Honeywell International and Bombardier have reached a settlement in a lengthy legal dispute while also forming a new partnership to develop advanced aviation technologies. The collaboration will focus on avionics, engines, and satellite communications, with an estimated potential revenue of up to US$17 billion.
The legal dispute, which dates back decades, centred on pricing disagreements over Honeywell's HTF7000 turbofan engines, initially developed exclusively for Bombardier's Challenger jets. Bombardier argued that Honeywell provided competitors, including Gulfstream Aerospace and Textron Inc., with similar engines at lower prices. Bombardier sought CA$447 million (US$318 million) in damages for alleged overpayments between 2012 and 2017 and additional compensation for purchases in subsequent years. A Quebec Superior Court ruling a year ago required Honeywell to negotiate cost reductions for Bombardier.
The settlement comes at a cost for Honeywell, as it revised its financial forecasts downward. The company now expects adjusted fourth-quarter earnings of US$2.36 per share, reduced from a prior projection of at least US$2.73 per share. Honeywell also cut its sales outlook by US$400 million, impacting margins and cash flow. The announcement caused a 2% drop in Honeywell's shares during after-hours trading in New York on Monday, December 2.
The roots of the dispute trace back to the 1990s, when Bombardier was developing its Challenger line of super-midsize private jets designed for transcontinental flights. Despite the past conflict, the agreement positions both companies to collaborate on future aviation innovations.
