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Tue, Feb 11, 2020

Bombardier Looks To Leave A220 Joint Venture

Looking To Sell Multiple Business Units To Generate Cash

Bombardier is in the late stages of negotiations with Airbus to leave the A220 joint venture, according to reports.

The website Seeking Alpha has posted an article indicating that Bombardier is looking at maturing debt beginning in 2021. To improve its bottom line, the transportation company is exploring the possibility of selling off some of its business units to generate case. One of those would be its stake in the Airbus A220 program.

The A220 began life as the C Series line of regional airliners. Airbus is currently forecasting demand for some 7,000 units over 20 years for the aircraft.

Several factors will go into determining what price Bombardier might be able to get from Airbus for its share of the joint venture. Dhierin Bechai, the author of the piece doubts Bombardier "has the leverage to negotiate a good deal out of it since the jet maker will be walking away from cash infusions that were required in the coming years and that will reduce the fair value of Bombardier’s share of the joint venture."

While Bechai says while $4 to $6 billion would be a good deal for Bombardier, it would not reflect the long-term prospects for the airplane. Therefore, he feels that a more realistic number would be $2 billion or less.

Negotiations are reportedly ongoing.

(Image from file)

FMI: Source report

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