As Bombardier weighs the mergers and acquisitions space, the reacquisition of the Spirit AeroSystems facility in Belfast could be one of its next moves. Earlier this month, Spirit AeroSystems reached agreements with Boeing and Airbus to sell off the majority of its operations as it pertained to the OEM giants, but it also planned to seek buyers for certain facilities, including the Belfast plant that it had acquired from Bombardier in 2020.
The facility is critical for the Canadian airframer, producing center fuselages for the Challenger programs, forward fuselages for the Global 5500 and 6500, and horizontal stabilizers for all of the Globals (including the Global 7500), along with other key components such as engine nacelles.
Bombardier president and CEO Éric Martel noted that the facility used to be part of Bombardier for more than three decades. It was sold along with other assets as the company pared down to a pure-play business jet producer.
“Our priority right now is clearly to make sure that the existing contracts [for the Belfast work] will be upheld at the higher standard,” Martel told analysts during the release of its quarterly earnings on Thursday morning. “And that's why we have, on a regular basis, people in Belfast working on this priority to make sure that the material keeps flowing.”
Bombardier is monitoring the situation closely, he said. “As a customer, we're willing to provide the appropriate operational or structural or legal input to that,” Martel said, adding, “There'll be potential buyers at some point. We could also consider to be one of them. We'll see what the market says, but I think what is important to us will be that whoever the buyer is, we need to be comfortable with these guys to be there for the long run. If there's nobody, we could again be considering that as an option.”
Martel did not have a timeline, deferring to Airbus’ and Boeing’s plans for closing on their respective deals in mid-2025. Bombardier has not developed a team on this yet but is watching how the situation unfolds. However, Martel said he could be equally comfortable with another buyer or with Bombardier ownership.
This comes as Bombardier looks at the reserve cash it has begun to accrue. During its Investor Day in May, Bombardier opened the door to possible merger and acquisition activity down the road as it accumulates free cash and continues to deleverage.
Both Martel and Bart Demosky, executive v-p and CFO, stressed that the company’s first objective remains paying off debt. “With our upcoming expected large amounts of free cash flow that we'll be delivering as a business, we have lots of flexibility when it comes to how we want to deploy that capital,” Demosky said.
The company has not yet provided guidance on which direction it will take, he said, adding that guidance may come early next year after the board meets later this year. While he said all options are open, “Certainly debt repayment remains the number-one priority for excess free cash flow that we have at the moment. We are not going to take our eyes off of that.”
Martel agreed and cautioned not to expect any substantial acquisition “until this is done,” referring to continued debt repayment. In the interim, acquisitions could occur to shore up its supply chain, he noted.