Bombardier Posts Wider Than Estimated Loss on C Series Costs
By Frederic Tomesco, Bloomberg News
Bombardier Inc. reported a wider-than-expected second-quarter loss amid rising costs for increased production of the new C Series airliner while managing to burn through less of its cash.
The planemaker swung to an adjusted loss of 6 cents a share, according to a statement Friday. Analysts had predicted a loss of 5 cents, according to the average of estimates compiled by Bloomberg. Revenue decreased 6.7 percent to $4.31 billion, compared with an average estimate of $4.18 billion.
Chief Executive Officer Alain Bellemare is pressing ahead with a five-year plan to reduce risk and bolster cash flow after revamping his senior management team. He took over last year following delays in the development of the C Series jet, which finally entered commercial service last month — about 2 1/2 years after the initial target.
After bringing in more than $3 billion in 2015 by issuing shares and debt, Bellemare raised a further $2.5 billion this year by selling 30 percent of the train-making unit to Caisse de Depot et Placement du Quebec and a 49.5 percent stake in the C Series to the Quebec government.
Bombardier on Friday reaffirmed its full-year forecast. Revenue in 2016 will be $16.5 billion to $17.5 billion, and earnings before interest and taxes will range from $200 million to $400 million. It will spend $1 billion to $1.3 billion of its free cash flow, the company said.
The planemaker spent $490 million of free cash flow in the second quarter, after burning through $808 million a year earlier. Bombardier cut production of its Global 5000 and 6000 business jets by about 40 percent last year and delayed entry into service of another model by two years amid shrinking demand for large private planes.
The company’s use of free cash flow is a key variable for analysts, who had predicted it would spend $623 million in the latest quarter.
Ilyushin Finance Co., a Moscow-based leasing company, reduced its C Series order “to align with their current market needs,” Bombardier said. Iluyshin’s firm order now includes 20 CS300 aircraft and one Q400 turboprop, along with options for five Q400s. It originally had ordered 32 CS300s and options for 10 more CS300s.
Bombardier’s widely traded Class B stock rose 0.5 percent to C$1.99 Thursday in Toronto, pushing the shares up 49 percent this year.