After CSeries deal, Bombardier aero unit faces uncertain future - Reuters
"I'm sure they'd love to sell the Q400 if they could get a serious buyer," said an industry source specializing in the prop market.
- By Allison Lampert
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MONTREAL (Reuters) - Bombardier Inc (BBDb.TO) secured the future of its struggling CSeries jet but still needs to find ways to spur growth in other units that have aging products or face larger rivals, industry players and analysts said.
A blockbuster deal with Airbus SE (AIR.PA) that saw the European company take control of the CSeries for $1 leaves Bombardier's commercial aviation division with the soft-selling turboprop and regional jets lines.
Meanwhile, on the rail side, Bombardier recently lost out on a merger with Germany's Siemens AG (SIEGn.DE) and now faces off against China's merged rail company CRRC Corp (601766.SS) and a soon-to-be-formed European giant in Siemens-Alstom.
Macquarie on Friday said it would tweak 2019 company valuations to focus on corporate jets and rail, in the wake of the Airbus deal and media speculation on further commercial aircraft sales.
While the Airbus partnership boosts the CSeries and potentially Bombardier's small aerostructures and engineering division, which produces aircraft components, the remaining lines in its commercial aerospace arm are "mature and stay stable at best as the industry changes around them," according to AltaCorp analyst Chris Murray.
Removal of the CSeries headache means the company can focus on its more profitable rail and business jet divisions.
"I think they will be forced to take a decision (to) either fix, coast or sell," U.S. analyst Richard Aboulafia said of the commercial plane unit. "But fix means putting some serious money into product upgrades."
Upgrading a regional jet with a new engine and wings would cost upwards of $1 billion, an amount likely to be prohibitive for the company as it spends on ramping up its CSeries and bringing its strong-selling Global 7000 to market, analysts say.