Textron Buying LearjetThe Textron buys Learjet
Cessna manufacturer Textron Inc. would be interested in buying Bombardier Inc.'s battered Learjet deal "at the right price," a spokesman said Monday. This approval gives Bombardier a possible opt-out from the corporate aircraft segment, which CEO Alain Bellemare described as "oversupplied" and "remarkably competitive" in the company's quaterly profit distribution early this month. However, the company's financial results are not yet fully in line with the company's expectations.
Textron has since been cited as the most likely prospective purchaser. Mr Rumohr, Cowen and Co. researcher, said that a combination could save costs - both Cessna and Learjet are located in Wichita, Kan. - and that Textron could update current Learjet clients to its new Cessnas aircraft.
On Monday Textron confirmed that it would be interested in the Learjet under the right conditions. Influenced by both organic and exogenous drivers, Bombardier's corporate aircraft volumes were driven by a number of key drivers. There has been no complete recovery in worldwide corporate aircraft market activity from the recent credit crunch, and the slowdown in Russia, China, Latin America and the Middle East continues to impact all providers.
For this year, Bombardier forecasts a 10 percent decline in overall industrial shipments in comparison to 2015. In the meantime, it has also been losing shares to rivals such as Cessna, Embraer SA from Brazil and Dassault Aviation SA from France. Noealt Corporate Services, a research company, reported that "all of these businesses have suffered at the cost ofombardier, which recorded a full 40 percent decline in the number of airplane invoices in the first half of the year and a strong decline in overall airplane shipments.
Bombardier's bid for the Learjet, the smallest of its kind, was particularly severe. In the first half of the year, the airline shipped only six of its lightweight planes, up from 14 last year, and recently reversed its development plan for a new Learjet 85. The medium Challenger and large Globals have not been affected as much, although Bombardier reduced Globals output last year.
According to J.P. Morgan analysis Seth Seifman, the airline has three options: to cease production of new Learjets, but to maintain the current portfolio of around 2,400 planes; to resell Learjets to third parties; or to increase the division's competitive edge through lower costs and investments. Seifman challenged, however, whether Bombardier would wish to reinforce Textron, an important competitor in the corporate jets segment, by the sale of Learjet.