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Boeing CEO Dennis Muilenburg Faces Mounting Pressure From 737 MAX Crashes

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Dennis Muilenburg has earned a reputation as a high-energy CEO, bicycling 140 miles a week, sometimes taking groups of employees along for high-speed bonding sessions. The 55-year-old may need every ounce of energy he’s got as he faces one of the worst crises for Boeing in over 50 years: two crashes that killed 346 people, linked to the automated flight controls of the 737 MAX and leading to the grounding of the company’s bestselling plane.

The stakes for Boeing, and its CEO, are huge. The 737 accounts for 33% of Boeing’s revenue and almost 50% of its profit, according to Berenberg analyst Andrew Gollan. Deliveries have been halted since the plane was taken out of service worldwide after the March 10 crash of an Ethiopian Airlines plane, airlines are demanding compensation, and the company faces scrutiny from Congress, a Department of Transportation inquiry and a federal criminal probe. The stock (BA) has fallen 10%. Lawsuits filed by relatives of the dead and shareholders could take years to conclude.

Over the past few weeks, the 34-year Boeing veteran has been traveling heavily to shore up support from airline customers and investors. An aerospace engineer by training, Muilenburg has kept a close eye on the Boeing team rewriting the faulty flight control program; last week he went up in a plane that tested out its effectiveness.

But many observers are giving Boeing and Muilenburg poor marks for their public handling of the crisis. Until late last week, Muilenburg was largely invisible and the company’s public statements, while expressing sympathy for family and friends of the deceased, were short on substance.

“I give them a B,” says Jeffrey Sonnenfeld, a professor of leadership at the Yale School of Management. Muilenburg needs to put a human face on Boeing, he says, and get out in public and engage with the media to try to correct misperceptions and address the many questions about what went wrong, even if he doesn’t have ready answers to offer.  

Muilenburg hasn’t shown the media sophistication of his predecessor, Jim McNerney, who’d previously helmed GE’s prized aircraft engine division and 3M. “He’s got a catastrophe as his training ground,” says Sonnenfeld.

Preliminary reports from the investigations into the crashes of Lion Air Flight 610 in October and Ethiopian Airlines Flight 302 last month suggest that the pilots of both planes struggled to counter a flight control program called MCAS that erroneously pushed the planes’ noses down due to malfunctioning angle-of-attack sensors. After Ethiopian investigators released their report last Thursday, Boeing put out a video statement by Muilenburg in which he said Boeing accepted responsibility for the role that MCAS played as one of the “chain links” in the two accidents.

Aviation regulators in other countries have questioned the Federal Aviation Administration’s certification of the MCAS system and its initial reluctance to pull the 737 MAX out of service; several have said they won’t just take the FAA’s word that it’s safe to fly again, making it uncertain when the plane will return to the skies worldwide.

With the prospects of a quick resolution fading, Boeing announced last Friday it would throttle back 737 production to 42 a month from 52—a sharp reversal from its plan to raise output to 57 by the summer.

Analyst Richard Epstein of Bank of America/Merrill Lynch downgraded the stock to neutral Monday, estimating that Boeing likely won’t be able to resume deliveries for six months and won’t get back on pace until 2021, reducing earnings through 2023 before interest and taxes by $13.7 billion.

Whether Muilenburg’s job is threatened or not may depend on the stock price, says Richard Aboulafia, an aerospace analyst with Teal Group.

The board is loyal to Muilenburg, observers say, and his record so far has given them little reason to doubt having signed off on then-CEO and chairman McNerney’s decision to promote him to the top job in 2015 at age 51.

Engineer With Focus On Financial Discipline
US-aviation-ACCIDENT-BOEING
Workers stand under the wing of a Boeing 737 MAX airplane at the Boeing Renton Factory in Renton, Washington on March 27, 2019. Boeing gathered hundreds of pilots and reporters at its factory to unveil a fix to the flight software of its grounded 737AFP/GETTY IMAGES

The hard-charging, detail-oriented engineer presented a strong contrast to McNerney, a liberal arts major at Yale and Harvard M.B.A. who rose up through the ranks at General Electric when it was a star factory under Jack Welch. Native to Iowa, Muilenburg grew up milking cows every morning on his family farm and graduated from Iowa State before going straight to work at Boeing. Health-conscious and rail thin, he drinks Diet Mountain Dew to get a calorie-free caffeine fix and has been known to order turkey sandwiches with no mayo.

Though he’s cut head count, Muilenburg has cultivated a more positive relationship with the workforce than McNerney, who clashed with the machinist’s union and infamously joked of workers “cowering” from him.

However, Muilenburg has followed in McNerney’s footsteps with a laser focus on financial discipline, including boosting profits by wringing discounts from suppliers. Muilenburg has even gone a step further, moving to make more components in house and aiming to more than triple sales from lucrative aftermarket maintenance and services to $50 billion a year.

Like his two predecessors, Muilenberg has continued to sweeten the pot for investors, devoting roughly 95% of operating cash flow to the company’s steadily rising dividend and share buybacks.

The stock has taken off, climbing fourfold from February 2016 to a peak of $446 at the beginning of March, compared with a 63% rise for the Dow industrials over the same period. The March selloff has only pushed the stock back to where it stood at the end of January.

But to Aboulafia, the flawed design of the MCAS flight control system, combined with the continuing problems with the KC-46 tanker and delays in the crewed space-launch program are further evidence for criticism he’s leveled at Boeing for almost two decades: that the company’s focus on shareholder rewards has come with a “deprioritization and perhaps under-resourcing of engineering.”

Boeing says it’s maintained R&D spending at a steady level and has a healthy corps of 56,000 engineers.

The question of how MCAS was certified has raised concerns over whether Boeing has gained too cozy a relationship with the FAA; a wildcard going forward is whether any evidence of wrongdoing will emerge.

If whistleblowers had any damaging information we likely would have heard it by now, says Mark Dombroff, an aviation attorney at LeClairRyan and former head of the Department of Justice’s aviation division. He expects that the DoJ will seek to determine within 90 to 120 days whether there’s a case to pursue.

Aviation experts are optimistic that Boeing’s software patch and training revisions will solve the 737 MAX’s safety problems. Boeing’s disclosure this week that it logged zero orders for the MAX in March generated negative headlines, but with a whopping 15,000 total narrow-body orders placed over the past seven years, there aren’t really any airlines left with sizable needs, says Aboulafia, with the notable exception of Chinese carriers. Any trade deal between the U.S. and China that would change the balance of trade will likely include Boeing sales.

Boeing’s last major crisis came in 2013, when the 787 was grounded for three months due to battery fires, two years after the plane entered service following years of production snafus and spiraling costs. While the financial stakes were large, no lives were lost. The last time Boeing faced a safety crisis of a comparable nature to the current one was the mid-1960s, when four new 727 jets crashed in a span of four months.

Like then, Boeing faces the task of convincing a fearful public that the MAX will be safe to step into again. Sonnenfeld says Muilenberg needs to take a page from James Burke, the late CEO of Johnson & Johnson, who pulled off the tall task of convincing Americans that Tylenol was still safe after seven people were killed by cyanide-laced capsules in 1982. “It’s going to take the CEO to be out there.”

-Jeremy Bogaisky; Forbes Staff

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Refugees: The Nowhere People

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The displaced and their search for identity and belonging; the migrant mother and the forgotten daughters who take the brunt of it all.


There are 65.3 million displaced people worldwide. Of those people, 21.3 million are refugees, the people who belong to – Nowhere. No one knows where they come from, no one knows where they’re going. Ban Ki-moon, secretary-general of the United Nations, has highlighted that: “We are facing the biggest refugee and displacement crisis of our time.” He has called it a crisis of solidarity.

The United Nations High Commissioner for Refugees’ (UNHCR) Global Trends report shows that since 2003, the number of newly-displaced people per minute has increased from just fewer than 10 to 24 persons in 2015. In 2014, the number was at its highest – 30.

The reasons for displacement differ. Increasingly, the main reason is fleeing the source of political or economic conflict. It then becomes difficult to imagine the uncertain reality the many have run to or are left to live through. In theory, international law defines and protects refugees, encouraging the initiation of asylum procedures once they enter a new environment. In reality, the many who have migrated become nomads, often pursuing what becomes a hollow quest for a better life.

Women and girls form around 50% of refugees or displaced people around the world. In Africa, the number of women uprooted by war and unrest is significantly higher. A study published by Hivos International recorded 80% of refugees in Lebanon were women and children.

Along the inner streets of Johannesburg, are ‘foreigners’, women selling fruit, vegetables and sundry items to feed their hungry children and themselves. Whilst walking up to the Department of Social Development, two young female hawkers ran past me, clutching towels in one hand and tacky sunglasses and cellphone pouches on the other, feeling cops. As is the case with hundreds of immigrants, they have no papers.

Another, a lady, sits rubbing her pregnant belly beside a small stall on Eloff Street. She sells hats, wallets, purses and scarves. She is reluctant to talk and asks not to be named. She came to South Africa following her husband escaping the political turmoil in the Democratic Republic of Congo (DRC).

“I came after he had made his way to what we were calling the land of milk and honey… [but] when I arrived in South Africa, it was made known to me that he had left for Canada. I’d come for nothing.”

Abandoned, she was forced to join the informal trading business.

“Life is hard here. We as foreigners are just not free. People don’t respect us and just steal our stock,” she says with little emotion.

After matriculation, she had gone on to acquire a degree in management in the DRC. But today, she is battered and broke.

Often, along their treacherous journey, the women are abused and mishandled by gangs, truck drivers and cops. This is only the beginning of their travails. The constitutional guarantees cannot protect them from the injustices they face. The UNHCR has highlighted that life for a woman beyond her country of origin, becomes a constant battle and one of constant fear and uncertainty.

One of the many dangers is the xenophobic attacks, as has happened in recent times, with South Africans accusing foreign nationals of taking their jobs and over-populating their areas.

The informal trading sector is the main space in which the hateful disputes unfold. But for foreign nationals who have no other hope, informal trading becomes the only option.

Vanya Gastrow, a PhD candidate currently doing research for the African Centre for Migration and Society (ACMS), says one of the biggest challenges faced by foreign traders who come to South Africa is the crime targeted at them.

Other challenges include lack of access to reliable documentation. Says Gastrow: “Asylum seekers and refugee permits often don’t meet documentation requirements for banks, visa offices, and landlords.” She says such foreigners cannot open bank accounts or access loans.

“These permits also require frequent renewals and so many make the decision to just live without them.”

For women though, it is even worse.

“It’s the sexual violence … and extortion, specific dangers that authorities fail to understand,” according to Penny Foley, a volunteer from Australia currently living in South Africa. She highlights that the objectification of female refugees is one of the many symptoms of what has become the de-humanizing process of forced migration. 

“The global community needs to change the 20th century understanding of a nation-state and move away from the notion of isolated nationalities”, she says.

“Interestingly though, the problem is not just about changing the perception of what nationals think of foreign nationals, relations amongst refugees need to be established. The fight becomes harder if unity lacks amongst them.”

Women and girls form around 50% of refugees or displaced people around the world.

In the pages that follow, FORBES WOMAN AFRICA speaks to three women from Zimbabwe; what displacement has done to them. 

Tafadzwa Shumbu

“I just stood at the border in my pink shirt and panties after I had crossed over. I had nothing and I was scared.”

*Tafadzwa Shumba is 42 and came to South Africa in 2008. She was forced to leave her country, Zimbabwe, because of the political instability that made life for her and her family unbearable.

“I was seen to be too neutral so they threatened my parents and tried to kill me for not engaging in their dirty politics.”

The choice to leave was not an easy one to make but as she recalls, “I literally had to take that leap of faith”.

On July 27, 2008, as the world slumped to a financial crisis, Shumba packed a portable bag. She had R300 ($21) that would pay the ‘Guma-Gumas’, a group of men said to assist escapees across the woods to the border.

“I had a passport but those days we were using visas and they were expensive so my only choice was to cross over illegally.” She was the only woman amongst seven guys.

The group began the three-day walk through the forests, the Limpopo River, eventually reaching the border.

Few survive the trek but Shumba’s determination carried her.

“I don’t forget, as we walked through the forest we saw dead bodies. There was a human head lying on the ground with dreadlocks like mine,” says Shumba, running her fingers through her own.

“The Guma-Gumas picked it up and pointed it at us and said if you don’t give us your money you will end up like this head.”

“They took everything, even my pants and left me with there in my pink shirt, panties and shoes.” There was no time to process the betrayal. The trek had to continue. 

“Look at me,” she says, as she gestures to her body. “I am nothing. I was a nurse, we would wear crisp white uniform and after work, I had a home to go to.”

Last year, she was involved in a road accident in South Africa that left her crippled.

“I could not even get compensation from the Road Accident Fund because I am a foreigner.”

Now, because of her disability, she cannot work so she takes care of children and sells fruits and vegetables when she is desperate for money. The future is uncertain but she takes “each day as it comes”.

There was a human head lying on the ground with dreadlocks like mine.”

Tapiwa Moyo

“Coming to South Africa was supposed to be like going to heaven,” says *Tapiwa Moyo who is 22 years old and from Zimbabwe. When her mother, her only caregiver, left her and her younger sister to find work in Johannesburg, she did not anticipate the hardship.

“At one stage we went without food for almost a week and we had to start selling my mother’s belongings to get some money to buy some maize meal.” 

Moyo’s mother saw South Africa as the place where she could try and build a better life for her children.

“The deal was that she would work for a few months, save the money and get us passports and visas to move to South Africa.”

The months passed and then they turned into years. When their supply of cash and food ran dry, Moyo, as the older sister, still in her early teens, was forced to work menial jobs washing clothes, selling nuts and chips and eventually having to part with all their worldly possessions to survive.

“I would see other children playing with teddy bears and Barbie dolls or walking in the streets with their mothers and I would just cry because that’s all I wanted to do,” she weeps.

She was 15 when she received word that her mother had finally made enough money to bring her and her sister to South Africa. They had waited seven years. 

“When I finally got my passport, it was like my prayers were finally answered.”

The bus ride was one filled with excitement.

“It was a 12-hour ride but I couldn’t even sleep. My life was about to change.”

She recalls the moment she arrived.

“Everything I thought was a lie, South Africa was supposed to be my heaven but it was not.”  

She wipes her tears with anger, not allowing herself to be weak.

“I’ve cried about it all for so long you know and nobody cares … the tears don’t mean anything.

My name meant nothing to the border police and some of the citizens. I was just another ‘kwere-kwere’.”

Since then, that’s all she’s known apart from poverty. Just as she did in Zimbabwe, Moyo finds and sells what she can to ensure she and her daughter do not go to bed hungry each day.

“I left one hell for another. Would I like to be back home with my family? Sure, but that’s no longer an option for me. I’m here now.” 

At some point, I fell to the ground and started to scream ‘I am tired’.”

Emily Shamu

*Emily Shamu came to South Africa when her daughter, Lisa, was a toddler.

“She was too heavy for me to carry along with our luggage and a gentleman offered to carry her when we crossed the Limpopo River,” she says.

She would normally not have trusted a stranger, but for Shamu, the focus was survival. 

Shamu and the others walked 12 hours to Messina, the northernmost town in South Africa’s Limpopo province.

“I did not know we were going to walk for so long. At some point, I fell to the ground and started to scream ‘I am tired’.”

She describes her knees colliding with the gravel road. Her daughter watched as she cried uncontrollably. “My child remembers. We rested for some time and I used this time to remind myself (sic) why I was going through this.”

Now, living in South Africa for eight years as a refugee, her life is defined by a cycle of begging – not for food or spare change – but, each quarter of the school year, to plead with the headmaster to allow her daughter to sit her exams with her peers.

“Every term, my heart sinks… I don’t know if he will say yes. We are just controlled by circumstances.”

In South Africa, students are required to produce a form of identification before they are allowed to partake in written assessments. Because Shamu has no asylum papers, she is unable to apply for an ID document for her daughter.

“If I’m honest, I have not tried to get my papers,” she says. “I tried in 2010 and the back and forth is just so demoralizing. “ Shamu and her daughter live stateless with nothing to ensure stability.

“I want to go home, if the situation can just change…” 

Interestingly though, the problem is not just about changing the perception of what nationals think of foreign nationals, relations amongst refugees need to be established. The fight becomes harder if unity lacks amongst them.”

Refugees Seen As ‘The Other’

The story of a Vietnamese immigrant

Lisa Phung, her mother and older sister hid in a mosquito and disease-infested swamp during the day and in the night were led onto a small boat that took them to a main fishing boat which would eventually transport them to their new lives.

Earlier, Phung’s mother had received instruction from her father to leave Vietnam as their freedom was under threat. He was a pilot who had just been captured by communist soldiers in the Vietnam War. Her mother who was not educated enough for a stable job heeded her husband’s call and managed to secure the money to get her and her girls out of war-torn South Vietnam.

“People smugglers” were paid to get them out.

“The first two times, we got caught and jailed,” says Phung. The third time they got lucky.

“Enroute to the fishing boat, we got robbed by the people smugglers and everything was taken except for a few pieces of food.”

But at least they got onto the big boat.

“We were crammed up like anything and I was one of the youngest at age four.”

Shortly after they started, the boat’s engine died.

“They thought it was a petrol problem but the people smugglers had taken the petrol and replaced the tank with water.”

The group of people floated for 10 days with nothing more than the packet of rice.

“My mother remembers that I was starting to die … everyone was getting ready for death.” 

Shortly before a storm, a British cargo ship sailed past and for a few moments there was hope of survival.

“It didn’t stop to save us and that was heart-breaking because we lost hope.”

It was as though their fate was sealed but then, in a surprise move, the ship turned around and carried the refugees, Phung and her family amongst them, to Singapore.

“After the ordeal, my mum told me she lost hope in a lot of human beings because everyone just looked out for themselves.”

Because Phung’s mother had children, she was the last to be rescued.

“She was the last person off that boat; it must have been horrifying for her.”

The ship docked in Singapore. From there, the refugees were taken to a detention center in Hong Kong where they stayed for three years.

“My mum wanted to go to the USA but they were no longer taking refugees.”

Sometime later, Australia was accepting refugees. Phung was seven years old and finally a life of some stability awaited her.

Years have passed. She now lives in Australia with a family of her own and uses her experience to give hope to others who have walked her path.

“I’ve seen how refugees are seen as ‘the other’ in different parts of the world, coming to take their jobs or their land and they really just want a safe place to live and everyone should have that right.”

Misplaced In Their Own Space

How a community in Western Algeria live like refugees, in their own land.

isolated from the world and within their own state, this has been the plight of the Saharawi people living in refugee camps in Western Algeria for the last 41 years. They face human rights injustice, but unlike other global refugees, it is on their own land.

The Polisario movement, the voice of the Saharawi ethnic group, says the territory reported to be illegally occupied by Morocco belongs to the Saharawi people.

For years following a guerrilla war, they have tried and failed to claim ownership of the land from the Moroccan government with no success. Now, according to the United Nations, they live in mud brick houses and tents in the harsh desert conditions of Tindouf Province, Western Algeria.

They have been locked in an armed struggle for liberation. At the forefront of the movement are the Saharawi women who have increased their traditional role in the fight not only to reclaim their territory but to also salvage their self-determination as a people.

According to Catherine Constantinides, a human rights activist and executive director of Miss Earth South Africa, the power structure is unlike any other on the globe, particularly in Muslim culture. “Women have a strong hold in the camps; they double as caregivers as well as liberation fighters. They also invest heavily in themselves educating one another and learning various skills. They exert the power there and the men respect this because they hold the camps together.”

Constantinides who has dedicated her efforts to bringing to the fore their plight emphasizes the world cannot fathom the dire conditions faced by the Saharawi people “until you see it”.

“The Saharawi people have less than nothing,” she says. On one her many visits to the region, Constantinides witnessed the dehumanizing process of the people getting food dropped from the skies as by aeroplanes and water delivered in huge trucks. The men cannot provide for their families and their children just watch each time as they reach out to the skies to catch what they can.

This is just one illustration of the wide socio-economic gap and the gap between humanity and policy regulations that leave the Saharawi people living in a constant state of statelessness and discomfort.

Moreover, there are no adequate health facilities for them.

“Child mortality is at its highest in Tindouf as women are forced to give birth in their mud houses or tents,” explains Constantinides.

“It’s devastating because children bring that spark of hope within that unfortunate situation.”

United Nations Secretary-General, Ban Ki-moon, has since visited the refugee camps as an effort to reinitiate negotiations in the region to end the dispute and to bring liberation to the Saharawi people. During his visit, he said he “would spare no effort towards a just and meaningful solution” for the people in Western Algeria.

These are the kind of efforts activists like Constantinides want to see in the fight against the global neglect of refugees. “We have to find better ways of dealing with the crisis.”

One example which Constantinides makes reference to is the naturalization process that she witnessed earlier this year in Virginia, America, on the 4th of July.

“This was an example of how in time systems can work if applied to crises to give people dignity.”

“We have to bring the concept back of supporting each other instead of building walls,” she sighs.

Until such time, the Saharawi people will continue the taxing fight for their statehood, led by the women who Constantinides says will never give up

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Mysterious Object Under Moon’s Largest Crater Found By Scientists

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An unknown, mysterious mass has been found beneath a crater on the moon,  according to researchers at Baylor University—and it may give scientists clues into how the moon was shaped.

  • Researchers discovered an unknown anomaly roughly five times the size of Hawaii’s largest island.
  • The mass is sitting beneath one of the largest preserved craters in the solar system, the South Pole-Aitken basin.
  • A plausible guess by scientists: The mass is a piece of metal left behind nearly 4 million years ago by the asteroid that formed the crater.

The mysterious mass sits more than 300 km (186 miles) underneath the solar system’s largest crater. The crater isn’t visible to the naked eye because it’s on the far side of the moon, which always faces away from Earth.

While the researchers who discovered the mass don’t know what it is or where it came from, computer simulations suggest that, under the right conditions, a large asteroid’s iron-nickel core could have been embedded inside the moon upon impact almost 4 million years ago.

Another possibility, according to researchers, is that the mass consists of oxides left over from when the moon was changing from a large ocean of molten magma to what it is today.

-Rachel Sandler; Forbes Staff

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Why Mitsubishi Heavy May Want Bombardier’s Money-Losing CRJ Regional Jet Line

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Bombardier may be close to completing its exit from the airliner business, confirming Wednesday morning that it’s holding talks with Mitsubishi Heavy Industries to sell its once-mighty CRJ regional jet line. For Mitsubishi Heavy, which has struggled to make the climb from an aircraft component supplier to a jet maker, the deal may be less about the money-losing CRJ than acquiring its extensive service network.

Tokyo-based Mitsubishi Heavy is years behind schedule on the MRJ, a twin-engine regional jet that was initially expected to be launched in 2013 with Japanese airline ANA. With certification of the 90-seat version believed to be on track for 2020, acquiring the competing CRJ program would solve the knottiest remaining problem for Mitsubishi: product support and maintenance, says Richard Aboulafia, an aerospace analyst with Teal Group. “They have no experience at that, and no infrastructure,” he says.

The sale talks were first reported by The Air Current.

Montreal-based Bombardier created the regional jet market in 1989 when it launched the CRJ, which was a stretched, 50-seat version of the Challenger business jet that it had acquired a few years prior when it first got into aerospace by buying the struggling aircraft maker Canadair from the Canadian government. With jet fuel cheap in the 1990s, U.S. airlines snapped up the CRJ to replace propeller-driven planes on short-haul routes serving smaller cities. Bombardier has sold 1,950 CRJs, but sales slowed in the early 2000s as oil prices climbed and airline consolidation shrank route networks.

Bombardier had 51 outstanding orders for the aging airframe as of March 31, a backlog that should be worked through by 2020. Bombardier refreshed the CRJ in recent years with a new cabin design, but its seventies-vintage General Electric engines are inefficient by modern standards, and it’s not clear if the plane could be retrofitted with newer ones.

What’s kept sales trickling along has been the persistence of so-called “scope clauses” in U.S. airlines’ labor contracts with their pilots, which restrict the major carriers from contracting with regional airlines for flights of planes above 76 seats and a maximum takeoff weight of 86,000 pounds. With the MRJ, Mitsubishi made a losing bet that the scope clauses would be relaxed by the time it came into service: the MRJ90 is too big to be used in the U.S. now. Embraer made the same miscalculation with its new E2 regional jet line.

Mitsubishi has been working on a 70-seat version, but that project is reportedly going through a redesign that could delay it until 2023.

United and Delta pilots are negotiating new contracts, and American and Southwest’s agreements are up in 2020, but it’s unclear whether the airlines will be able to win relaxation of the scope clause restrictions.   

It’s also unclear whether Mitsubishi would want to keep producing the CRJ, scope clauses or no, given its unprofitability. The company could choose to fulfill current orders and wind it down, says Aboulafia.

Beyond the CRJ maintenance network, Mitsubishi could benefit from adding experienced engineers from the Bombardier program who could aid in developing the MRJ and in the complicated regulatory certification process.

Bombardier filed a lawsuit against Mitsubishi in October, alleging that former Bombardier employees had supplied it with trade secrets that would help the MRJ gain certification.

A sale of the CRJ line would be the sunset of an era of ambition for Bombardier, a snowmobile maker that expanded into rail in the 1970s and aviation in the 1980s with a series of acquisitions, but stumbled badly earlier this decade with an attempt to challenge Airbus and Boeing by developing a 100- to 130-seat jet, the CSeries, that almost bankrupted the company.

CEO Alain Bellemare, who came aboard in 2015, has sold off assets and raised new debt and equity to pare Bombardier’s heavy debt load, aiming to slim the company down to its strongholds in business jets and trains.  

In 2018, Bombardier gave away a majority share in the CSeries to Airbus, which has rebranded it the A220. Airbus has the option to buy full control in 2025. This week Bombardier closed the sale of its Q Series regional turboprop line to Longview Capital, and last month it announced that it would sell an aerostructures factory in Morocco and its Northern Ireland unit, which developed innovative composite resin technology used to make the wings for the A220.

For the CRJ program, Bombardier could fetch a similar price to its sale of the Q Series, which netted $250 million, says analyst Christopher Murray of AltaCorp Capital, and a deal could allow it to offload other contingent liabilities.

Bombardier shares rose 8.9% Wednesday morning to 2.14 Canadian dollars on the Toronto Stock Exchange. The stock tumbled 20% in late April after the company cut its 2019 sales and profit outlook due to delays and quality issues on multiple contracts at its rail unit. Bombardier said during its first-quarter earnings call last month that it would no longer commit to previously announced financial goals for 2020, including raising sales to $20 billion.

-Jeremy Bogaisky;Forbes Staff

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