Trump's Reversal Boosts Bombardier Shares Amid Election Focus

Bombardier’s stock price increased on Tuesday following US President Donald Trump’s decision to back away from his September proposal to prohibit the Montreal-based aircraft manufacturer from operating in the US market.

Reports on the stock movement varied. Reuters documented a 4 percent rise, while CBC News recorded an increase of $13.85 US, approximately 4.5 percent, reaching $325.32 US. Bloomberg noted the shares climbed as much as 2.6 percent during morning trading in Toronto on Tuesday.

Trump indicated his change in stance during a Monday rally in Park City, Kansas, close to Wichita, where Bombardier maintains its US headquarters, as reported by Bloomberg.

During the event, Trump pledged assistance to Bombardier after receiving a call from Republican Senator Roger Marshall. He explained that while he had previously categorized the company as Canadian, its Kansas-based operations influenced his revised outlook. Trump emphasized he would address the workforce and jobs.

According to Bloomberg, Trump did not explicitly name Bombardier at the rally.

Earlier that day, Trump told Kansas station 12 News, “We’re going to take care of Bombardier,” referencing Marshall’s involvement, as reported by Reuters.

Marshall is contending with a tight election race against Democrat Adam Hamilton in Kansas, a state that has not elected a Democratic senator since 1932, according to CBC News.

James McGarragle, an RBC Dominion Securities analyst in Toronto, stated in a note that the shift removes a drag on the stock. “We view the removal of this regulatory uncertainty as positive for sentiment as it alleviates an important headline overhang for investors,” McGarragle said, according to CBC News. He added that the threat had not had a “tangible impact” on demand for the jets among American customers over the past six weeks.

Bombardier employs roughly 3,500 individuals in the United States, with over 40 percent of these positions located in Wichita, as reported by Reuters. The firm spends more than US$2.5 billion annually on roughly 2,800 American suppliers across 47 states, Bombardier told CBC News in September.

Final assembly of its Challenger and Global business jets occurs in Canada, while more than half of its revenue comes from US customers. Analysts cited by CBC News noted that most aircraft include at least 40 percent US components, with the Global 7500 deriving over half its value from American parts.

Last week, Bombardier committed US$50 million to Wichita operations and opened a North American Learning Center at the location.