Bombardier's New Toronto Digs Leave Room for Global 7000 Growth
(Bloomberg) -- Bombardier Inc. will still have room to boost production of its Global 7000 business jet after moving its Toronto assembly plant to a cheaper location -- and pocketing $550 million in the process.
The planned factory at Toronto Pearson International Airport will have the capacity to build as many as 100 business aircraft annually, Chief Executive Officer Alain Bellemare told shareholders Thursday. That’s enough to increase output of the Global 7000, the world’s biggest purpose-built private jet, if demand requires it.
The Canadian planemaker is banking on the aircraft to contribute about $3 billion in annual sales over the next decade. After the jet’s debut later this year, it will compete with General Dynamics Corp.’s Gulfstream G650, which has reigned unopposed since pioneering the ultra-long-range category five years ago.
Bombardier will deliver a handful of Global 7000 jets this year and probably ship about 20 of the planes next year, David Coleal, the president of business aircraft, told reporters in Montreal after the company’s annual meeting. Normal production should reach about 40 a year by 2020 or 2021.
Besides the newest model, Bombardier also makes the Global 5000 and 6000 jets at its Downsview factory in Toronto. The company delivered 45 of those aircraft last year.
Bombardier is selling the Downsview property to Canada’s Public Sector Pension Investment Board for about $635 million. The transaction is expected to close in the second quarter, increasing cash by more than $550 million after costs, Bombardier said.
Even as it focuses on expanding business-jet revenue, Canada’s largest aerospace company remains committed to building regional aircraft of 100 seats or less, Bellemare said Thursday. Airlines in the U.S. and elsewhere will need to replace thousands of aging smaller planes over the next two decades, according to Bombardier market forecasts.
On Thursday, Bombardier announced an agreement with American Airlines Group Inc. to sell 15 of its CRJ900 regional jets, an order with a list value of $719 million before customary discounts. American also took an option to buy 15 more.
Bombardier is stepping back from building larger commercial jets. It’s ceding control of its C Series single-aisle jetliner to Airbus SE, while retaining a minority stake in the program. The partnership is expected to close by the end of next month.
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