Bombardier will sell its Q400 turboprop program to Canadian airframe maker Viking Air for $300 million as part of a streamlining exercise expected to include the elimination of some 5,000 jobs over the next 12 to 18 months, the company announced Thursday. Bombardier also said it agreed to sell its business aircraft training unit to CAE for $645 million. The company expects both transactions to close by the second half of 2019 and generate net proceeds after assumption of certain liabilities, fees, and closing adjustments of $900 million.
The sale of the Q Series turboprop line leaves the CRJ regional jet as the sole remaining commercial aircraft program for Bombardier Aerospace, which sold a controlling stake in its most ambitious project ever—the C Series narrowbody airliner—to Airbus in July.
Soon after Bombardier completed negotiations over the C Series sale, it predicted a bright future for the Q400, and during a June 21 briefing with reporters in Mirabel, Quebec, Bombardier Commercial Aircraft president Fred Cromer endeavored to erase any lingering notion that the company’s recent sale of its turboprop assembly site in Downsview, Ontario, could signal a waning commitment by the company to the Toronto area.
At the time, the Q400 appeared to have begun to recover some sales momentum after several years of dominance in the turboprop market by rival ATR. A firm order for 10 airplanes in an 82-seat layout from Ethiopian Airlines in April raised hope that an earlier order for 50 ninety-seaters in September 2018 from India’s SpiceJet amounted to more than a temporary reprieve for the big propjet.
Now it appears that Cromer’s talk about lowering program costs to improve the Q400’s market competitiveness signaled more than a possible effort to outsource the manufacture of certain subassemblies.
Further initiatives announced Thursday include an effort to “right-size” and redeploy its central aerospace engineering team. Bombardier plans to send key engineering team members to other business segments, the largest group moving to Business Aircraft. It also plans to establish a new Advanced Technologies Office (ATO) led by François Caza, who the company has named chief technology officer. The ATO will focus on systems design and engineering, including applying experience from Bombardier’s aerospace programs to its rail transportation business.
Bombardier estimates the resulting reduction of some 5,000 positions across the organization will lead to an annual savings of $250 million at full run rate, which it expects to occur by 2021.
