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3:00 (UTC 08:00) - February 10, 2020 - by Sylvain Faust for Fliegerfaust

Follow-up from my previous article. Read it first, and maybe read it again, here it is: https://www.fliegerfaust.com/bombardier--2645048156.html

Here is more info I was able to recover from my memory, in the wake of my chance encounter with this knowledgeable little bird on the taxiway.

Textron was not invited by Bombardier

First and foremost, I was told Textron was not invited by Bombardier. But they knew damn well Bombardier was in troubled waters, paddling against the tide to solve a difficult cash situation, as warned by CEO Alain Bellemare, so they just wanted to come by and take a long hard look at the goods. And, in the process, they would then see what could be had for cheap from the Business Jet division

As it is, Textron would only be interested by the Global aircraft product line, while the only thing that Bombardier would happily consider parting from would be the Learjet setup. Oops!

Could the Learjet line be of any interest to Textron? By adding more space at their Wichita existing facilities for instance, could they manage to suck up all the maintenance revenue and potentially make the business thrive at long last, just by tweaking the upcoming improvement list to the current Learjet 75? (Personally, I do not see Textron investing to further advance the development of the Learjet 85, a project officially cancelled by Bombardier when the Quebec government invested $US1 billion into the CSeries ). The Learjet 85 would have become the first "business jet" fully made of carbon fibers. It made its first test flight on April 9, 2014. (more https://en.wikipedia.org/wiki/Learjet_85)

For years, Bombardier has been on the lookout for an elegant way of parting with the Learjet. Just like for BRP, it's believed, wouldn't an elegant exit on a red carpet, --to someone who might do better with it--, be ultimately more acceptable?

Did Honda express some degree of interest and left rather quickly? Pointedly, they felt the prospect was way too expensive and not fitting well at all in their business plan? Still, that would have been a drastic way to get a major foothold in the high-end business jet market, adding the Global and Challenger, plus the Learjet, to their current Honda-Jet offering.

Do you really believe Bombardier would be parting with its high profit jewel, a business generating so many jobs in Quebec? Or could it just be not so subtle bluff, aimed at politicians point blank, to get something else somehow? You be the judge... My advice? Just sit tight, as we'll all know in the next few days.

At the end of the day, the Bombardier Business Jet division will remain as such, "Bombardier" Business Jet.

Have you ever heard of the "Hemisphere"? Here, I am referring to the Textron aircraft. The machine to be was announced in November 2015 by Textron Cessna as the "Cessna Citation Hemisphere". (Note to journalists not familiar with aviation: Cessna is not an aircraft type; it is a company that makes a wide range of aircraft including business jets, and yes, it belongs to Textron, like Bell Helicopter, Beechcraft etc…).

The Hemisphere fuselage diameter is, --or would have been--, 102 inches with a capacity of 12 passengers and a range of 4,500 nautical miles. (more https://en.wikipedia.org/wiki/Cessna_Citation_Hemisphere)

Why I'm I talking about the Textron (Cessna) Hemisphere? Its development was stopped just a few months ago, in July 2019, because of issues with the Safran Silvercrest jet engine, the power plant that had been selected for this new aircraft.

Or would it have anything to do with my previous update, when I said the Business Jet division still had issues to manage regarding the future of the Challenger? Well, that would not be the case according to my little bird. As my know-it-all friend sees it Bombardier would also have a follow-up design almost completed for the next version of the current Challenger.

The happy few that could have a glimpse at the various drawing boards say a new bird replacing the 650 would move up in size from large to super large. Interesting isn't it?

A220/CSeries

Following up on my update in which I mentioned that Airbus was to be acquiring all of Bombardier remaining shares in the CSeries partnership (now called the A220 aircraft), including all the businesses Bombardier owns that makes parts for the A220 aircraft (Bombardier is "also" a supplier to the program), the central issue revolves about the the valuation of the Quebec government participation in the partnership.

If the shares of Bombardier were bought too low by Airbus, the move would shrink the value of the Quebec government's participation to an amount much inferior to its initial contribution. This is the where the uncertainty stands.

Now, if Bombardier's share were bought out from the CSeries (A220), Airbus adding money (investing) in the program would risk diluting the percentage of ownership left to the Quebec government. This is just the normal consequence of such a transaction, unless Quebec also added more money in the program, like Airbus, if you wish, but just relative to their percentage of ownership.

Basically, after Airbus has bought Bombardier's share and were to invest, let say, $500 million into the CSeries/A220 program, --assuming Quebec holds about 17% of the program ownership--, it would mean Quebec should add $85 million and Airbus $415 million, so Quebec can keep its 17% of ownership.

But if Quebec do not invest, In this scenario, --still with a $500 million investment in the A220/CSeries--, should Quebec not participate, then Airbus would be able to pay itself in more shares of the partnership. How much? Ah! That's the trick, it depends upon the level at which the partnership is valued. Essentially, if Quebec were to also participate with Airbus in the investment its move would make it unnecessary to arrive at an official re-valuation of the CSeries/A220 program. Probably something Quebec would prefer since this would not “officialise" the value of $US 1 billion already invested, if you get the point.

The snag is how can Airbus buy back Bombardier's part of the A220/CSeries without setting "a value" to the partnership? Anyhow, Quebec government is in better company with Airbus taking care of the A220/CSeries without Bombardier. For Airbus, their effort will pay them more and should motivate them to push the A220 much further.

Premier Legault of Quebec keeps saying that the government would have fared much better investing in Bombardier Inc. instead of directly funding the CSeries back then. I'm not so sure about that. Does the premier see how much lower his shares of Bombardier Inc. would be by now and how much the government would have "officially" lost? If so, he would now be facing a dilemma having to invest much more in Bombardier Inc., hoping for the company to get better in terms of valuation, something he does not have to worry about for the time being, and not because of the US$1 billion in the CSeries/A220. Anyway, the Bombardier Beaudoin (Beaudier Inc.) family would not accept any further issuance of shares of the company since this will make them lose their absolute total power and dominance, all alone, on the board of the company, with just above 50% of the vote.

Here's are two quotes on this total control of Bombardier Inc. by the Bombardier/Beaudoin family that was published three days ago:

David Baskin, president, Baskin Wealth Management;
"It's a story of corporate arrogance, greed and mismanagement by a family company that has multiple voting shares and doesn't have to answer to an independent board or to the common shareholders. I can't imagine either the Canadian or the Quebec government coming up with more money in these circumstances"

Norman Levine, managing director, Portfolio Management Corporation:
"…being a family-held company, it became harder and harder because they wouldn't give up control. If it was an outside board of directors with adults on it, this probably would never have happened."

Source: https://www.bnnbloomberg.ca/a-story-of-corporate-arrogance-money-managers-weigh-in-on-bombardier-s-plight-1.1386713

Politically, the people of the province of Quebec, aka the taxpayers, are not ready to put more money in Bombardier Inc. especially under its current totalitarism ownership structure.

Bombardier's Focus

What would be the focus at Bombardier Inc. after having sold its Transportation division (BT: Bombardier Transportation) and all what was left related to the A220/CSeries (ownership in the program plus wing factory, cockpit, etc), Mexican aerospace facilities, Morocco facilities… What would be "Key" at Bombardier is to get the Global aircraft production and delivery up to expectation, i.e. 4 per months I heard a while ago. A very important part affecting all the business metrics.

You want to talk about the aerospace sector, how important it is? Politics?

Start by asking yourself why is the Canadian Federal government in Ottawa pushing (rigging?) the old CF-18 fighter jet replacement process to only let the Lockheed Martin infamous F-35 to win when Airbus and Saab did offer some very capable fighter jets (Eurofighter Typhoon and Saab Gripen) when both companies offered to have their military fighter jets built in Canada (Mirabel)? They also offered the associated intellectual property to be given to Canada. Why not? This would also have created an amazing impact on the whole aerospace sector, high paying jobs, etc. Ask the current Federal government in Ottawa…. Why?

For more on this, read this: The "Perceived" Objectivity... is What Matters For The Canadian Department of National Defence In New Fighter Aircraft Selection Process" - https://www.fliegerfaust.com/ottawa-politics-2639640365.html

Since when does Canada need the most advanced high-tech fighter jet? Yes, Bentley and Ferrari cars to exist but we are not driving them… why? Because we don't need what they have to offer. Why should we need the super duper most advanced fifth generation fighter jet to cover the far great north and some of the mission assigned to Canada? Missions assigned in line of what equipment we have. Our allied have plenty of them and plenty more to be delivered. Spending like if there were no tomorrow… Thanks to the current government in Ottawa.

Sylvain Faust for fliegerfaust.com