Bombardier president and CEO Eric Martel introduces the new Challenger 3500 in Montreal on Sept. 14, 2021.Paul Chiasson/The Canadian Press
Bombardier Inc. BBD-B-T plans to push harder into the military market, as the biggest global security crisis in decades has Western governments looking to boost their defence spending.
The Montreal-based company generates most of its money selling luxury jets to billionaires and charter operators. But it also has a small but solid business in specialized aircraft typically used by governments for intelligence, reconnaissance and other applications.
“We’re going to be growing our defence business quite significantly,” Bombardier chief executive Éric Martel told an interviewer Monday at the International Aerospace Innovation Forum, a conference organized by strategic think tank Aéro Montréal. “There is a lot of interest right now in our product.”
His comments highlight an opportunity for Bombardier and other Canadian aerospace companies – one that is growing as government defence budgets climb in tandem with increasing geopolitical uncertainty. Military spending has increased for seven straight years globally, in 2021 surpassing US$2-trillion for the first time, according to data from the Stockholm International Peace Research Institute.
With Russia’s invasion of Ukraine feeding insecurity in Europe, and with tension over Taiwan increasing between the United States and China, defence spending looks poised to increase further. Germany alone has announced plans to invest €100-billion ($130.27-billion) to rearm itself, including by buying new fighter jets.
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Bombardier manufactures three to six specialized aircraft annually, on average, for government clients, Mr. Martel said. That’s a fraction of the 120 planes it delivered overall last year. He said defence could become a US$1-billion business for the company, representing 10 per cent or more of its overall revenue.
The chief executive gave no timeframe for achieving that target. Bombardier reported revenue of US$6.1-billion last year.
Military missions worldwide make use of Bombardier-built planes, including two modified Challenger 600s currently being flown by the U.S. military on the border of Russia and Ukraine, Mr. Martel said. The company signed a deal last year with the U.S. Air Force to supply as many as six Global 6000 planes for the military branch’s Battlefield Airborne Communications Node (BACN) program, an airborne communications relay system.
The U.S. is leading the surge in defence spending, analyst Richard Aboulafia, of AeroDynamic Advisory, told the Montreal industry forum Monday.
The one piece of advice his organization has for any supplier, he said, is “to look more to the defence sector for growth.” He said military spending is rising not only on procurement, operations and maintenance, but also on research and development. This, he said, could reverse the long-term, post-Cold-War pattern of technological innovation flowing from the civil sector to the military.
The Canadian government has faced pressure from allies to increase its military spending, particularly after Russia’s aggression in Ukraine. This fiscal year, Canada’s military spending of $36.3-billion amounts to 1.33 per cent of the country’s GDP. The federal government has made budget commitments to spend $51-billion, or 1.59 per cent of GDP, in 2026-27.
Still, that falls short of Canada’s commitment to the North Atlantic Treaty Organization, which calls on each of its members to devote 2 per cent of their annual economic output to military spending. The government would need to earmark $75-billion over the next half-decade to catch up, according to a report published in June by Parliamentary Budget Officer Yves Giroux.
Earlier this year, Bombardier renamed its specialized aircraft division to better reflect its strategy for the business. The unit, now known as Bombardier Defense, is based in Wichita, Kan., and led by Steve Patrick, a Bombardier veteran who served earlier in his career as a senior flight test engineer for BAE Systems and worked on the Tornado fighter.
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