The story of Bombardier: how it refocused on business aviation
Once known for producing snowmobiles, Bombardier expanded into commercial aviation during the 1990s. Throughout the years, Bombardier established strong representation in the regional aircraft market as well as the business aviation segment.
But in 2020, Bombardier announced its strategic decision to focus exclusively on business aviation. So, how did the Canadian aircraft manufacturer shift its focus from commercial aviation to business?
History in short: from snowmobiles to aviation
Bombardier, named by Canadian snowmobile inventor and the company’s founder, Joseph-Armand Bombardier, was originally established as a snowmobile producer in 1942.
Over time, the company expanded into rail, public transport, and aviation. Four decades after its establishment, Bombardier entered the aerospace sector following the acquisition of several aircraft manufacturing companies.
In 1986, Bombardier bought ailing Canadair, the leading Canadian aircraft manufacturer of Challenger widebody business jets.
Three years after the purchase of Canadair, Bombardier launched the 50-seat Canadair Regional Jet (CRJ) program, which was certified in 1992. The CRJ program later expanded with the launch of the 70-seat CRJ700 in 1997, the 86-seat CRJ900 in 2000 and the 100-seat CRJ1000 in 2007. CRJ became a cornerstone of Bombardier’s regional aircraft business segment.
Further acquisitions of aircraft manufacturing companies followed in 1990 and 1992, when Bombardier obtained bankrupt American private business manufacturer Learjet and the cash-strapped Boeing’s de Havilland division in Canada.
With the addition of Learjet and Boeing’s de Havilland, Bombardier’s aviation division continued to grow and entered the emerging business aviation market. The Learjet 60 private jet, which harnessed American know-how, was remodeled by Bombardier’s engineers and launched in 1990.
In 1993, the Canadian plane maker announced the decision to develop its own ultra long-range Global Express business jet. The aircraft performed its maiden flight in 1996 and entered commercial service in 1999. The Global Express XRS 6000, the Global 5000, the Global 7500, the Global 5500 and Global 6500 followed.
Entering main line of commercial aviation: CSeries development
Prior to CSeries commercial aircraft introduction, Bombardier inhabited a niche in the global aviation industry, establishing strong representation in the business jet and regional commercial aircraft market. But its core CRJ family of regional aircraft was starting to age, and Bombardier desired to develop something bigger.
The CSeries commercial airliner family was launched in 2008. The C-Series targeted the 100-150 seat market, which Bombardier thought was underserved by Airbus and Boeing.
“The CSeries family offers the greenest single-aisle aircraft in its class," Gary Scott, President at Bombardier Commercial Aircraft announced in a statement dated 2008.
Scott further explained: "These game-changing aircraft emit up to 20% less CO2 and up to 50% less NOx, fly four times quieter, and deliver energy savings – up to 20% fuel burn advantage as well as up to 15% improved cash operating costs versus current in-production aircraft of similar size.”
However, throughout CSeries development, the program suffered production delays and cost overruns due to supply issues.
“We are taking the required time to ensure a flawless entry-into-service,” Mike Arcamone, President at Bombardier Commercial Aircraft, announced in a statement dated January 2014.
Arcamone continued: “While the process has taken more time than we had expected, our suppliers are aligned with the program’s schedule and together, we will continue to work closely to move the program steadily forward.”
But despite production delays and cost overruns, Bombardier’s CSeries was certified to conduct commercial operations by Transport Canada (TC) in December 2015. The CSeries aircraft have undergone more than 3000 flight test hours since its first test flight in 2013.
According to a Financial Post report, Bombardier’s initial plan was to spend $3.5 billion on developing the CSeries between 2008 and 2013, but the budget has increased to approximately $5.4 billion and the aircraft entered service in 2016, three years later than originally planned.
Turbulent chapter: Bombardier CSeries rebranded to Airbus A220
Although Bombardier CSeries were brand-new aircraft targeting the underserved 100-150 seat market, the aircraft sales experienced a slow market response even after certification. Therefore, in order to boost sales, Bombardier announced a partnership with Airbus on the CSeries aircraft program in October 2017.
Airbus acquired a majority stake of 50.01% in CSeries, leaving Bombardier and Investissement Québec (IQ) with approximately 31% and 19%, respectively.
Under the terms of this partnership, Airbus committed to “provide procurement, sales and marketing, and customer support expertise to the CSeries”, as it was outlined in the Airbus statement.
For Airbus, the partnership was beneficial because the 150-seat CSeries was highly complementary to Airbus’ existing single-aisle aircraft portfolio, which focuses on the higher end of the single-aisle business (150-240 seats).
“The aircraft are fully optimized for the 100 to 150 seat market and perfectly complement Airbus’ existing best-selling A320neo family,” read the Airbus statement.
On July 1, 2018, when the agreement took immediate effect, the CSeries family aircraft was rebranded to Airbus A220. The Airbus A220 family comprised two variants, the A220-100 and A220-300, formerly known as Bombardier CS100 and CS300.
In a press release dated July 10, 2018, Eric Schulz, Airbus Chief Commercial Officer, said: “We are enthusiastic about incorporating the A220 in the Airbus Family. I have received positive feedback from customers, and this contributes to my optimism that within the Airbus network, we will make the A220 a great commercial success."
Since Airbus’ takeover of the CSeries, aircraft sales have increased. Currently, Airbus has a total of 643 historical orders of A220 family aircraft from around 25 customers, of which 177 have been delivered, leaving a backlog of 470, according to Airbus orders and deliveries data.
After 10 years of marketing the plane, Bombardier had amassed over 400 orders of CSeries aircraft, according to Bombardier aircraft order data outlined in yearly annual reports.
Bombardier’s exit from commercial aviation
Due to lack of commercial aircraft sales and mounting debts, Bombardier has been progressively abandoning its commercial aviation activities, especially after the company sold its majority stake in the CSeries program to Airbus in July 2018.
In November 2018, Viking Air, which had acquired Bombardier’s Amphibious Aircraft (Canadair) program in 2016, took over the Q400 for $300 million.
In June 2019, one year after it sold its majority stake in CSeries, Bombardier sold the CRJ regional aircraft program to Mitsubishi Heavy Industries for $550 million.
Finally, Bombardier marked its exit from commercial aviation with the sale of its stake in the A220 aircraft program to Airbus and the government of Quebec in February 2020. The action was taken as the manufacturer moved to pay off its debts and reorganize the company.
“This transaction supports our efforts to address our capital structure and completes our strategic exit from commercial aerospace,” Alain Bellemare, President and CEO at Bombardier announced in a statement dated February 12, 2021.
Airbus paid $591 million to Bombardier to raise its stake in the Airbus A220 program to 75%, leaving the government of Quebec with the remaining shares of 25%. According to Bombardier, which posted a net loss of $1.6 billion in 2019, this deal allowed it to avoid future capital investments of about $700 million.
“The CSeries was a cash drain,” Bombardier chief executive Alain Bellemare said in a call with analysts on February 13, 2020. “The strategy was always to exit commercial aircraft while protecting jobs.”
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