Amid reports that Canadian train and plane-maker Bombardier, Inc. (TSX:BBD.B) is looking to sell a portion of its aerospace business to raise cash in an effort to bolster its balance sheet amid nearly 300% in countervailing and anti-dumping duties which have been handed down by the U.S. Department of Commerce, investors are now wondering what impact these sales will have on the long-term growth trajectory of the company.
The reported divisions being considered for divestiture or foreign investment are the company’s Q400 turboprop and CRJ regional jet business units, segments which have lost traction to foreign rivals such as ATR and Embraer, two firms which have competed with Bombardier for most of its regional business globally for a number of years.
Bombardier’s struggle to compete in the global arena for regional jets is likely to be exacerbated by the recent ruling by the U.S. Department of Commerce, a ruling which effectively eliminates the Canadian airplane maker from the U.S. market.
With Bombardier likely looking to streamline its operations to focus on its CSeries program and train-making program, investors will be placing a greater emphasis on the operational performance of these two business units.
The success of Bombardier’s management team in attempting to turnaround a business which has run at a significant free cash flow deficit for the past five years will be much more reliant on the CSeries as opposed to the company’s other airplane assets which have performed reasonably well in the past.
Invest wisely, my friends.
