New Potential Investment into Bombardier

May 18, 2017

Canada’s largest aircraft manufacturer, Bombardier, announced Thursday that it held talks with Chinese state-owned Aircraft Corporation of China Ltd. (Comac) about a possible investment into the Montréal-based company. This announcement comes two weeks after Comac successfully tested its C919 plane, which could carry 156 to 168 passengers. The C919 is a twin-engine narrow-body plane, designed to compete against Airbus 320 and Boeing 737.

Bombardier has struggled to secure market access for its C-Series twin-engine narrow-body planes (which can also carry between 130 to 160 passengers), since launching the program in 2012. The company’s stock (BBD) price dropped from $4.36/share in November 2014 to an average of $2.10/share in the last year. It reached its lowest point in February 2016, to $0.80/share. Bombardier’s earnings have increased in the last year, from a loss of (0.07$)/share in Q4 of 2016 to breaking even at $0.00/share in Q1 of 2017.

Such an investment, if realized, will be useful for both companies. It would ease Bombardier’s financial burdens while broadening its access into the Chinese market, which is expected to witness the world’s largest growth over the next 20 years. It would also provide Comac with access to new commercial/passenger aerospace technologies. Therefore, this will assist both companies (through the exchange of capital and technologies) as they seek to enter the same twin-engine narrow-body segment of the aerospace industry, competing against the Airbus and Boeing.