Finance Bombardier

Bombardier, once a towering name in aerospace and rail transportation, experienced a turbulent financial journey that ultimately led to its restructuring and the sale of key assets. The company’s finance story is one of ambition, strategic missteps, and ultimately, a struggle for survival.

Bombardier’s financial troubles began to escalate in the early 2000s. The company, known for its innovative regional jets and rail cars, embarked on a period of aggressive expansion. While aiming for diversified growth, this expansion also brought significant debt. The development of the CSeries (now the Airbus A220), a technologically advanced but costly narrow-body airliner, proved to be a pivotal point. The program suffered from delays, cost overruns, and difficulty securing orders, placing immense strain on Bombardier’s finances.

The CSeries’ financial burden forced Bombardier to seek government assistance, primarily from the Quebec government, to keep the program afloat. This intervention highlighted the strategic importance of Bombardier to the Canadian economy but also raised concerns about the company’s financial viability.

Facing mounting debt and lackluster performance in some of its divisions, Bombardier began divesting assets to raise capital and refocus its strategy. These divestitures included the sale of its recreational products division (Bombardier Recreational Products, now BRP), the sale of its water bomber aircraft business (Bombardier Amphibious Aircraft), and other non-core assets. Despite these efforts, the debt burden remained substantial.

The most significant strategic shift came with the eventual majority stake sale of the CSeries program to Airbus in 2017. This move relieved Bombardier of the enormous financial responsibility associated with the program and provided a much-needed injection of capital. However, it also meant relinquishing control of a key product that had represented Bombardier’s ambitions in the commercial aircraft market.

Following the Airbus deal, Bombardier continued to restructure, focusing primarily on business aviation. It further divested its rail transportation division (Bombardier Transportation) to Alstom in 2021. This marked a significant transformation for the company, effectively exiting the rail industry after decades of prominence. The proceeds from the Alstom deal were used to reduce debt and strengthen Bombardier’s financial position.

Today, Bombardier operates primarily as a business jet manufacturer. While smaller and more focused than its former self, the company has significantly reduced its debt and is concentrating on its core competencies in the high-margin business aviation sector. The future of Bombardier hinges on its ability to maintain its market share in the competitive business jet market and manage its remaining debt obligations effectively. The financial lessons learned from the CSeries debacle and subsequent restructuring are crucial for the company’s long-term sustainability.