Heroux Devtek says Airbus C Series ownership good for Canadian supply chain
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Montreal – Airbus’ majority ownership in the C Series could be positive for Canada’ aerospace industry, the head of Boeing landing gear supplier Heroux-Devtek Inc. said Monday.
“I think it could be quite good for the Quebec, Canada supply chain (to) service Airbus from here,” chief executive Gilles Labbe said during a conference call to discuss its fiscal second-quarter results.
Boeing’s European rival reached a deal last month with Bombardier to purchase a 50.01 per cent stake in the C Series commercial jet.
Airbus said Canada will become its fifth “home base,” and first outside Europe, allowing the Canadian industry to tap into the company’s supply chain. It plans to build a second C Series assembly line in Alabama while maintaining the primary line in Mirabel, Que.
The Canadian government responded to a trade petition launched by Boeing against the C Series by threatening to cancel the planned purchase of 18 Boeing Super Hornet fighter planes to temporarily augment Canada’s aging fleet of CF-18s.
Heroux-Devtek is a large supplier on Boeing’s 777 and 777X aircraft.
Labbe said he doesn’t expect Boeing’s challenge will have a negative impact on Canadian suppliers.
Boeing has 2,000 people working in Canada and invests US$4 billion a year.
“I don’t think they will change their way of doing business given the circumstances,” he told analysts.
“Canada is part of their supply chain in a big way so I think it’s positive…We need a customer like that to continue to put some work in Canada.”
The aircraft landing gear maker said it earned $3.2 million or nine cents per share for the quarter ended Sept. 30. That compared with a profit of $9.5 million or 26 cents per share in the same quarter last year.
On an adjusted basis, Heroux-Devtek said it earned nearly $4.1 million or 11 cents per share, down from $5.7 million or 16 cents per share.
Sales fell to $89.7 million compared with $91.6 million a year earlier.
Heroux-Devtek announced a deal last month to acquire Compania Espanola de Sistemas Aeronauticos (CESA), a subsidiary of Airbus SE, for roughly $205 million.
Derek Spronck of RBC Capital Markets said Heroux-Devtek’s momentum is beginning to build after a good quarter.
“When we look out over the next two years, we see operational and financial momentum building for the company,” he wrote in a report.
Spronck said the anticipated ramp in the Boeing 777/777X program and its position in the Embraer Legacy 450/500 and the Dassault Falcon 5X mark the “beginning of an inflection” in earnings growth.