Mark Collins – Bombardier to Sell Learjet to Cessna-Owner Textron?

This could be a sensible thing for the Canadian company to do as it focuses on its new CSeries airliner, and with not much job impact here as Lear bizjets are made in Wichita, Kansas:

Cessna-maker Textron Inc would be interested in Bombardier Inc’s Learjet ‘at the right price’

learjet.jpg
Bombardier’s Learjet 75 [see here]. Bombardier’s business jet sales have taken a hit from both internal and external factors.

Cessna-maker Textron Inc. [aviation website here] would be interested in buying Bombardier Inc.’s struggling Learjet business “at the right price,” a company spokesperson said Monday [Aug. 23].

The admission gives Bombardier a potential exit from the light business jet market, which CEO Alain Bellemare described as “oversupplied” and “remarkably competitive” on the company’s quarterly earnings call earlier this month.

Bellemare was vague when asked if Bombardier would consider divesting Learjet, which it has owned since 1990 [website here], saying that the company is monitoring its position in the market and will “see where it goes.”

Since then, Textron has been named as the most likely potential buyer. Cai von Rumohr, an analyst at Cowen and Co., argued that a combined company could generate cost savings — both Cessna and Learjet are based in Wichita, Kan. — and that Textron could upgrade existing Learjet customers to its new-model Cessnas [their bizjets  are here].

Textron acknowledged Monday that it would be interested in Learjet under the right circumstances.

“Textron would look at the Learjet asset at the right price, if it became available,” spokesman David Sylvestre said in an email. “In addition, our strategy to develop new products at Textron Aviation proceeds with success.”

Bombardier’s business jet sales have taken a hit from both internal and external factors. Global demand for business jets never fully recovered from the financial crisis, and economic slowdowns in Russia, China, Latin America and the Middle East continue to weigh on all suppliers. Bombardier is forecasting a 10 per cent drop in total industry deliveries this year compared to 2015.

Meanwhile, Bombardier has also lost market share to competitors like Cessna, Brazil’s Embraer SA and France’s Dassault Aviation SA.

All of these companies have gained ground “at the expense of Bombardier, which witnessed a whopping 40 per cent drop in aircraft billings along with a sharp decrease in overall aircraft deliveries” in the first half of the year, according to a report by research firm Noealt Corporate Services.

As Bombardier’s lowest-end offering, Learjet has been hit particularly hard. The company only delivered six of the light aircraft in the first half of this year, down from 14 a year earlier, and it recently cancelled plans to develop a new Learjet 85 [earlier: “Bombardier Learjet Bombs“].

Its mid-range Challenger jets and large Global jets [see here] have not been hit as hard, although Bombardier did cut production of the Global last year…

Lots more on Bombardier here.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

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