Bombardier Deal Gives Turboprop Crown to Twin Otter Planemaker
(Bloomberg) -- A little-known company on Canada’s west coast will become king of the turboprops and owner of some of the most storied brands in the country’s aviation history after striking a deal with Bombardier Inc.
Closely held Longview Aviation Capital Corp. is poised to become North America’s largest maker of turboprop aircraft with its $300 million purchase of Bombardier’s Dash 8 program, including the Q400. Longview is also buying the rights to the de Havilland trademark, bringing the brands under one company for the first time in decades. With its roots in England in the 1920s, De Havilland’s Canadian subsidiary made the Moth, the Chipmunk and the Beaver, the original bush plane used to fly the nation’s rugged north.
Longview, based in Victoria, British Columbia, currently manufactures the de Havilland Twin Otter -- a successor to the Beaver used for island hopping and commuter travel -- through its Viking Air Ltd. unit. It also makes the Canadair water bombers and provides parts and servicing for other aircraft. The Q400, which is used by Toronto-based Porter Airlines, is a commuter turboprop line with a range of up to 1,100 nautical miles, allowing it to fly from Paris to Stockholm or Bangkok to Hong Kong nonstop.
ATR, a joint venture of Airbus SE and Leonardo SpA, has been Bombardier’s arch-rival in the market for turboprops with 90 seats and below, and was global No. 1 last year, delivering 78 new aircraft versus 30 Q400s.
While turboprops can be slower than jets, their appeal centers on a general ability to operate from the shorter runways of some smaller airports, combined with less-thirsty engines. The Q400 burns 30 percent less fuel and produces 30 percent lower emissions on short-haul routes where it has replaced similar capacity jet aircraft, according to Bombardier.
The segment is seeing strong growth from new markets like India and should keep going strong for at least the next decade, until hybrid planes and other new technologies start to complicate the picture, Viking Air Chief Executive Officer David Curtis said in an interview.
Turboprops have “a really interesting niche,” he said. “There’s always going be a need for a very efficient turboprop.”
All the same, the development of more-efficient regional jets has squeezed turboprops from some of their traditional stomping grounds.
Latvia’s Air Baltic Corp. operates 12 Q400s on shorter routes around mainland Europe and Scandinavia, but is retiring the model as it shifts to a fleet of Bombardier-built A220 jets, formerly the CSeries and now owned by Airbus.
“I’m sure that there’s still a market for the Q400,” CEO Martin Gauss said in an interview. “Just not the one we were using it for, which was connecting capital cities and business centers. That needs the speed and seats of a jet.”
After the deal, Longview will have about C$1 billion ($670 million) in annual sales and 1,800 full-time workers at locations in Victoria, Calgary and Toronto. Curtis said the company, which was set up in 2016, isn’t planning any job cuts from the acquisition. While Bombardier has sold its de Havilland Downsview site in Toronto, Longview will continue operate there until at least 2021.
Despite reaching sales that have surpassed publicly listed companies like Shopify Inc. and BlackBerry Ltd., Longview isn’t planning to change the way it does business. It funded the Bombardier deal with its own cash and sees no need to turn to outside investors or to pursue a sale of itself, Curtis said.
“We don’t do these kind of things to flip them,” Curtis said. “It won’t be in my lifetime that we go public.”
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