Bombardier flying high as results exceed expectations

Boeing trade complaint rejected as it ‘lost no sales or revenues’, US regulator says

A man works on a C-Series wing in the Bombardier factory in Belfast. The company announced results showing it is generating cash at the healthiest rate in seven years. Photograph: Clodagh Kilcoyne/Reuters

A man works on a C-Series wing in the Bombardier factory in Belfast. The company announced results showing it is generating cash at the healthiest rate in seven years. Photograph: Clodagh Kilcoyne/Reuters

 

Bombardier is generating cash at the healthiest clip in seven years. Free cash flow jumped 76 per cent to $872 million during the fourth quarter, the aerospace company which has a significant presence in Belfast, said in a statement Thursday as it reported earnings. That exceeded analysts’ expectations for the closely watched figure.

The improving results underscore Bombardier’s turnaround progress under chief executive Alain Bellemare after two aircraft-development programmes left the company awash in debt.

Having shored up liquidity, cut thousands of jobs and agreed to team with Airbus SE on the C-Series jetliner, Mr Bellemare is now working to push the company’s next big revenue generator – the Global 7000 business jet – into service late this year.

The earnings report was “well ahead of expectations across all segments,” Fadi Chamoun, a BMO Capital Markets analyst, said in a note to clients. “We sense there is greater demand momentum in business aviation and opportunities for growth beyond what is currently reflected in our forecast.”

“We are moving out of our investment cycle and into a strong growth cycle,” Mr Bellemare said in the statement.

Sales increase

Adjusted earnings were two cents a share, surpassing expectations that the company would break even. Sales climbed 7.6 per cent to $4.72 billion. Analysts had projected $4.75 billion.

Revenue is set to rise in all divisions in 2018, Bombardier said. The Montreal-based company makes trains and aircraft parts in addition to aircraft.

For all of 2017, free cash flow usage of $786 million exceeded Bombardier’s full-year target by more than $200 million. That enabled Bombardier to end the year with a $3.1 billion cash balance, leaving the company “well positioned’’ to break even on a cash-flow basis in 2018 – a key goal of Mr Bellemare’s turnaround plan.

Just ahead of the results, an independent US trade body said it had rejected hefty US duties on Bombardier’s C-Series jets – wings for which are made at the Belfast plant – partly because Boeing lost no sales or revenue when Delta Air Lines ordered the aircraft in 2016 from the Canadian aircraft manufacturer.

The International Trade Commission published its reasoning three weeks after announcing the decision.

The ITC said the 110-seat C-Series jets ordered by Delta and Boeing’s smallest 737 MAX 7 aircraft do not compete.

It also said Bombardier’s C-Series sale to Delta did not come at Boeing’s expense as the aircraft manufacturer did not offer any new aircraft to the second largest US carrier.

“Boeing lost no sales or revenues,” the ITC said in its 194-page ruling.

It was not yet clear whether Boeing will seek to appeal the ITC’s decision, a move that could generate uncertainty at a time when Airbus SE plans to take a majority stake in the C-Series programme. – Bloomberg/Reuters