Airplanes in production sit on the factory floor as Canadian business jet maker Bombardier holds an investor day at its plant in Mississauga, Ont. on May 1.Carlos Osorio/Reuters
Bombardier Inc. BBD-B-T is eyeing a potential takeover of factories in Northern Ireland belonging to Spirit AeroSystems Holdings Inc. as it moves to safeguard the stability of one of its key suppliers.
The Canadian maker of luxury private jets is open to acquiring Spirit’s manufacturing assets in Belfast to protect its own interests, Bombardier chief executive officer Eric Martel said. The assets there are expected to be carved off as part of Boeing Co.’s BA-N US$4.7-billion purchase of Spirit, announced earlier this month.
Workers at the Belfast plants make fuselages for both Bombardier Challenger and Global models as well as engine nacelles, horizontal stabilizers and other components, which are then shipped to Bombardier facilities in Canada for final assembly. The reliability of production in the Northern Irish capital is crucial for the Montreal-based plane maker as it pushes on with its turnaround effort after years of crisis.
“If another buyer can guarantee long-term visibility on pricing, on execution, delivering on time and quality of the product, we’re open to that. But we could also be the solution,” Mr. Martel told analysts on Bombardier’s second-quarter earnings call Thursday when asked about buying Spirit assets. “If there’s nobody, we could be considering that as an option.”
Bombardier used to own the storied aircraft manufacturing business in Belfast, commonly known as Shorts, but sold it to Spirit as part of a US$1.2-billion deal in 2020. At the time, Bombardier was in the midst of a wider sell-off of assets in a bid to rebuild its finances as it refocused its business model on private aircraft.
Belfast is now emerging as a key piece of the puzzle for Quebec’s industrial future. In addition to work for Bombardier, Spirit in Belfast also makes the composite wings for Airbus SE’s A220 commercial airliner.
That plane, the former Bombardier CSeries, is assembled by 3,500 workers in Mirabel north of Montreal and considered to be a cornerstone of the province’s aerospace strategy. The Quebec government this week invested another US$300-million into a limited partnership that owns the A220 program.
Airbus has already moved to secure the supply of the A220 parts made in Belfast. The same day Spirit announced its takeover by Boeing, Airbus said it struck a binding term sheet agreement with Spirit that aims to shift the production it is currently doing on the A220 to Airbus itself. Under the deal, Spirit will pay Airbus US$559-million to take over the work packages, subject to due diligence, according to terms announced by the companies.
Bombardier will need its own long-term solution and will be keeping close tabs on how the Spirit sale plays out. The Canadian plane maker doesn’t necessarily want to leave the Belfast fuselage work in the hands of Boeing, a company with which it has had a thorny relationship in recent years. The two manufacturers have locked horns on several occasions, most recently over the Canadian government’s decision to award a sole-source contract to Boeing for military surveillance planes.
Still, taking over Shorts, minus the Airbus A220 work, isn’t an easy decision to make. Bombardier already knows the business and acquiring it would allow it to bring a critical piece of manufacturing in-house at a time when there is enormous pressure on the aerospace supply chain. But there are financial and strategic considerations as well and a transaction could add more complexity to its operations. Shorts also does work for Rolls-Royce.
“The question for Bombardier is whether what it would be buying in terms of manufacturing capacity exceeds its own needs,” said Mehran Ebrahimi, a professor at the University of Quebec in Montreal. “And does it really want to develop aerostructures pieces for others? The company has moved away from that.”
Spirit is one of Northern Ireland’s biggest manufacturers and employs thousands of workers across multiple sites. The Unite union, which represents a majority of those employees, has voiced concerns that a break-up of Spirit operations in the country would threaten jobs.
Mr. Martel told reporters in a separate call Thursday that he has “no preference” at the moment between a scenario where Bombardier would own the Shorts assets or deal with another owner, as long as that owner is willing and able to deliver quality structural components on time. “If we have to [buy it], we will,” he said.
Northern Ireland Economy Minister Conor Murphy told the Belfast Telegraph in comments reported Thursday that his department has been in touch with Bombardier and that company leaders will visit the city in August. “We’ll be able to have a dialogue with them. What we’re trying to see is that the work is protected, the potential growth of that industry is protected,” Mr. Murphy was quoted as saying.
Meanwhile, Bombardier reported financial results for its latest quarter that beat analyst expectations, tallying adjusted earnings before interest, taxes, depreciation and amortization of US$335-million on revenue of US$2.2-billion. Net profit was US$19-million or 12 cents per diluted share, reversing a loss of US$35-million a year earlier.
The plane maker delivered 39 jets during the three-month period ending June 30 and reaffirmed its previous financial targets for the year. Its backlog of work booked but yet to be completed now stands at US$14.9-billion.