Bombardier Inc. has decided it will just let go of its multi-billion-dollar ambition of becoming a major player in the commercial aviation business and is reportedly finalizing an agreement to sell off its shaky rail unit.
The company's official exit means the business aircraft unit could soon be all that will be left of the once-mighty Quebec jet and train maker that is trimming down its portfolio in order to pay off its ballooning debt.
The company continues to consider strategic measures that will help it fast-track the payment of its financial obligations, which has grown to over $9 billion.
Bombardier disclosed that it will move its shares in the Airbus deal, which manufactures the A220 plane formerly known as the C-Series, to Airbus and the Quebec government.
The transfer of assets will give Bombardier around $600 million in cash from Airbus and gets the company out of shelling out an additional $700 million into the agreement. Airbus confirmed the deal to acquire the remaining shares of Bombardier, officials announced on Thursday.
Bombardier will also receive around $592 million and will no longer have future capital requirements to Airbus Canada. The contract will guarantee over 3,300 Airbus jobs in Quebec, the companies divulged.
Stocks of Bombardier, which had been making an advance in the past few days on news of asset unloading was unstable on the Toronto Stock Exchange as investors weighed on the latest effort by the company to discard components of the firm in what would become the final year of a five-year turnaround program.
The contract bolsters Airbus' shares in the program from just over 50 percent to 75 percent, while Quebec's stocks rallied from 16 percent to almost 30 percent.
Bombardier has sunk over $6 billion through its aircraft program's development, which chief executive Alain Bellemare stated during a conference call with analysts that it was the "biggest challenge in 2015" when they joined the company.
"We lost a lot of money," Bellemare said, referring to the commercial aerospace business the company hoped would turn things around for them.
According to sources, Bombardier may also sell its rail unit to French company Alstom, although any agreement between the two companies has yet to be officially made.
Over the past four quarters, Bombardier has ditched its regional turbo-propelled aircraft division and aerostructures businesses for a total proceed of around $1.6 billion as it works to settle upwards $9 billion in total unpaid dues.
