RE:CAN BA SURVIVE THE COVID NEGATIVE EFFECT?They will survive COVID but BA probably won't survive on its own for more than 5 years IMO. What happened to C series will happen to Aviation as a whole IMO. Right now they're easy to compete with given their financial woes but once this is addressed (if it is), the competition will need to find something else to attack them with...
Notwithstanding the C series fiasco, and given that having a big military business was out of the question, the family had setup a good corporate structure with BT and BA (everyone in the industry is setup in this fashion - Boeing (military), Gulfstream (military), Textron (military, conglomerate), Embraer (military, commercial), Dassault (military), Airbus (some military)) and it should not have been undone with the 30% sale to CDPQ and now the sale of BT to Alstom.
BT has averaged $2.1B revenue with 5.1% EBIT and 7.1% EBITDA over the past 9 years. Well managed, BT can probably generate cash which can be used - as it probably was in the past - to support Bombardier Aviation through its peaks and valleys.
However, the BT business requires low interest loans like Alstom has (0.25%) because its a relatively low margin business. Such loans cannot be obtained by Bombardier from Wall Street. Quebec is too small to support such a large company, and Ottawa doesn't want to.
In this context, given the low margin yet stable cashflow nature of the business, CDPQ's involvement with their required 15% return, investment at the subsidiary level and full support for a transaction with Alstom can only be categorized as an unmitigated disaster for Bombardier.
The ideal and unrealistic scenario is that CDPQ convert their equity in BT to Bombardier Class B shares at a reasonable "private" valuation price ($2?) thus undoing the mess they created in the first place. And that Bombardier obtain low interest loans from the government.
Also, strategically speaking, it actually made more sense to sell part of BA (given the predatory nature of aviation) to a US company and retake 100% of of BT.
Pablo's imagination