By Allison Lampert and Yashaswini Swamynathan
(Reuters) - Canadian plane and train maker Bombardier Inc (TO:BBDb) has agreed to sell its Toronto aircraft assembly site to a pension fund as it strives to raise extra cash under a five-year recovery plan.
The company, which reported a 16-percent rise in its favoured measure of profit on Thursday but is only bouncing back after considering bankruptcy in 2015, will make $635 million (467.4 million pounds) gross from the sale to the Public Sector Pension Investment Board.
The company said earlier this year it was looking for buyers for the sprawling Downsview property, which assembles its Q400 turboprops and several business jets.
The sale raises questions about the future of Bombardier’s commercial aircraft programs, especially the Q400, after the company agreed to give a majority stake of its flagship CSeries jet to European planemaker Airbus.
The company said it would assembled business jets at a leased facility at Toronto’s Pearson (LON:PSON) Airport, and would continue leasing space at the Toronto site for three years, with options to renew for two more.
Chief Executive Alain Bellemare said the deal would allow the company to "monetize an underutilised asset, further streamline and optimise our business aircraft operations, and will support further economic development and job growth in the Greater Toronto area.
"Today, we only use about 10 percent of a 370-acre site at Downsview and bear the entire cost of operating a 7,000-foot runway," he said.
Selling the site is expected to add $550 million to the company's cash reserves.
The Q400, with a backlog of 50 planes, has about 25 percent of global market share for the small commercial planes and comes second to European rival ATR, the world's largest maker of turboprops.
Bombardier said revenue in three of its four businesses increased in the first quarter, led by a 21 percent rise in its rail unit. The company's loss-making commercial aircraft segment, which includes the CSeries, reported a 12 percent drop in revenue.
It made $265 million before interest, taxation, depreciation and amortization (EBITDA) in the first quarter, helped by higher orders for its rail-focussed transportation unit and an improving market for business aircraft.
Adjusted net income attributable to company shareholders fell to $22 million in the first quarter ended March 31 from $28 million a year earlier.
Overall revenue rose nearly 12 percent, helped by 21 percent rise in revenue for the transportation unit.
Separately, Bombardier said client American Airlines Group Inc (O:AAL) had placed an order with it for 15 new CRJ900 regional jets worth $719 million. The airline expects to take delivery of the first aircraft in the second quarter of 2019.