Analyst: Learjet Sale ‘Increasingly Plausible’

 - August 11, 2016, 10:27 AM
A new investment analyst report from Cowen and Company said it is "increasingly plausible" that Bombardier would divest Wichita-based Learjet to alleviate the parent company's debt load. The light jet market is also currently challenging, it noted. (Photo: Matt Thurber/AIN)

A divestiture of Wichita-based Learjet from Bombardier’s aerospace portfolio is “increasingly plausible to lighten the overhang of $6.7 billion in debt” that matures starting in 2018, according to an investor analyst report published this week by Cowen and Company. During its second-quarter financial call last Friday, Bombardier chairman and CEO Alain Bellemare said the company is “addressing Learjet’s position due to significant pricing pressures.”

Cowen aerospace analyst Cai von Rumohr said that while the lone products at Learjet—the Model 70 and 75—have lost considerable market share to the Cessna Citation XLS+ over the past year and have “no opportunity for growth,” the after-market business for the more than 2,300 in-service Learjets is worth $400 million annually. Thus, he said, Textron Aviation could be an “interested potential buyer for cost synergies (both are located in Wichita) and potential to upgrade Lear service customers to its bizjets.”

A Bombardier spokesman said the company would not comment on “speculation” about Learjet's fate. “Our immediate focus is on aggressively selling aircraft in a highly competitive [light jet] segment—this includes being aggressive on price and driving cost reduction to better compete in this market space,” he told AIN. “The Learjet 75 offers unmatched performance versus competitors," noting its flat floor, low operating costs, 2,040-nm range and recently introduced pocket door.

Bombardier delivered only six Learjet 70/75s in the first half, compared with 14 in the same period last year. In total, it shipped 32 Learjet 70/75s last year.