Last month, Bombardier announced the sale of its iconic Short Brothers Belfast subsidiary as well as its Morocco aerostructure and Dallas maintenance, repair and overhaul facilities to Spirit AeroSystems for $1.1 billion. This is on the heels of its divestiture of the CRJ and Q400 programs earlier this year and the sale of 51% of the C Series program to Airbus in July 2018. In a short period of time, Bombardier has undertaken four bold moves to radically transform its aerospace business from a $7.3 billion enterprise participating in regional jets, business aircraft and aerostructures to a pure-play business aircraft OEM. Were these the right moves by Bombardier CEO Alain Bellemare and his leadership team?

The sale of of Bombardier’s aerostructures assets makes complete sense. As outlined in my June 10 “Up Front” column, no equipment category faces more pressure than the $61 billion aerostructures segment, which is being buffeted by OEM vertical integration, new commercial terms, emerging technologies and geopolitics. Aerostructures is ripe for supplier consolidation, and Spirit AeroSystems—the largest and arguably most successful supplier—will bring the technology and capital to improve the competitiveness of its acquisitions. The move reduces Spirit’s dependence on Boeing, which comprises nearly 80% of its revenue, and helps Bombardier sharpen its focus and deleverage its balance sheet. If approved by regulators, this would be a win-win.

Bombardier’s sales of its regional aircraft assets were also sound decisions. The aging Q400 turboprop was at a significant competitive disadvantage relative to its ATR-42/72 competition, with just a 20% market share projected over the next decade. A major investment in a clean-sheet or upgraded aircraft would be required to remain in the low-growth $2 billion turboprop transport segment—hardly an attractive prospect for Bombardier shareholders. The new owner, Longview Capital, has a successful track record of acquiring sunset De Havilland aircraft programs. 

The CRJ divestiture was a more emotional decision. In retrospect, Bombardier might have been better off creating a clean-sheet 70-100-seat regional jet in the late 1990s rather than continuing to stretch the CRJ’s fuselage. Unfortunately, Embraer preempted Bombardier with the ERJ series, and it was locked into a competitive disadvantage. As the regional jet segment contracted, the payback of a new aircraft was not there—particularly given Embraer’s decision to reengine the ERJ and the impending entry of the Mitsubishi MRJ, all in a $6 billion segment with a flat market outlook. There was no rationale for continued investment. Exiting regional aircraft was a difficult but sound decision for Bombardier.

Finally, the last 15 months of Airbus involvement with the C Series—now the A220—vindicates the hypothesis that it was an excellent aircraft that lacked corporate critical mass to compete with the Airbus-Boeing duopoly. The A220 has already wracked up major new orders and is poised for a breakout decade in the 2020s. Had Bombardier not ceded control of the program to Airbus, it would have hemorrhaged cash to a level that would have threatened the company’s very existence. Production of the A220 will remain in Quebec until at least 2041 and, with Airbus ownership, production rates and employment, will be at significantly higher levels. There remains the intriguing possibility that Airbus could stretch the A220 to expand its addressable market. 

Bombardier is not out of the woods yet, however. It must decide what to do with its Learjet series, where growth has disappointed. Global business aircraft utilization has been flat in recent years, limiting demand for new aircraft and services. Bombardier needs to continue to deleverage its balance sheet, which includes nearly $9 billion in long-term debt. And its Transportation division, which comprises 50% of Bombardier’s revenue and has also undergone major restructuring under Bellemare, needs to improve its uneven financial returns.

Still, Bombardier is in a far better position than when Bellemare took over in early 2015. Its Global 7500, once deprioritized in favor of the C Series, is a hit in the large-cabin business jet segment, and its Global 5500 and 6500 aircraft just received European Union Aviation Safety Agency certification. Its aftermarket segment has improved, with expanded services revenue. And Bombardier’s focus on business aviation enables it to eliminate an entire layer of aerospace management. Once again, it is competing toe-to-toe with Gulfstream as the segment leader.

Corporate restructurings are never easy, and it is often difficult to judge their effectiveness without the benefit of time. It may take years to fully assess the effectiveness of Bombardier’s restructuring. But Bellemare had been dealt a terrible hand of cards in 2015. Since then, he has played his hand expertly. 

Contributing columnist Kevin Michaels is managing director of AeroDynamic Advisory, based in Ann Arbor, Michigan.

The views expressed are not necessarily those of Aviation Week.