Bombardier is eyeing a new sector to sell its private jets: defense. Ultimately, this industry could allow the aircraft manufacturer to generate an additional $1 billion in revenue annually, which could account for as much as 10% of its annual revenue.
Posted at 3:02pm
How does the company intend to achieve this? By trying to persuade armed forces worldwide to abandon the large launchers currently used for surveillance and reconnaissance missions in favor of their convertible business jets.
“The telecommunications equipment that we install on airplanes has gotten smaller and smaller,” Bombardier President and CEO Éric Martel said on Tuesday at the sidelines of an event organized by Aéro Montréal.
He attended the International Aerospace Innovation Forum 2022 to speak, among other things, about the Ecojet, a research project for wing-integrated fuselage aircraft. During a discussion on stage, Mr. Martel spoke about his never-before-revealed ambitions regarding the military sector.
Bombardier does not disclose its current sales of aircraft subsequently converted for military use. According to his boss, they represent only a “fraction” of the company’s revenue.
“Oh yes, definitely,” said Mr. Martel when asked if defense could one day account for 10% of the company’s revenue. We deliver three, four, five, six planes a year. We can see the growth getting much bigger and reaching, I don’t know, 1 billion [de dollars] and maybe more. »
Bombardier expects $7.5 billion in revenue from increased sales of luxury private jets and contribution from its aftermarket services division. It will likely be some time before we see a significant contribution from the military sector.
A shift has started
The multinational is already putting its pawns.
Last April, she founded the Bombardier Defense division based in Wichita, Kansas, where assembly of the Learjet once took place. This is where the calling swaps for the Global and the Challenger are performed. Its Global 6000 – which can travel more than 11,000 kilometers in its original configuration – was selected by Saab to be part of the GlobalEye programme, an airborne remote surveillance system. Last week, an aircraft from the same family was delivered to the US Air Force under a contract announced last year.
“Of course, the current geopolitical tensions have accelerated things,” says Mr. Martel. People are interested in working with us. We not only supply the aircraft, but also the engineering. There is also a consulting segment, and we are very well positioned for that. »
The armed conflict between Russia and Ukraine has already prompted several countries, including Canada, to increase military spending. The organization estimates that the military spending of the 30 member states of NATO will amount to 1,051 billion US dollars this year. This trend will accelerate in the coming years.
With business jet conversion taking place south of the border, it is currently difficult to quantify the impact of potential secession for Quebec through a defense breakthrough by Bombardier.
Richard Aboulafia, general manager of AeroDynamic Advisory, believes this growing interest in the military industry should have manifested itself at Bombardier a few years ago. However, the American analyst wonders if revenues will still be stable.
“The billion-dollar plateau can be reached with the sale of a dozen wide-cabin jets,” he says. But it’s an erratic market. Some years the revenue could be in the billions, in others it could be in the hundreds of millions. »
In order not to fuel the debate on immigration thresholds while the Quebec election campaign is in full swing, Mr. Martel has been invited to comment on the contribution of newcomers to the aerospace sector.
With more than 500 jobs available in Quebec and few recruits in training schools, the contribution of immigrants is crucial, says the aircraft manufacturer’s head.
“Maybe we should attract more young people to aviation, but I think we’re also seeing signs that immigration will be important,” he believes.
On the Toronto Stock Exchange, Bombardier shares were trading at $30.72 as of Tuesday afternoon, down 13 cents, or 0.4%.
- Number of “special purpose” business jets built by Bombardier in service worldwide