Industry Week in Review – January 17, 2014

On Thursday the Senate approved a $1 trillion omnibus spending bill for FY 2014, which was approved by the House of Representatives on Wednesday with broad bipartisan support.  President Obama is expected to sign the legislation before the current stop-gap funding measure expires on Saturday.  The legislation includes all 12 individual spending bills covering the entirety of the federal government’s discretionary spending, and reflects the budget agreement reached at the end of 2013.  Members of Congress indicated that the agreement, which also set top-line targets for FY 2015 spending, will enable Congress to return to its past practice of debating and passing the 12 bills separately ahead of the September 30th expiration of the current omnibus legislation.

As many analysts and experts had expected, Bombardier has officially pushed back the service-entry target date for its CSeries line of aircraft by at least 12 months, citing longer than expected time to complete certification flight testing.  With this delay, the new service-entry for the initial CS100 aircraft moves to the second half of 2015 while the larger CS300 is expected to follow six months after.  Furthermore, while Bombardier executives say the CSeries program is making solid progress and performance results are in line with expectations, many analysts believe that the service-entry date will actually slip further beyond 2015 and into the first half of 2016, with projected development costs rising to $5.5 billion.  Meanwhile, Bombardier recently announced that Al Qahtani Aviation signed a firm purchase agreement for 16 CS300 aircraft with an option for an additional 10, bringing up the total firm order count to 198.  Bombardier’s goal still remains at 300 firm orders from 20 different customers by service-entry.

Big Movers

Bombardier Inc. (Down 9.2%) – Shares were down this week after the Company announced it would push back the service-entry target date for its CSeries line of aircraft into the second half of 2015.

Relevant Transactions

Curtiss-Wright Corporation acquired Component Coating and Repair Services Limited, a British provider of ultra-smooth and corrosion resistant coatings and precision airfoil repair services for aerospace and industrial turbine applications.  Curtiss-Wright paid 15 million GBP, or approximately $25 million USD.

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