The investment deal for Spirit AeroSystems Holdings to buy the shares of Short Bros. plc was announced just a year ago, on October 31, 2019. Last week, on October 30, 2020, the amended deal was finalised.
The purchase by Spirit AeroSystems of the Belfast company followed an earlier statement by the present Canadian parent company Bombardier that it was seeking a buyer as it disposed of a range of assets, including the assets of Short Brothers
Short Brothers has now published its annual report on the performance of the business in the year to December 2019.
The results are published in American dollars to be consistent with the report of parent company Bombardier. The headline financial results are in the table on the right.
The results show two contrasting trends. First, there is a healthy increase in annual turnover. Second, a continuing loss on overall performance is reported. Shorts last reported an annual profit (before tax) in 2016.
Shorts accounts show a heavy reliance on borrowed funds. This is well illustrated by the size of the borrowed funds due for repayment in more than a year at the date of the accounts.
In December 2019, $332,882,000 was outstanding.
Interest and other finance charges converted an operating profit into a loss of $30,673,000.
The performance in 2019 was worrying and this was a prelude to the more difficult trading conditions that have emerged in 2020.
The annual report, reviewing events last year, confirms that there were some notable achievements.
Shorts was part of a consortium appointed to produce preliminary designs for a technology demonstrator vehicle and has now, in August 2020, been selected as preferred bidder for an unmanned capability vehicle to support MoD aircraft.
Also in 2019 the company further developed its activities in business aircraft assembly with particular emphasis on the Global series.
As part of the consolidation programme, Bombardier sold its interests in the Q series to De Havilland Aircraft as well as selling its interest in the regional jet programme to Mitsubishi.
The major feature for forward planning was the decision to seek a buyer for the plant and assets in Northern Ireland.
The annual report, just published on September 29, makes reassuring statements from Shorts on the consequences and prospects for its business following the purchase by Spirit AeroSystems. It was originally expected that the deal would cost Spirit $630m.
As amended, the deal will now cost Spirit $275m in cash and also includes an acceptance of liability for refundable advances held by Shorts and a contribution to the inherited actuarial deficit in the funding of pensions obligations together valued at $824m.
The decision to sell Shorts must be seen in the context of a difficult period for the Belfast company. For several years, with support from Bombardier and the UK Government, the commercial viability of the (then) C Series passenger aircraft, now the Airbus A220, offered an attractive prospect.
Unfortunately, just after the original Spirit AeroSystems agreement was announced a year ago, the market prospects for aircraft sales, including the Airbus A220, were sharply affected by the Covid -19 crisis and the major international collapse in air travel.
The prospects for recovery in air travel probably have some way to go before the situation can be described as stabilised. The news that a final agreement has been reached gives Shorts some long awaited reassurance about the future.
It is expected that Spirit will be announcing how it sees activity at Shorts in Belfast and at its Morocco plant developing.
Bombardier has said that it will now be a more focused 'pure-play business jet company'.
Shorts, no longer a Bombardier subsidiary, will be in play as a possible sub-contractor supplier to its former owner.