MHIRJ takes to the cloud with the power of IBM to build its newly acquired aviation business

By ibmblogs, Dave McCann, and Sebastien Abbandonato  | March 16, 2021

It’s been one year since the first case of COVID-19 was discovered in Canada. In 2020, airline traffic around the world fell by 60 per cent, the largest yearly drop in history according to the International Civil Aviation Organization (ICAO). There is no question, the airline industry and aerospace in general, have been greatly impacted by the COVID-19 pandemic. And while the world’s major airlines have had no choice but to reduce service or remove routes and aircraft, essential travel continues. Though the frequency of flights has decreased significantly, commercial aircrafts still require maintenance and airlines need technical support to ensure the world’s economy remains operational.  

Based in Montréal, Québec, Mitsubishi Heavy Industries (MHI) RJ Aviation Group launched after MHI acquired the Canadair Regional Jet (CRJ) Series program from Bombardier, making them MHIRJ. The new business provides maintenance, repair and overhaul services, as well as technical and engineering support for the global regional aircraft industry. As a new standalone company, MHIRJ began the search for a technology provider that could support the agility they needed to deliver services in the aftermarket supply chain. This was an opportunity for them to bring in top tier technology and transform the IT landscape with advanced applications. 

We wanted a solution that would give us a transparent and unified view of our business. It would also have to guarantee our ability to deliver [world-class] service levels to our clients during a time of uncertainty in the airline industry,” said Sebastien Abbandonato, Head of IT at MHIRJ. “We turned to IBM because of their ability to transform, implement and manage our services all in one place.” 

To unlock greater insights and provide a streamlined and unified view of their business, MHIRJ chose to deploy SAP S/4HANA ERP solution hosted on the IBM Cloud. IBM is providing implementation services and management of the cloud environment, and once implemented will provide application management, ensuring seamless, end-to-end service, delivered with quality. In addition, the strategy helps MHIRJ to control its overhead expenses while simultaneously reducing its physical footprint. The new open hybrid platform is data–driven, customer-centric and enables MHIRJ to make effective decisions that drive down costs and drive-up efficiency  

As governments discourage non-essential travel, many airlines are facing financial consequences with most of their largest aircrafts grounded for months. As a result, airlines are shifting their focus and using smaller aircrafts like the CRJ now serviced by MHIRJ. By bringing the best technology and the most enhanced user experience to the table, MHIRJ can enrich customer service and improve the supply chain at a cost that is optimal, affordable and sustainable. 

As airlines and associated industries recover from the COVID-19 pandemic, now is the perfect time to focus on rethinking business models, retooling process and innovating with new cloud technologies for resilience across the industry. 

Misinterpretation of air traffic control communication identified as a factor in August 2019 runway incursion at Toronto/Lester B. Pearson International Airport

From: Transportation Safety Board of Canada

News release

Richmond Hill, Ontario, 15 January 2021 — The Transportation Safety Board of Canada (TSB) today released its investigation report (A19O0117) into the August 2019 runway incursion between two aircraft at the Toronto/Lester B. Pearson International Airport, Ontario. There were no injuries.

On 9 August 2019 at 1240 local time, an Air Canada Boeing 777-300 landed on Runway 33L. Three minutes later, at 1243 local time, an Air Georgian Bombardier CRJ 200 was instructed to line up on parallel Runway 33R. In accordance with air traffic control (ATC) instructions, the Boeing 777 was crossing Runway 33R. Simultaneously, the flight crew of the CRJ 200 began its take-off roll on the same runway without a take-off clearance from ATC. When the CRJ 200 flight crew saw the Boeing 777 over the crest of the runway, they rejected the takeoff and exited via a taxiway.

The investigation found that while completing the pre-departure checks, the flight crew of the CRJ 200 was informed of a change in departure instructions. The first officer received and read back the line-up instruction with the departure amendment, but misinterpreted that ATC communication as a clearance for takeoff.

It was determined that the number of pre-departure tasks the flight crew was required to complete within a short amount of time increased their workload, and that the workload was further increased by the additional tasks brought by the change in instructions. Thus, it was found that the increased workload, the expectation to receive a take-off clearance without delay, and the misinterpretation of the line-up instructions led the CRJ 200 flight crew to initiate take-off roll without a take-off clearance. Also, because of the grade profile of Runway 33R, the fuselage of the Boeing 777 would not have been visible to the CRJ 200 flight crew at the start of the take-off roll, therefore they had no visual indication that it was unsafe to begin the takeoff.

Both flight crew members worked an early morning shift after working an evening shift, known as a backward-rotating shift schedule. Although the investigation did not determine that fatigue affected the performance of the flight crew in this occurrence, backward-rotating shift schedules cause circadian rhythm desynchronization, which increases the risk of fatigue in crew members who do not receive sufficient time off to adapt their sleep-wake pattern when working these schedules. Furthermore, if airlines do not inform crew members of the risk of fatigue due to the direction of shift schedule rotation, there is an increased risk that crew members will operate an aircraft while fatigued.

Following the occurrence, NAV CANADA issued a directive reminding air traffic controllers to cancel the take-off clearance or issue an instruction to abort takeoff when runway incursion monitoring and conflict alert system stage 2 alerts are activated by a departing aircraft.

Air Georgian Limited conducted an internal safety investigation as per the company’s safety management system. It amended its standard operating procedures to mandate an ATC query if one of the two crew members was unaware of the content of an ATC clearance or instruction.

See the investigation page for more information.

Mishap involving catering truck and plane causes flight delays at Regina airport

From Global News – link to source story

By Jonathan Guignard  Global News | January 8, 2021

Air Canada flights from Regina to Vancouver and Toronto were delayed Friday morning after a catering truck got stuck under the nose of a CRJ900 aircraft at the Regina airport.
Air Canada flights from Regina to Vancouver and Toronto were delayed Friday morning after a catering truck got stuck under the nose of a CRJ900 aircraft at the Regina airport. Provided / Riley Park

Two flights at the Regina airport experienced delays on Friday after a catering truck got stuck under the nose of a CRJ900 aircraft.

The truck was stocking the plane with supplies at around 6 a.m. before getting caught underneath the aircraft, lifting up the nose of the jet, according to the Airport Authority.

Crews had to use a crane to move the Air Canada jet off of the catering truck. “Ground operating equipment — whether it be tags for luggage, catering vehicles … there can be [times] where you may have some sort of conflict, but I wouldn’t say this is a regular occurrence,” said James Bogusz, Regina Airport Authority president and CEO.

“Certainly not one that would delay an aircraft for a few hours.”

Air Canada confirmed that delayed flights were to Vancouver and Toronto. Its maintenance team is inspecting the plane for damage.

“No passengers were onboard at the time of the incident,” Air Canada said in a statement emailed to Global News on Friday. “We sincerely apologize to our passengers for the disruptions.”

© 2021 Global News, a division of Corus Entertainment Inc.

Passenger plane makes emergency landing at Moncton airport

From CBC News – link to source story

Air Canada Jazz flight to Toronto lands safely after smoke detected

CBC News · Posted: Jan 07, 2021

An Air Canada flight on its way to Toronto from Sydney, N.S., made an emergency landing round 6:45 a.m. Thursday without incident. (Ken Hébert/Radio-Canada)

Smoke in the cabin of a plane carrying 29 passengers from Sydney, N.S., to Toronto was forced to make an emergency landing at the Moncton airport Thursday.

The pilot realized during the flight that a smoke detector in the back lavatory was activated, said Manon Stuart, a spokesperson for Jazz Aviation, a regional partner of Air Canada. 

“Subsequently, the crew noticed a haze in the rear cabin,” Stuart wrote in an email.

With 33 people, including four crew onboard, the plane was diverted to Moncton, the nearest airport. The crew requested priority landing at about 6 a.m.

Stuart said the haze had dissipated by the time the plane landed. 

“The passengers deplaned normally.”

The CRJ900 aircraft landed safely around 6:45 am.

Julie Pondant, spokesperson for the Greater Moncton International Airport Authority, said a call came in around 6 a.m. about smoke in the cabin of the plane. (Pierre Fournier/CBC)

Julie Pondant of the Greater Moncton International Airport Authority, said 911 was called, which is standard procedure.

“They dispatch their regular emergency crews, which includes ambulance, police and fire and our fire crews as well are dispatched at that same time,” said Pondant.

“The initial inspection from the firefighters came clear, basically there didn’t seem to be any smoke or anything to be worried about at that moment.”

According to Stuart there was no fire. 

“Passengers will resume their travel on the next flight scheduled to depart Moncton to Toronto around noon today,” wrote Stuart. 

Stuart said a maintenance crew is on its way to Moncton to inspect the plane to determine the cause of the problem, and to make any necessary repairs.

Radio-Canada

Mirabel Prepares To Build The 1945th And Final CRJ

From Simple Flying – link to source story

By Andrew Curran | December 21, 2020

The final Bombardier Canadair Regional Jet (CRJ) is rolling off the assembly line in Mirabel. Between 1992 and the present day, Bombardier has manufactured 1945 units of the popular type. However, Japan’s Mitsubishi finalized the purchase of the Bombardier CRJ program mid-year and is integrating it into the Mitsubishi Regional Jet (MRJ) Spacejet program.

Mirabel-Final-CRJ-Construction
The final aircraft from the CRJ program is rolling off the assembly line in Mirabel. Photo: Bombardier

Last drinks for the Bombardier CRJ program

The CRJ family is made up of the CRJ100, 200, 440, 550, 700, 900, and 1000 models. The final CRJ is a significant milestone for Bombardier. Having sold the C Series program to Airbus in 2018, and the Q400 turboprop program to De Havilland Aircraft in 2019, Bombardier is no longer manufacturing commercial aircraft.

Last year, Bombardier admitted competing against Boeing and Airbus in the commercial jet space was a tall order. Embraer was also aggressively competing in the regional jet market space. Cutting their losses, Bombardier sold the CRJ program to Mitsubishi for US$550 million cash and $200 million in liabilities.

The CRJs were part of a four-decade flirtation with aircraft at Bombardier. The business has its origins in World War II. But they started as a snowmobile maker rather than an aircraft manufacturer. Bombardier branched out into aircraft in the mid-1980s, building water bombers and buying out Canadair and Short Brothers.

Mirabel-Final-CRJ-Construction
One of Bombardier’s earlier CRJ types, the CRJ200. Photo: Bombardier

From snowmobiles to regional jets

This was Bombardier’s springboard into the commercial airline manufacturing business. Bombardier had inherited the Challenger 600 aircraft type when they bought Canadair and used that as the platform to develop the CRJs. They started with CRJ100 and CRJ200s, small 50 seat jets that went into service with multiple airlines, including Air Canada, Delta Air Lines, Lufthansa, and Austrian Airlines. These planes helped establish the regional jet market.

Bombardier’s own website calls the CRJ series the world’s most successful family of regional jets. But Bombardier’s CRJ program had also incurred losses for several years and was burdened by heavy debt. What kept the program flying was the demand from US airlines. In the United States, scope clauses in labor contracts restrict airlines from operating regional planes with more than 76 seats and a maximum takeoff weight of 86,000 pounds.

However, US airlines are attempting to overturn these scope clauses. Bombardier, which initially had the regional jet market to itself, is also facing stiff competition from Brazilian regional jet manufacturer, Embraer. Going forward, Bombardier is keeping some presence in the aviation space. It intends to keep on building private jets.Advertisement:

Mirabel-Final-CRJ-Construction
The CRJ1000, Bombardier final CRJ type introduced in 2007. Photo: Bombardier

What will Mitsubishi do with the CRJ program?

Meanwhile, Japan’s Mitsubishi is trying to crack the regional jet market. That program is deeply mired in its own problems, including cost overruns, delays, and aircraft too big to crack the US regional jet market. That’s a problem Mitsubishi is attempting to address. But SpaceJet sales remain sluggish. Mitsubishi doesn’t want Bombardier’s CRJ program for the planes, they want to bring in the CRJ customers.

Since the sale was finalized in June, the CRJ program converted to the Mitsubishi Regional Jet (MRJ) brand. However, Bombardier kept on building the planes they’d previously taken orders for

The 1945th CRJ is going to Endeavour Airlines to operate under the Delta Connect brand. Bombardier will continue to offer after-sales support, repairs, and spare parts to CRJ customers. What it will no longer do is sell them new planes.

UK fraud office probes Bombardier over suspected bribery in airplane sales

Link to Source: Global News

By Kirstin Ridley, Allison Lampert and Tim Hepher Reuters | November 5, 2020

The UK Serious Fraud Office announced on Thursday it was investigating Canadian industrial group Bombardier over suspected bribery in airplane sales to Garuda Indonesia, widening a global anti-corruption drive in aerospace.

The plane and train maker is the latest aerospace group to face scrutiny over the use of middlemen after authorities struck a record bribery settlement with Europe’s Airbus in January and a 2017 plea deal with British engine maker Rolls-Royce.

Both settlements involved sales of planes or engines to Garuda and airlines in other countries.

“The SFO is investigating Bombardier Inc over suspected bribery and corruption in relation to contracts and/or orders from Garuda Indonesia,” the agency said on Thursday.

“As this is a live investigation, the SFO can provide no further comment,” it added.Click to play video 'Bombardier announces 2,500 job cuts, most of them in Quebec'

In Montreal, Bombardier said it had been informed about the SFO probe several weeks ago and would cooperate. It has appointed external lawyers to run an internal review.

Shares in the company, which also reported results on Thursday, fell more than 3% after the SFO’s announcement. They ended down 1.7%.

At the center of the case, Bombardier said, are five procurement processes involving different manufacturers, including the 2011-2012 acquisition and lease of Bombardier CRJ1000 regional aircraft by Garuda.

Bombardier, which has undergone several changes of leadership after costly industrial bets in the past decade, said the SFO was investigating the same transactions that led to a former CEO of Garuda Indonesia being convicted in May.

It sold six CRJ1000 regional jets to Garuda in 2012 and simultaneously leased a number of similar jets. Garuda now has 18 of the jets in its fleet, according to its website.

Irfan Setiaputra, Garuda’s current CEO, said in a statement on Friday the airline would cooperate with relevant authorities. Indonesia’s state-owned enterprises minister Erick Thohir also said the government would cooperate.

An Indonesian court in May handed Emirsyah Satar, Garuda chief executive from 2005 to 2014, an eight-year jail sentence for bribery and money-laundering related to procurement of planes and engines from Airbus and Rolls-Royce.

In 2017, Rolls-Royce agreed to pay more than $800 million to defer charges after an investigation by the SFO and U.S. Justice Department into alleged bribery of officials in six countries.

Airbus in February agreed to pay a record $4 billion in fines after reaching a plea bargain with prosecutors in Britain, France and United States over alleged bribery and corruption stretching back at least 15 years.

SFO approached Bombardier

Under a system of deferred prosecution agreements available to the SFO, companies can be offered the chance to settle cases with a fine and escape corporate criminal charges by helping to investigate themselves and undergoing radical internal changes.

Bombardier Chief Executive Eric Martel, who started his role in April, told reporters the SFO had come to Bombardier with its suspicions.

“We got contacted a couple of weeks ago and we’re going to offer our support so they can do the investigation they need to do,” he said.

“We were not aware of any issue internally,” he added.

Under the system of plea bargains used in UK corruption cases, companies can be at a disadvantage if the probe was thrust upon them but win more lenient fines if they bring potential wrongdoing to the attention of authorities themselves.

Nonetheless, Rolls-Royce avoided a larger fine by demonstrating what a British judge described as “extraordinary” co-operation even after the probe was instigated by the SFO.

Airbus has undergone a radical overhaul of its top ranks since reporting itself to the SFO in 2016. The four-year probe however weighed on sales and relationships with airlines and led to in-fighting over who should carry the blame for using agents.

Bombardier has already undergone significant upheaval since 2015 while trying to bring a larger narrowbody jet to market.

It completed an exit from commercial aviation this year by selling its money-losing regional jet business to Japan’s Mitsubishi Heavy Industries to focus on more profitable business jets.

(Reporting by Yadarisa Shabong in Bengaluru, Kirstin Ridley in London, Allison Lampert in Montreal, Tim Hepher in Paris, Bernadette Christina Munthe in Jakarta; Writing by Kirstin Ridley and Tim Hepher; Editing by Emelia Sithole-Matarise, David Gregorio and Edwina Gibbs) © 2020 Reuters

Bombardier Concludes Sale of the CRJ Series Regional Jet Program to Mitsubishi Heavy Industries

From Bombardier Inc.


All amounts in this press release are in U.S. dollars unless otherwise indicated.

MONTREAL, June 01, 2020 (GLOBE NEWSWIRE) — Bombardier (TSX: BBD.B) confirmed today the closing of the previously announced sale of the CRJ Series aircraft program to Mitsubishi Heavy Industries, Ltd (MHI) (TOKYO:7011) for a cash consideration of approximately $550 million, subject to post-closing adjustments and the assumption of liabilities by MHI related to credit and residual value guarantees and lease subsidies amounting to approximately $200 million. Under the agreement, the Corporation’s net beneficial interest in the Regional Aircraft Securitization Program (RASPRO), which is valued at approximately $170 million, has been transferred to MHI.

Through this sale, MHI acquires the maintenance, support, refurbishment, marketing, and sales activities for the CRJ Series aircraft, including the related services and support network located in Montréal, Québec, and Toronto, Ontario, and its service centres located in Bridgeport, West Virginia, and Tucson, Arizona, as well as the type certificates.

Bombardier will continue to supply components and spare parts and will assemble the remaining 15 CRJ aircraft in the backlog as of March 31, 2020 on behalf of MHI until the complete delivery of the current backlog, expected in the second half of 2020.

Bombardier retains certain liabilities representing a portion of the credit and residual value guarantees totalling $288 million as of March 31, 2020. This amount is largely fixed and not subject to future changes in aircraft value and is mainly payable by Bombardier over the next four years.

MHI RJ Aviation Group launches as Mitsubishi Heavy Industries Ltd. closes acquisition of CRJ Series Program from Bombardier Inc.

From Mitsubishi Heavy Industries, Ltd.

 The newly created group entities of MHI RJ Aviation Group begins operations today –

MONTRÉAL, June 1, 2020 /CNW Telbec/ – Headquartered in Montréal, Canada, MHI RJ Aviation Group (MHIRJ) is launching as a newly created group of entities providing a holistic service and support solution for the global regional aircraft industry including the CRJ Series aircraft. The launch of MHIRJ coincides with the acquisition close of the CRJ Series Program from Bombardier Inc. (Bombardier) (TSX: BBD.B) by Mitsubishi Heavy Industries, Ltd. (MHI) (TOKYO:7011).

“I am pleased to announce the opening chapter of MHIRJ’s story,” said Hiroaki Yamamoto, President & CEO of the MHI RJ Aviation Group. “Building on the solid foundations already in place and with the strong support of the MHI group of companies, there is new energy on board and our team is committed to serving the regional aviation market and becoming a platform for growth in the industry.”

As part of the acquisition, MHI acquires the maintenance, engineering, airworthiness certification support, refurbishment, asset management, marketing, and sales activities for the CRJ Series aircraft, along with the type certificates and related intellectual property rights. This transaction also includes the related services and support network mainly located in Mirabel and Toronto (Canada), and Bridgeport and Tucson (United States). CRJ Series Spare parts will continue to be distributed from depots in Chicago (United States) and Frankfurt (Germany).

About MHI RJ Aviation Group
MHI RJ Aviation Group (MHIRJ) provides comprehensive critical operational, engineering and customer support solutions including maintenance, refurbishment, technical publications, marketing and sales activities for the global regional aircraft industry. Headquartered in Montréal, Quebec, and bolstered by an Aerospace Engineering Center, MHIRJ’s network of service centres, support offices and parts depots are positioned in important aviation hubs in the U.S., Canada and Germany. A wholly owned subsidiary of Mitsubishi Heavy Industries, Ltd, MHI RJ Aviation Group includes MHI RJ Aviation ULC (Canada), MHI RJ Aviation Inc. (U.S.A.) and MHI RJ Aviation GmbH (Germany).

For more information about the company, please visit: www.mhirj.com.

Mitsubishi Heavy Industries Ltd. and Bombardier Inc. have agreed on a June 1, 2020 closing date for the transaction pertaining to the acquisition of Canadair Regional Jet Program

From Mitsubishi Heavy Industries, Ltd

— Program to be operated under new name of MHI RJ Aviation Group upon 1, June, 2020 —

TOKYO, May 7, 2020 /CNW Telbec/ – Mitsubishi Heavy Industries, Ltd. (MHI) (TOKYO: 7011) and Bombardier Inc. (Bombardier) (TSX: BBD.B) of Canada have agreed that all closing conditions have been met and the transaction pertaining to the acquisition of Canadair Regional Jet (CRJ) Program will close on June 1, 2020. The Program will be operated under the newly created group entities of MHI RJ Aviation Group (MHIRJ) and will commence upon closing.

As part of the acquisition, MHI acquires the maintenance, support, refurbishment, marketing, and sales activities for the CRJ Series aircraft, along with the type certificates. This includes the CRJ related services and support network mainly located in Mirabel, Québec, and Toronto, Ontario in Canada, Bridgeport, West Virginia, and Tucson, Arizona in the United States. CRJ Spare parts will continue to be distributed from depots in Chicago, Illinois and Frankfurt, Germany.

Complementary to MHI’s existing commercial aircraft business, MHIRJ will provide a holistic servicing and support solution for the global aircraft industry including the CRJ Series aircraft, and eventually, for the Mitsubishi SpaceJet family of next-generation regional jets.

Key integration milestone updates will be provided on an ongoing basis.

Bombardier Announces Full-Year Financial Results

Provided by Bombardier Inc/CNW

  • Exit of commercial aerospace completed with sale of remaining interest in A220 partnership for ~$600M cash proceeds and the elimination of future investments of ~ $700M(1)
  • Pro Forma(1) cash on-hand of more than $4B, including all previously announced transactions, enhancing financial position
  • Company continuing to actively pursue strategic options to accelerate deleveraging
  • Fourth quarter, and full-year results in line with preliminary results previously announced
  • 2020 consolidated outlook: double-digit organic revenue growth(3) to more than $15B(1)
  • 2020 consolidated adjusted EBITDA margin(2) expected at ~ 7.0%, adjusted EBIT margin(2) expected at ~3.5%(1)
  • 2020 consolidated free cash flow(2) expected to be positive, excluding Residual Value Guarantee (RVG) payments(1)

MONTRÉAL, Feb. 13, 2020 (GLOBE NEWSWIRE) — Bombardier (TSX: BBD.B) today reported its fourth quarter and full year 2019 results, in line with previously announced preliminary results. The company also confirmed it is still actively pursuing options to accelerate deleveraging, strengthen its balance sheet and enhance shareholder value.

Sale of A220 Partnership Interest

Bombardier has entered into an agreement with Airbus SE and the Government of Quebec, under which Bombardier transferred its shares in the Airbus Canada Limited Partnership (ACLP) to Airbus and the Government of Quebec, improving Bombardier’s cash position. This includes cash proceeds of ~$600 million from Airbus, of which $531 million was paid upon closing with the balance to be paid over 2020-21, and the elimination of all future capital requirements for the A220 program, estimated at ~ $700 million.(1)

Bombardier will also transfer aerostructures activities and employees supporting the A220 and A330 in St-Laurent, Québec to Airbus subsidiary Stelia Aerospace. Finally, the agreement provides for the cancelation of 100,000,000 Bombardier warrants owned by Airbus.

Bombardier’s decision to sell its stake in the A220 partnership completes its exit from commercial aerospace, a significant undertaking. In 2016, Bombardier’s commercial aerospace business lost approximately $400 million and was consuming approximately $1 billion in cash. Addressing this challenging portfolio was a fundamental step in the Company’s turnaround plan.

“We are incredibly proud of the many achievements and tremendous impact Bombardier had on the commercial aviation industry,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “We are equally proud of the responsible way in which we have exited commercial aerospace, preserving jobs and reinforcing the aerospace cluster in Québec and Canada. And, we are confident that the A220 program will enjoy a long and successful run under Airbus’ and Québec’s stewardship.”

Acceleration of Deleveraging Phase of Turnaround

The sale of our interest in the ACLP, combined with the previously announced aerospace divestitures, will generate more than $1.6 billion in cash proceeds and eliminate close to $2 billion in liabilities and future commitments.  Liquidity remains strong, with Pro Forma cash-on-hand of more than $4 billion and $5.5 billion in liquidity, providing the necessary flexibility to complete the turnaround. Both the CRJ program sale to Mitsubishi Heavy Industries, Inc. and sale of the aerostructures business to Spirit AeroSystems, Holding Inc. are expected to close in the first half of 2020.(1)

As previously announced, the Company is actively pursuing options that would allow it to accelerate deleveraging, paydown debt and position the business for long-term success with greater operating and financial flexibility. This process remains ongoing, however the company does not intent to provide any further updates at this time.

Overview Financial Performance

Bombardier’s consolidated revenues for the year were $15.8 billion, highlighted by an 8.5% growth in business aircraft activities. The growth in Aviation revenues were offset by the lower contribution from commercial aircraft businesses following their divestitures. Revenues at Transportation also decreased, mainly due to contract estimate revisions.

Consolidated adjusted EBITDA and adjusted EBIT for the year were $896 million and $470 million, respectively, reflecting (i) improvements at Aviation as it exits underperforming commercial programs and ramps-up production on the Global 7500 aircraft; and (ii) additional charges and investments at Transportation to complete challenging projects. Reported EBIT loss for the year of $498 million includes a $1.6B impairment charge related to the ACLP investment.

Fourth quarter cash generation reached $1.0 billion, reducing free cash flow usage to $1.2 billion for the year.  Higher than anticipated cash usage was driven by additional investments made to address challenging rail projects, as well as, the deferral of deliveries, mainly at Transportation. Cash usage from operating activities amounted to $680 million for the full year.

2020 Outlook

Revenues from our sustaining business aircraft and Transportation activities in 2020 are expected to grow organically by double-digit percentage over the $13.7 billion revenues recorded from these businesses in 2019(1).  This strong growth is driven mainly from the acceleration of Global 7500 deliveries contributing to a total of 160 aircraft or more for the year at Aviation. The consolidated revenue growth is also supported by the ongoing production ramp-up of Transportation, driven by the solid orders from the past few years.

Adjusted EBITDA and adjusted EBIT are expected to increase to approximately 7.0% and 3.5% respectively, mainly from the acceleration of Global 7500 deliveries at Aviation and gradual margin normalization at Transportation. The adjusted EBIT margin expansion includes a higher amortization expense as Global 7500 deliveries increase. The full year outlook for earnings reflects the partial year contribution from ongoing divestitures of the CRJ program and Aerostructures businesses.(1)

Free cash flow is expected to be positive in 2020, excluding Credit and RVG payments. These residual liabilities related to the exit of commercial aircraft are estimated to be approximately $200 million for the year and are expected to be paid from the CRJ transaction proceeds.(1)

Aviation

Stronger Financial Performance as Aviation Reshapes its Portfolio

  • Revenues for Aviation totalled $7.5 billion for 2019. This reflects an 8.5% revenue growth from business aircraft activities and continued double-digit organic growth from aftermarket.
  • The segment achieved 175 aircraft deliveries during the year, comprised of 54 Global, 76 Challenger, 12 Learjet, as well as 33 commercial aircraft.
    °  The fourth quarter’s activity level was high, with deliveries reaching 52 business aircraft as Global 7500 deliveries accelerated.
  • Adjusted EBITDA margin was 10.8% for the year, up 200 bps driven by the exit of the Q400 and C Series programs. This profitability was nonetheless diluted in 2019 by CRJ activities, accounting for $1.2 billion in revenues for the year.
  • The adjusted EBIT margin of 7.1% is up 70 bps year-over-year, reflecting the early production ramp up and higher amortization associated with Global 7500 deliveries, as well as the dilution from commercial aircraft activities.
  • Business aircraft backlog increased slightly for the second consecutive year, reaching $14.4 billion at year end, while the CRJ backlog declined as production winds down.

Concentrating on Business Aircraft while Addressing Underperforming Programs

  • In February 2019, the Corporation acquired the Global 7500 aircraft wing program operations and assets from Triumph Group Inc. This transaction enabled the company to leverage its extensive technical expertise to support the ramp-up of the Global 7500 aircraft and secure its long-term success.
  • In March 2019, we concluded the sale of Business Aircraft’s flight and technical training activities to CAE Inc. for net proceeds of $532 million.
  • In May 2019, we completed the previously announced sale of the Q Series program assets, including aftermarket operations and assets, to De Havilland Aircraft of Canada for net proceeds of $285 million.
  • In June 2019, the Corporation entered into a definitive agreement with Mitsubishi Heavy Industries, Ltd (MHI) for the sale of its regional jet program for a cash consideration of $550 million payable upon closing, and the assumption by MHI of approximately $200 million of liabilities related to credit and residual value guarantees and lease subsidies. The transaction is currently expected to close by mid-year 2020 and remains subject to regulatory approvals and customary closing conditions.
  • In October 2019, the Corporation and Spirit AeroSystems Holding, Inc. (Spirit) announced that they have entered into a definitive agreement, whereby Spirit will acquire Bombardier’s aerostructures activities and aftermarket services operations in Belfast, U.K. and Casablanca, Morocco, and its aerostructures maintenance, repair and overhaul facility in Dallas, U.S. for a cash consideration of $500 million and the assumption of approximately $700 million of liabilities, including government refundable advances and pension obligations. The transaction is expected to close by mid-year 2020 and remains subject to regulatory approvals and customary closing conditions.

Positioned for Growth through certification and ramp up of New Programs and Service Network Expansion

  • Reaching full-scale production of the class-defining Global 7500 aircraft. With increased deliveries, the Global 7500 aircraft is expected to contribute significantly to revenues growth in 2020. As the aircraft progresses on the learning curve, it will also contribute to margin expansion.
  • Certified the new Global 5500 and Global 6500 aircraft, followed by the entry into service of the Global 6500 aircraft in 2019, offering customers the perfect combination of range, speed, field performance and smooth ride.
  • Continued and consistent growth of the aftermarket business, with further expansion of the service network in Singapore planned for 2020.

Link to full press release