Bombardier Aims High In Biz Jet Aftermarket

During Aviation Week’s visit to Bombardier’s Montreal headquarters in late May, ebullience was in the air. 

Paul Sislian, the company’s EVP of aftermarket services and strategy, emphasized the brisk expansion of the Canadian firm’s share of the addressable maintenance market for its business jets. “It’s been a phenomenal growth over the last four years,” he said, noting that Bombardier will reach its target of 46% market share in just three years (in 2024) instead of the originally expected four.

The sentiment matched that of Bombardier’s first-quarter earnings call, when, highlighting the aftermarket segment’s 13% annual growth to $477 million, CEO Bart Demosky said that “we love having this business with its strong predictable revenues and cash flows and expectations of strong growth for years to come.”

The company is targeting $2 billion in aftermarket sales in 2025—a compound annual growth rate of 7%, according to Jefferies. The investment bank estimates that fleet growth supports a total addressable market of $4 billion for aftermarket sales in 2025, so if Bombardier reaches its target, it will have a 50% market share. 

Bombardier is not resting on its laurels though. A key focus for the company now “is how to move from 50% market share to 70%” by 2030, Sislian said. By that time, Jefferies estimates the business jet aftermarket will be worth $5.6 billion. “We have grown all this capacity, and now we have to optimize it,” Sislian said, which will involve reducing cycle time and increasing efficiency.

If Bombardier foresees any specific headwinds in its ambitious aftermarket expansion, they were not apparent during Aviation Week’s visit to the company’s headquarters. In response to a question about whether Bombardier faced workforce challenges, Sislian painted in broad brushstrokes. “As an industry,” aviation could do a better job of ensuring workers are equipped with the necessary technical skills, he said.

With regards to the supply chain, Sislian said that it had stabilized. Meanwhile, OEM parts shortages remain a common problem for many in the aviation sector.

When asked about expansion of aftermarket facilities, Sislian said that the facility in Abu Dhabi launched in December 2022 is a “greenfield” service center. “Will that be sufficient? I don’t think so. There is 100% more to come in the Middle East,” he said.

Singapore is another location where Bombardier sees strong potential. The city-state is the “center point for anything east of India, south of China and west of Australia,” Sislian said. With the “migration of the market” to Singapore, it is a location where Bombardier will “keep expanding our footprint.”

Auguring well for Bombardier is that the business jet market continues to perform well. “The fact that business jet flying activity remains well above 2019 levels is positive for new jet demand as well as aftermarket activity, which represents over 20% of Bombardier’s revenue and is growing,” the National Bank of Canada said in an April 15 research note.

“Business aviation demand is softening just a tad, but utilization is pretty strong compared to where it was pre-COVID, and that’s good for maintenance,” said Kevin Michaels, managing director at the consultancy AeroDynamic Advisory.

With regards to Bombardier’s ambitious aftermarket growth targets, he notes that business jet market leader Gulfstream as well as Dassault and Cessna have all been successful growing their respective MRO businesses. He estimates that Gulfstream surpassed a 70% market share of maintenance business in its own service centers about a decade ago, and now has closer to 80% of that market. “It’s been done [reaching the 70% milestone] but took many years to get there,” he said.

For its part, Bombardier has “certainly shown that they can grow market share and diversify their portfolio away from just selling aircraft. They have a lot of momentum and plenty of runway” to achieve their goals, Michaels said.

As for headwinds, given the labor shortage in the aviation sector, getting enough technicians for burgeoning maintenance work might pose a challenge, “though that’s less of an issue outside the U.S.”

Otherwise, the possibility of an economic recession that would stymie business jet demand cannot be dismissed—despite the extraordinary resilience of the U.S. economy, now in its fifth year of expansion that began in May 2020. The Federal Reserve Bank of New York estimates that there is a 51.8% chance that the U.S. economy will fall into a recession by May 2025.