Canada's Bombardier back on brink after rethinking Airbus A220 deal
CANADIAN plane and train maker Bombardier's deal with Airbus to rescue its long-delayed and over-budget jetliner programme is threatening to go off the rails, bringing the threat of insolvency ever closer
CANADIAN plane and train maker Bombardier's deal with Airbus to rescue its long-delayed and over-budget jetliner programme is threatening to go off the rails, bringing the threat of insolvency ever closer.
Bombardier is almost a penny stock again, as bonds tumbled after the company cast doubts about the A220 Airbus deal. Costs are rising, and the goal of breaking may come later than expected, reports Bloomberg.
'The joke continues,' said John O'Connell, chief executive officer of Toronto-based Davis Rea. 'This company has been a disaster my whole career and I'm almost ready to retire.'
Hopes have been dashed that the A220 programme, formerly known as the C Series, will help pay down its US$10 billion debt, including pending deal for its CRJ jet unit with Mitsubishi Heavy Industries.
The company said fourth-quarter sales would be $4.2 billion, trailing the lowest analyst estimate in a survey by Bloomberg. The results were dragged down in part by new challenges in the company's rail division. Bombardier said it would take a $350 million accounting charge because of problems in London, Switzerland and Germany.
Liquidity remains strong, with year-end cash on hand of roughly $2.6 billion, Bombardier said. The company is scheduled to report full earnings February 13.
Said Bombardier CEO Alain Bellemare: 'We are actively pursuing alternatives that would allow us to accelerate our debt paydown.'
The Province of Quebec's economy and innovation minister declined to comment. The jet added 63 orders in 2019, with 105 currently in service and a backlog of close to 500 planes. Airbus will begin producing the A220 on a second assembly line this year at its factory in Mobile, Alabama.