Canadian business jet maker Bombardier and US manufacturer Honeywell have settled a long-running lawsuit regarding engine prices and will embark together on a new “strategic agreement” to upgrade existing Bombardier platforms and supply future aircraft.
The partnership marks the end of an eight-year feud over the price of turbofan engines that power Bombardier’s Challenger 300 super-midsize business jets, and the beginning of a potentially lucrative new phase, Honeywell said on 2 December.
Co-operating with Bombardier is expected to deliver an estimated $17 billion of value to Honeywell over the life of the partnership, though Honeywell cites the deal’s “short-term costs” in cutting its full-year financial outlook for 2024.
“Given the required investments associated with this agreement, Honeywell has updated its full-year sales, segment margin, adjusted earnings per share and free cash-flow guidance,” says the Arizona-based manufacturer.
Honeywell cut its full-year free cash-flow expectations by about $500 million as a result of its settlement with Bombardier. But the companies did not disclose financial terms. "The terms of the settlement agreement are confidential to both parties," te airframer says.
Honeywell says it will provide ”advanced technology for current and future Bombardier aircraft in avionics, propulsion and satellite communications technologies”.
“This new partnership creates unprecedented opportunities for Bombardier,” says Eric Martel, Bombardier’s chief executive. “Honeywell’s differentiated technology is the key reason we decided to collaboratively build a bright future with them.”
The partnership’s propulsion-based efforts will focus on “evolutions of power, reliability and maintainability”, starting with the next-generation model of Honeywell’s HTF7000 turbofan.
HTF7000s power super-midsize business jets including Bombardier’s Challenger 300-series, Cessna's Citation Longitude, Embraer's Legacy 450/500 and Gulfstream's G280.
Competition between the OEMs was a driving factor in Bombardier’s 2016 lawsuit against Honeywell, which previously designed and built engines exclusively for Bombardier.
The Canadian Press reports that a Superior Court of Quebec judge ruled in January that Honeywell must negotiate in good faith with Bombardier to lower the cost of its HTF7000 engines, and that it must provide documents showing it did not sell engines at lower prices to rival OEMs such as Embraer, Gulfstream and Textron Aviation, which manufactures Cessna aircraft.
Honeywell appealed the judge’s decision to the Supreme Court of Canada, but the companies said on 2 December that ”all legacy pending litigation between the companies has been resolved”.
