Bombardier October 16, 2017

So, Bombardier is selling half of its C Series jet project to Airbus for umm zero dollars.

What an indictment, what a testament to a colossal failure of management. Bombardier spent , as I indicated in 2016, at least $5.4 billion on the program before selling half of it to the Quebec government for $1 billion. And arguably that was really a sale for just a half billion since Quebec would own half of the billion dollars it put into the C Series partnership. Now they have given away half of the C Series for no cash whatsoever. Bombardier will apparently own 31% and Quebec 19%. Apparently Quebec’s share had slipped from 50% to 38% even before this deal presumably because Bombardier was continuing to put cash into the C Series partnership and the Quebec government was not.

The whole think looks like good news for the Canadian economy and jobs. As for Bombardier it looks like more evidence that the company is probably totally worthless just as its balance sheet says it is. Bombardier’s shares trade at a positive value due to some hope of a resurrection or whatever.

I have trouble seeing how Bombardier’s shares will rise on this news but who knows.

I don’t know what it means for Bombardier’s preferred shares. I would think they are riskier than ever on this news.

But maybe it is good news, it will be better to make some future profits or at least positive cash flows from 30% of a more viable C Series as opposed to owning all of a program that was facing years of losses. If the preferred shares happen to bounce on the news it might be wise to trim or eliminate positions.

Little attention has been paid to how much shareholder money has been destroyed by Bombardier’s management. Shareholders have actually lost more money than all the government subsidies combined.