An association with General Dynamics Mission Systems-CanadaBombardier (BBD. B, $60.15): an association with General Dynamics Mission Systems-Canada that pleases Desjardins Securities analyst
Bombardier Defence announced a few days ago an association with General Dynamics Mission Systems-Canada to offer multi-mission and anti-submarine warfare aircraft that will meet the Government of Canada's requirements for the Canadian Multi-Mission Aircraft (CMA) program.
"The statement did not specify what the specifications of the modified Global
6500 aircraft would be. However, by stating that the aircraft would meet all the requirements of the Canadian government, we believe that it will be able to be refueled in flight and launch torpedoes, "says analyst Benoit Poirier.
He recalls that in March, the Canadian government was considering acquiring a fleet of Boeing P-8 Poseidon surveillance aircraft without going through a tendering process, believing that it was the only aircraft to meet all its requirements.Canadian authorities had even sent a letter to the U.S. government seeking information about the aircraft. "However, these procedures do not require Canada to buy Boeing aircraft," the analyst said.
"Bombardier and General Dynamics Mission Systems (GDMS) are now calling on the Government of Canada to initiate a transparent selection process for the $9 billion aircraft procurement program," he said.Benoit Poirier argues that for Bombardier, the alliance with GDMS is strategic and could be the launch pad for global sales for the Global 6500 for many years to come, especially since the Boeing P-8 Poseidon is an "end-of-life" aircraft.
He points out that GDMS also equips the aircraft that the AMC program wants to replace, the CP140 Auroras, manufactured by Lockheed.
He concedes, however, that some investors are concerned about the costs associated with transforming the aircraft to be capable of performing military missions. He recalls that Boeing had invested 7 billion US dollars to convert its 737 to P-8.
The analyst reiterates his recommendation of "outperform" on Bombardier's stock and his one-year target price of $100.