How Bombardier is cashing in on elites’ desire for private jet travel

Planes, trains and snowmobiles comprised the transportation portfolio that Bombardier was riding as the 21st century unfolded.
But the Montreal-based company also was carrying a boatload of debt incurred while building those diverse businesses over several decades, especially the billions it poured into developing the C Series passenger jet, launched in 2008 to compete with Boeing and Airbus for commercial airlines orders.
By 2018, the financial and operational headwinds became too strong, forcing Bombardier’s then-CEO Alain Bellemare to begin shedding key assets, most prominently by selling Airbus the C Series program — rebranded as the popular A220 airline. That was followed by divesting the rest of its commercial aircraft businesses, the Learjet brand of private planes and the railway unit. The recreational products entity, featuring Ski-Doo snowmobiles and Sea-Doo personal watercraft, had been offloaded in 2003.
A new management team, headed by CEO Éric Martel and CFO Bart Demosky, took control in 2020. They immediately established an ambitious, five-year strategic plan to reposition Bombardier, with a focus squarely on its sturdiest leg: the high-flying business jet and ancillary services industry. That is proving to be a smart calculation, based not only on Bombardier’s almost 40 years of experience in manufacturing and marketing business jets but also the current state of that aviation sector.
Deliveries of business and general aviation aircraft last year topped 4,000 for the first time in more than a decade, the General Aviation Manufacturers Association reported in February. When compared to 2022, all aircraft segments saw increases in shipments, and preliminary aircraft deliveries were valued at $27.8 billion, an increase of 3.6%, according to the trade association, adding that business jet deliveries climbed 2.5%.
Bombardier’s pure-play strategy is based on four key pillars, Demosky said. The first two revolve around its highly regarded Challenger and Global business jets, both new and certified-preowned models, sold to well-heeled individuals, companies and fleet operators such as, Flexjet, Wheels Up and NetJets, the fractional-ownership unit of Warren Buffett’s Berkshire Hathaway . The third pillar is the worldwide network of aftermarket maintenance and repair centers, and finally the global defense market for retrofitted, special-mission military aircraft.
CEOs spending big on private planes
No matter who owns the jets, corporate executives have doing plenty of flying in recent years. Companies in the S&P 500 spent $65 million for bigwigs to use private jets for personal travel in 2022, up about 50% from pre-pandemic levels three years earlier, a Wall Street Journal analysis earlier this year found. CEOs benefited the most, with spending for their aircraft perks reaching a five-year high in 2022, according to executive compensation consultant Equilar. Approximately 45% of Equilar 500 CEOs received aircraft perks in 2022, while only 14.2% of CFOs received the same perk.
Of course, when the entire aviation industry was disrupted — and when commercial airlines started flying again later that year with mandated health restrictions, flight delays and airport chaos — individuals and companies that could afford to buy, lease, rent, or share business jets did, and demand soared. The post-Covid peak numbers are expected to moderate, but the growth continue over the longer-term. Honeywell said in a global aviation outlook issued last October that 2023 growth would still be 10% above the 2019 level, and demand for business jets over the next decade should remain strong.
Historically, the business jet market has been cyclical, said Noah Poponak, an analyst for Goldman Sachs,