Thursday, February 13, 2020
Bombardier exits commercial aerospace
The Montreal Gazette is reporting that "Bombardier Inc. is transferring its 33.6-per-cent stake in the partnership that builds the plane formerly known as the C Series to Airbus SE and the government of Quebec, the companies said in a statement issued early Thursday. Airbus paid Bombardier $591 million to boost its stake to 75 per cent, while Quebec now holds the remaining 25 per cent." This appears to be good news. Bombardier is a bad company like Lockheed Martin.
"Bombardier now has pro-forma cash-on-hand of more than $4 billion and liquidity to $5.5 billion, it said Thursday in a separate statement on fourth-quarter results. Bombardier added it’s actively pursuing options that would allow it to accelerate deleveraging and pay down debt." Wonderful. How about paying back some of the billions of tax dollars it has squandered over the years.
This brings us back to the Super Hornet. Boeing is good, Bombardier is bad and Lockheed Martin is even worse. Boeing's Super hornet is a superior aircraft compared with the Lockheed Martin F35 money trap. Boeing's Super Hornet works in the Canadian arctic. Lockheed Martin's F35 does not. Contracting out the mid air refueling for the F 35 makes it an impracticable Canadian investment. The Boeing's Super Hornet is rock solid.
Since Bombardier is exiting commercial aerospace, that would appear to resolve Boeing's court case against them and open the door for Canada to restore it's plan to purchase Super Hornets from Boeing. In support of that quest, I totally support giving Boeing tax incentives to build a manufacturing plant in Quebec. That would be fiscally advantageous for Canadian Taxpayers.
Many years ago Ireland offered low corporate tax for new companies that moved to Ireland. As a result, the Shannon Industrial Center was born and large high tech companies started moving to Ireland in the middle of nowhere right beside Paddy and Mick's sheep farm. The theory was 50% of nothing is nothing but 10% of something is something. The theory clearly worked. Google has now moved to Dublin. Everyone who works for Google in Dublin pays taxes on their wages. It was a win win situation for tax revenue. Giving Boeing an incentive to open a plant in Quebec would be in Canadian's best interest. Boeing is a good business model. They don't waste money.
Update: "The Wall Street Journal reports that Bombardier Inc. has reached a preliminary deal to sell its train division to French rail giant Alstom SA for more than US$7 billion. The reported deal with Alstom would come as little surprise since Bombardier, which is carrying long-term debt of US$9.3 billion, announced last month it was studying its options to accelerate its deleveraging, or reducing debt by selling assets."
"It would add to the list of assets the plane and train maker has sold in the last five years, which includes Q400 turboprop planes, the CRJ regional jet program and the former C Series aircraft. The sale would mean the Quebec company is focusing its business on private jets. Bombardier Transportation is based in Berlin and employs some 1,000 workers at factories in Quebec's Bas-St-Laurent region and in St-Bruno-de-Montarville, on Montreal's South Shore."