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Bombardier expects to deliver 155 biz jets to meet 18-bn revenue target

The jets, which list for $73 million and are sold out through 2021, will play a key role in Bombardier's five-year turnaround plan to boost revenue and margins by 2020

Reuters  |  New York 

Bombardier

Inc said on Thursday it expects to deliver 150 to 155 business aircraft next year, helping the Canadian maker of planes and trains meet an $18 billion revenue target for 2019.

Montreal-based is forecasting 15 to 20 deliveries of its flagship Global 7500 jets next year, after the long-range corporate planes enter service "in the coming days," David Coleal, President of Business Aircraft, told the company's investor day in New York.

The jets, which list for $73 million and are sold out through 2021, will play a key role in Bombardier's five-year turnaround plan to boost revenue and margins by 2020. Bombardier had faced a cash crunch in 2015 after investing heavily to bring two new planes to market.

"We have options now," Chief Executive Alain Bellemare said in an interview. "In 2015, we had no options."

Bellemare would not comment on the company's possible options, such as reducing company debt or buying back a 27.5 per cent share of its rail division held by Canada's second-largest pension fund next year.

"Bombardier is a much stronger company in 2018," he added.

Bombardier shares fell 0.9 per cent in Thursday trading in Toronto. The stock is down about 28 per cent so far this year on investor jitters over Bombardier's $9 billion debt and after the company recently revised down its 2018 free cash flow target by about $600 million, partly because of delivery delays involving five rail projects.

Chief Financial Officer John Di Bert said the company expects to recover about $300 million to $400 million of that $600 million in 2019.

Bombardier also said it expects to generate free cash flow of $250 million to $500 million in 2019, excluding one-time items, while overall 2019 revenue is expected to rise 10 per cent over 2018, driven largely by deliveries of the new corporate jet.

Bombardier also has a $250 million working capital contingency to support the Global 7500 ramp-up, given the typical execution challenges in developing new planes.

The company also expects to deliver two new longer-range variants of its large-cabin business jets, the Global 6500 and 5500, at the end of next year, at a time when demand for corporate planes is recovering.

The company said in October it had delivered 96 business jets in 2018, meeting more than 70 per cent of its forecast for the year.

Bombardier, which last month signed a deal to sell its Q400 turboprop program, is weighing options for its money-losing regional jet program. In the meantime, it has set a target of making its commercial aviation unit profitable in 2020.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, December 07 2018. 06:41 IST
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