the company sure looks like fading fast–fast enough to come begging before the October 19 Canadian federal election?
Bombardier shares plunge after talks fail with Airbus on ‘business opportunities’
Bombardier’s C-Series100 takes off on its maiden test flight at the company’s facility Monday, September 16, 2013 in Mirabel, Que.
(Ryan Remiorz/THE CANADIAN PRESS)
Bombardier Inc. and European plane maker Airbus Group NV held talks about “certain business opportunities,” but both companies said the discussions have ended.
Montreal-based Bombardier confirmed the talks late Tuesday [Oct. 6] after Reuters reported the discussions involved a possible sale of a majority stake in the C Series jet to Airbus. The partnership would have effectively ended Bombardier’s independent efforts to break into the 100- to 160-seat plane market dominated by Boeing Co. and Airbus, the news agency said.
“Bombardier confirms that such discussions occurred and are no longer being pursued,” the company said in a press release. “As previously mentioned, Bombardier will continue to explore initiatives such as a potential participation in industry consolidation [ouch! emphasis added].”
Airbus issued a similar statement, saying that the two companies had “been exploring business opportunities” and that such discussions “are no longer being pursued.”..
A bigger question is why Bombardier would feel the need to sell a controlling stake in an aircraft development program that’s so close to fruition. The C Series is Bombardier’s big bet to drive revenue over the next decade.
“Why would you sell the asset that’s going to bring you about $8-billion annually of revenue once it gets into full production?” said Mr. [Ernie] Arvai [of aerospace consultancy AirInsight], noting the first C Series is scheduled for delivery to a Lufthansa subsidiary. “They’re just on the cusp of making money with the airplane. So the timing doesn’t make sense unless you’re hurting so badly that there is no other way to do it.”
Bombardier shares plunged about 15 per cent in early trading Wednesday on the S&P/TSX composite index on news that the talks had failed.
…industry observers noted any deal would face political hurdles at both the federal and provincial levels. The Canadian and Quebec governments have both provided funding to help Bombardier develop the aircraft…