No flight of fancy

Bombardier may be the little Canadian that can

The manufacturer is mulling selling a majority stake in its trains division to a Chinese rival. That would almost certainly trigger political objections. In the past, after all, even the sale of a home-improvement chain foundered because it was considered a national treasure. Bombardier boss Alain Bellemare may, though, have a trump card.

The attempt by Lowe's to buy Rona three years ago is not the only foreign takeover that has crashed thanks to objections from state or national government. BHP Billiton's offer to purchase Potash in 2010 is another example. And The Globe and Mail reported that Ottawa put the kybosh on a potential BlackBerry-Lenovo deal in 2013. There is, at least, not a blanket ban on all deals. Petronas succeeded in snapping up Progress Energy Resources in 2012.

What may give Bellemare more comfort about getting a deal on track is what he can do with the proceeds. Bombardier's latest bet on new aircraft is its CSeries jets. This, though, has been plagued by cost overruns and delays. The aviation unit burned $1.1 billion of cash last year, and its losses contributed to the overall company's $1.2-billion loss. It will churn through more before it becomes profitable.

The company says it has enough liquidity, thanks to a recent capital-raising exercise. But more cash would always be helpful, given uncertainties in aircraft development. And its $9-billion debt load is now an uncomfortable seven times estimated 2015 Ebitda after roughly doubling over the past five years. Its rail arm is worth around $4.5 billion. according to Desjardins Securities. Selling a chunk of that must look pretty tempting.

Moreover, Canada has little to lose in approving a sale. The rail unit is headquartered in Germany and only about 10 per cent of its workers are Canadian, whereas most of its aviation employees are based in the home nation.

Aviation should grow faster than rail as developing economies grow, too - and is arguably more important for the country's technological base and security needs than railways. That won't silence all critics, but it may keep most of them in the hangar.