Thursday 31 October 2019

Bombardier sells multiple facilities to Spirit for US$500M

Bombardier Inc. is a multinational manufacturer of regional airliners, business jets, equipment for public transport, and high speed rail train sets. Its aviation division, Bombardier Aviation, is headquartered in Montreal. The public transport division, Bombardier Transportation, is headquartered in Berlin.

Spirit AeroSystems, Inc., based in Wichita, Kansas, is the world's largest first-tier aerostructures manufacturer. The company builds several important pieces of Boeing aircraft, including the fuselage of the 737 and portions of the 787 fuselage. It also builds the cockpit section of the fuselage of nearly all of its airliners.

Bombardier Inc. has decided to sell a wing factory in Northern Ireland and two other facilities to Spirit AeroSystems Holdings Inc. for US$500 million. This also includes the assumption of certain liabilities.

The wings are made for Airbus SE’s A220 jetliner. The deal also involves a plant in Morocco and a maintenance, overhaul and repair shop in Dallas, Bombardier and Spirit said Thursday.

For Spirit, buying the Belfast plant will expand its role as an Airbus supplier and lessen its dependence on Boeing Co. and the 737 Max.

Unfortunately, the 737 Max has been grounded for more than seven months after two deadly crashes. (President Donald Trump announced on March 13, that United States authorities would ground all 737 MAX 8 and 9 aircraft in the United States.)

The acquired operations have more than 4,000 employees and expected 2019 revenue of about US$1 billion, Spirit said.

As part of the agreement, Spirit said it would assume about US$300 million in net pension liabilities, and approximately $290 million of government grant repayment obligations, bringing the total value of the transaction to US$1.09 billion.

Spirit will also make a cash contribution of about US$130 million toward pension liabilities. The deal is subject to regulatory approval. It is expected to close in the first half of next year.

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