Bombardier is acquiring the Global 7500 wing manufacturing operation from Triumph for a “nominal cash consideration” under an agreement both companies announced this morning. Expected to close in the first quarter, the acquisition will include only the operations at Triumph’s Red Oak, Texas plant. Bombardier plans to continue operating the program at the Red Oak facility and integrate the employees there into the company.
The move comes as Triumph has divested several businesses as the aerospace supplier looks to streamline its portfolio and return to stable profitability. Over the past year, Triumph divestitures have included its APU Repair Product Line and various aerospace structures businesses in Los Angeles, Long Island, and East Texas.
Triumph president and CEO Dan Crowley said the Global 7500 program divestiture “is a pivotal step in our transformation as we continue our focus on our core integrated systems and aftermarket offerings and our goal of achieving predictable profitability.” In November, the company reported a $14.7 million net loss overall, including a $19.9 million “forward loss” charge on the Global 7500 program.
The sale is the latest turn for the wing program, which in early 2017 was ensnared in legal action between Triumph and Bombardier. Triumph had filed a lawsuit against Bombardier seeking $340 million for “certain non-recurring expenses incurred…during the development phase” and specifying “Bombardier-directed changes to the original wing requirements for the Global 7000 [now the 7500] program.” Initial changes in the wing contributed to a nearly-two-year delay in the aircraft development and certification program.
But in May 2017, Triumph and Bombardier reached an undisclosed comprehensive settlement that Crowley had said “resets” the relationship between the companies.
In announcing the new agreement to shift of the wing program to Bombardier, Crowley said, “We’re proud of our work to date on the Global 7500 program and we will continue to support Bombardier throughout its portfolio.”
For Bombardier, which already has had in-house wing production capabilities, the acquisition represents an opportunity to bolster its aerostructures business, while ensuring continuity of the ramp-up of its flagship business jet.
“This acquisition is a perfect strategic fit for Bombardier Aerostructures,” said Danny Di Perna, president of Bombardier Aerostructures and Engineering Services. “It will allow us to bring our extensive technical expertise to one of the industry’s biggest growth programs, while solidifying our position as a leading wing provider.”
Bombardier will acquire both the assets and obligations for the program and provide the necessary working capital for ramp-up of the Global 7500, which was certified and entered service late last year. The company expects the acquisition will help boost its aerostructures revenue for 2019 from the original $2 billion to between $2.25 billion and $2.5 billion.
The acquisition marks another major component shift from an outside supplier to a manufacturer. In the fall, Gulfstream acquired the G500 and G600 engine nacelle business from Nordam, a move that came after Nordam had ceased production on the nacelles citing an “impasse” with the engine supplier for the G500 and G600, Pratt & Whitney Canada.