeries) composite wing when it sold half of the CSeries to Airbus. Good move!
Divesting itself from the Ville St-Laurent facility means that Bombardier will be building/leasing new space around Mirabel Airport, a rare place where nobody is complaining about aircraft noise, unlike what is the case nowadays at so many other venues, the St-Hubert Airport being a prime example. Providing plenty of space for families available all around, located at the gateway of the great Laurentians area, yet so close to Montreal, -just perfect, if you ask me. Mirabel airport features two (2) 12000 feet runways and plenty of space all around for erecting new industrial structures. Renting land at the airport would be much cheaper, (in terms of property taxes, services etc.) when compared to the current very highly valuated Ville St-Laurent location, on the island of Montreal. As I mentioned in my previous article, this is new money literally locked up in real estate, -like Bombardier at long last liberated and made available, when they parted with their Downsview facility in Toronto, about a year ago.
And since we just mentioned Downsview, here is more on the Q400. Now you know I was not fantasizing when I told you a year ago that the Q400 was sold. I'm told that the "Top" union leaders of the Ontario division and assembly site had been informed about the transaction at least a week before the agreement, but it seems they are now saying otherwise to their members. Likely to be expected is the move of the Q400 assembly work from Toronto to western Canada as soon as the contract with the union is completed. Also, a new order for 25 Q400 aircraft should be coming from Asia pretty soon, as rumour has it.
Remember when I wrote that Airbus would be acquiring the CRJ and naming it A100? (read the article here) Well, this is still on.
With Boeing acquiring Embraer commercial aircraft business, the CRJ would become an appropriate weapon for Airbus when fighting on this part of the front. It would also help in closing more complex deals potentially involving many aircraft types. But make no mistake, Alain Bellemare wants the CRJ out of Bombardier, as he is focussing on what makes money/profit... and selling "commercial" aircraft is certainly not, at Bombardier. This is political too.
Again, the CSeries is gone, the Q400 is gone and the CRJ is still hanging on but, can be considered as "Gone" as well, one way or the other. Let's hope the situation evolves along the lines I described above and that those negotiations between Bombardier and Airbus do end soon to push away the cloud of uncertainty now hanging over the heads of the CRJ workers, a grim situation with Christmas this close.
Never forget that Bombardier and Airbus are negotiating on quite a few projects… and the CRJ "could" ultimately be resolved by being included in closing another "deal". And don't be surprised if Airbus gets something from Quebec and/or Ottawa for this "service". Airbus might also choose to replace the engine on the CRJ to make it more competitive. That would apply to the CRJ-700, CRJ-900 and the long CRJ-1000 currently still being made at the Mirabel factory. Could this help Airbus look good to Ottawa while negotiating the CF-18 (CF-188) fighter jet replacement bid for its Eurofighter jet?
Ah, the Global 7500 - Nothing But Good News
Nothing but good news on this one. The first customer will be taking delivery of the first Global 7500 this month, which should be before Christmas it seems. And this lucky first customer to take its brand new Global 7500 home is a famous Formula 1 driver from Austria, owner of an airline and more… Niki Lauda, whoelse! And, as we all know, this is not going to be his first Bombardier Global aircraft!
Expect the marketing machine to run on afterburners at Bombardier Business Aircraft (BBA) division for this major event. This will provide additional income from the aircraft complete payment at each delivery. The Global 7500 is sold out achieving better sales than the division expected still. The learning curve on the production side remains the issue, but delivery starting this month it would confirm that it is correctly being taken care of.
To be expected in 2019 is a ramp up to four (4) Global 7500 delivery per month and a fifty (50) in 2020 for a total of over 100 aircraft, when adding the Global 5500 and 6500. Additional production capacity would be added in the Montreal area if required, it has been decided. (Toronto/Pearson new location might not be big enough for the increased production)
The scene is also set for a larger number of business aircraft to be delivered during 2019 than any analyst following the company has planned for, combined with higher profit margins up to 14% at BBA.
Meanwhile, the Challenger is getting a face lift. Jealous of the surgery the Global 5000 and 6000 underwent to be transformed into 5500 and 6500? I think you have a good indication of what I mean. Yes, it has more to do with the "buttock" area it seems.
Airbus Bombardier A220
As I pointed out in my previous article, Airbus is working at expanding the A220 aircraft production rate at their Mirabel, Quebec facility while also planning additional production to be launched soon at their new Mobile, Alabama venue, where they currently assemble A320 aircraft.
That said, Airbus is not focusing on closing sales for the A220 until they have a good grasp of the additional capacity those changes will provide, the new "delivery slots" they would be able to offer to their clients. Airbus is expecting large orders for the A220. Sources reporting that Airbus will be increasing the A220 sales price combined to a faster delivery. The value of the CSeries Aircraft Limited Partnership (CSALP) would increase when such changes are implemented.
Remember last week what I wrote:
According to some sources, Airbus would be "acquiring 100% of the A220" sooner than expected. This would add cash to Bombardier cash flow, -maybe something Bombardier CFO John Di Bert could not reveal during the last conference call? Question is what would be the valuation of the CSALP for the takeover? How much money for Bombardier? How much for the Government of Quebec? If Quebec were to recoup its initial US$1B investment this would mean Bombardier would be receiving over $US1B with its additional CSALP shares received from its additional funding, as per the agreement."
The more Airbus knows about the A220, the more the management at Airbus realizes that this aircraft is a winner with nothing coming close from any competitor anytime soon. And that is not the only thing Airbus found out after the acquisition of their new A220 Mirabel facility...
What else then? Well, it is cheap to operate in Quebec, with such irresistible amenities at hand... salaries, qualified aerospace workers, cost of living and an airport featuring two (2) 12000 feet runway with plenty of space around it. And what have you. Then, for good measure, what about another A320 or A350 assembly facility in Mirabel Airport in Quebec, Canada? I won't go further on this for now.
Mobile, Alabama - First A220 Delivered in 2019 - Delta A220-300 (CS300)
The A220 production will start in 2019 and guess what, first delivery mid 2020! I'm sure you know the name of the airline the first aircraft produced at the Mobile factory will be going to! Now listen to this: that aircraft will not be a A220-100. Can you put 2+2 together? Yes, Delta is getting a A220-300 (CS300). Having ordered only A220-100 (CS100) you better stay tuned for news announcing Delta converted part of its order into CS300, and why not exercising its 75 aircraft option?
The Learjet – Wichita Good News For You - Learjet 85?
Contrary to what many expected and to what I wrote in September (things change and that is good), Bombardier Bellemare has seen something new about it. This one might have a future after all. I remember what I told a reporter when Pierre Beaudoin decided to write off the Learjet 85 project from the books because short on money paying for the CSeries and Global 7500 developments, it was a US$ 1.2 billion write-down, a total project loss of US$ 2.6 billion, I said, " what a nice value this will add to the company the day Bombardier announces it is back with it, no amortization, quick profit".
Expect the autoclave to be moved from Mexico to a lower altitude location for sure! Wichita, good news for you! By the same token, this will confirm the company's presence (i.e. the commitment to a minimum number of workers) in the US. That said; don't expect anything to be made "public" until the company is swimming in free cash flow, but Bellemare is planning ahead!
Bombardier Transportation (BT)
More about the cash flow, Bombardier will not be buying "La Caisse" part of BT until late 2019, or 2020, once the financial market is confident the company's results will be as per the 2020 plan, which also goes hand in hand with the value of the company on the markets, so the timetable here is variable.
More transformation at BT is still going on. The fragmented operation structure is changing, to be rationalized. News is to be expected on this front. Offices in some regional countries will be closing increasing the savings.
With all these changes, especially with BAES increasing its revenue and profits, post 2020 we should see a Bombardier Inc., (BAES + BT+ BBA) with over $20 billion in revenue together with higher profit margins. The next quarter financial results and coming news will be important.
Watch LIVE closely here what will be said during the Bombardier Investor's Day Thursday December 6 at 2:00 PM (19:00 UTC), save this link in your favorite.
Is all this real? I do not know. Stay tuned to Fliegerfaust for more, as always.
Read the article following this one here Bombardier Going Private? Name of First Global 7500 Client and much more... My New Insider Update!
Sylvain Faust, for Fliegerfaust
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