On Tuesday the Wall Street Journal reported that Bombardier is in talks to sell its business jet unit to Textron.
Bombardier’s aviation unit, which manufactures business jets under the Learjet, Challenger, and “Global” brands, is a leader in the world of private aviation. The company recently launched the Global 7500, which has room for four “living spaces” and offers the longest range of any business jet. Thank goodness, because those gas stops in the Azores can be oh-so inconvenient.
Bombardier’s aviation unit isn’t their only business on the chopping block. The company is also reportedly in talks to sell its transportation unit to France’s Alstom, but negotiations have been held up due to a gap in valuation expectations and cost overruns on numerous contracts.
The transportation unit, which makes trains and subway cars, has also run into problems with the New York Transit Authority, which recently pulled 300 subway cars from service due to safety concerns.
The private jet business isn’t what it used to be. Sales of business jets are in a multi-year slump with annual deliveries at roughly half the volume vs. 2008. Maybe it’s climate awareness, maybe it’s pesky activist campaigns. Whatever the reason, it hasn’t been good for Bombardier, whose share price has fallen 70% since the beginning of 2008.
Textron, the potential buyer, is the world’s largest manufacturer of business aircraft measured by deliveries. They specialize in small and medium-sized Cessna aircraft, for more modest corporate executives. Textron shareholders appeared enthused about the potential combination and shares were up nearly 10% on the day.