GRAHAM WARWICK / WASHINGTON DC
Sale will help stem losses but covers less than half the Canadian manufacturer's aircraft loans and leases
Bombardier has agreed to sell part of its business aircraft financing portfolio to GE Commercial Equipment Financing, already a leader in leasing and financing corporate aircraft.
The C$475 million ($340 million) price represents the book value of the assets being sold, avoiding further losses at the Canadian company, but covers less than half of Bombardier Capital's total exposure to business aircraft loans and leases.
The Montreal-based manufacturer announced in September last year that its Bombardier Capital unit would leave the business aircraft market and sell its portfolio to third-party financing entities. This strategy was reaffirmed in April, when new chief executive Paul Tellier unveiled a package of measures intended to strengthen Bombardier's balance sheet. These included a C$1.2 billion stock offering and the still-pending sale of its Recreational Products division for a hoped-for C$1 billion.
Bombardier Capital continues to provide interim financing for regional aircraft, but Tellier has imposed a limit of no more than 60 aircraft at a time, for a total exposure of $1 billion. Previously, the unit would finance the sale of Bombardier business jets and buy any traded-in aircraft. Now financing is provided by third parties and traded-in aircraft stay off Bombardier Aerospace's books until resold.
Source: Flight International
