- Bombardier Q400 Made in China AVIC SAC Commercial Aircraft Company Limited (hereinafter referred to as "SACC"),
Bombardier Q400 Division Sold to China
Following on my article titled "Bombardier Sold The Q400 Division" here's more related to this.
Updated 10:35 (15:35 UTC)3:25 (7:25 UTC) - October 27, 2017 - Quebec, Canada
by Sylvain Faust
Following on my article of October 20, 2017 titled "Bombardier Sold The Q400 Division" here's more related to this. According to sources, Bombardier Inc. is in the process of totally exiting the Commercial Aircraft business, really?
As it was the case with the CSeries, the goal here is to relinquish the company majority ownership in its entire Commercial Aircraft programs but to remain in the business as a supplier to others instead.
Bombardier Commercial Aircraft
Following such a scenario, the goal would no longer be to hold any majority ownership, nor play a management role in any commercial aircraft program, as Bombardier would be satisfied to act as a mere supplier and/or consultant. Offering a pointed expertise and qualified engineering services would now be the degree of involvement Bombardier would be readily willing to accept as far the "Commercial Aircraft" business is concerned, as they've just accomplished with the CSeries.
In the case of the CSeries, --after "the deal" with Airbus is signed--, Bombardier will become one of the most important suppliers to the CSeries Company supplying the aircraft cockpit (built by Bombardier in St-Laurent/Montreal Quebec), the aircraft wings (built by Bombardier in Belfast, UK), aircraft doors (Bombardier Mexico and another business running under a different name but now owned by Bombardier), a section of the fuselage (built by Bombardier China), engineering services for CSeries modifications, improvements, etc. (*CSeries Bombardier Ownership, read my note at the bottom of this article)
What I've been told is that Bombardier is selling the Q400 division in its totality to a buyer in China. After the Canadian Federal government asked Bombardier not to sell the CSeries to the Chinese who offered to purchase it --a program so heavily ladden with new technologies-- Ottawa let it be known it would be perfectly able to live with the transfer of the total ownership of the Q400 to China. With nearly all fuselage components already built in China it would now remain to be seen for how long Bombardier would continue supplying the aircraft's cockpit currently made in Downsview/Toronto, when would this be transfert to China with the rest of the fuselage construction . We should assume new assembly lines would be installed in China.
It is not clear yet if the new Q400 Chinese owner would keep any of the Q400 operations currently located in Dowsview near Toronto, Ontario. On the other hand, Pratt & Whitney Canada would still be supplying the PW150A powerplants..
What would Bombardier get? Basically, breathing space by bailing out from an aircraft program where the company has been losing money at each delivery. How would the deal be structured? Politically I would not be surprised that we're told that jobs in Downsview are preserved… but for how long? Maybe until the next Canadian Federal Elections? More on this soon!
The CRJ aircraft would then be the only one left for Bombardier to jettison, de facto eliminating its Commercial Aircraft Division. To now focus on its highly profitable Business Aircraft division and its Transport Division (owned at 70% by Bombardier Inc, 30% by the Caisse de Dépôt et placements du Québec)Bombardier Commercial Aircraft liquidation check list:
- CSeries Check/Gone
- Q400 Check/Gone
- CRJ Check/?
So, from what I was able to find, Bombardier is trying to "let go" the CRJ program too.
Sources reporting that Bombardier salespeople are contacting CRJ clients waiting for their new aircraft deliveries trying to convert them into CSeries instead, could this be real? It would make sense if you're trying to let go the program. What would that tell you?
** A note regarding the CSeries ownership split between Bombardier Inc. and the Quebec Government. Quebec acquired 49.5% of the CSeries program from Bombardier in exchange of US $1 billion. All further expenses occurring in the CSeries holding company are paid from money transfers from Bombardier. As per the agreement Quebec is not to be paying its share of the expenses. When there is a profit you share it with all shareholders. In the case there is no such profit but a loss, it is usually shared as well. Instead of creating debt (loan from Bombardier Inc.) in the CSeries company, as per the agreement, new CSeries shares are issued to Bombardier Inc. in exchange for cash to cover for the ongoing lost. Slowly, but surely, the relative % of ownership Bombardier has in the CSeries company is growing (and still is!).
This is the reason the ownership Quebec has in the CSeries at the time "the deal" with Airbus was announced was down from 49.5% to about 39% and Bombardier Inc. up to roughly 61% as I reported here (http://www.fliegerfaust.com/bombardier-inc-its-real-value-by-sylvan-faust-2497293683.html).
Since "The Deal" is giving Airbus 50% (50.01%) of the CSeries company , both Quebec government and Bombardier Inc. CSeries ownership will be cut in half, i.e. by 50% resulting into having Quebec left with 19% (half of 38%) and Bombardier Inc. with 31% (half of 62%).
But Quebec will have less than 19% of the CSeries when the deal with Airbus is signed. Why? Because Bombardier Inc. is still the one paying for the on-going lost in the CSeries holding company, meaning more shares are issued to Bombardier. Quebec will end up with 50% of whatever their ownership is "at the time of the closing of the transaction with Airbus, in 6 to 12 months. Same for Bombardier Inc, it would end up above 31%... but much more, maybe an additional 2% or 3% added to the announced 31%. **
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Q400 Made in China
Bombardier Q400 Made in China AVIC SAC Commercial Aircraft Company Limited (hereinafter referred to as "SACC")
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