(Adds Trudeau comments, updates share price)
By Allison Lampert and Allison Martell
NEW YORK/TORONTO Dec 15 Bombardier Inc
is still seeking funds from the Canadian government
despite improved liquidity, its chief executive said on
Thursday, as the company assured investors it is prepared to
deal with the cost of value guarantees for older jets.
Alain Bellemare said the plane and train maker is still in
talks with Ottawa, with an eye to managing unexpected risks or
funding the development of new products.
"Obviously things have changed a lot over the past 12
months, so the discussions are taking a different path," he said
at a New York investor event.
Bombardier, which considered bankruptcy protection at one
point last year, sold a 30-percent stake in its rail division to
pension fund Caisse de depot et placement du Quebec for $1.5
billion last November and got a $1 billion bailout from the
In Ottawa, Prime Minister Justin Trudeau said the government
was working "very productively" with Bombardier, which asked for
federal aid last year.
"We hope to be making some announcements before the budget,"
Trudeau told reporters. The federal budget is usually in
February or March.
The investor day came two days after U.S. airline SkyWest
Inc said it had agreed to terminate a residual value
guarantee with Bombardier in return for a $90 million payment
from the Canadian company.
Residual value guarantees cover some of buyers' losses if
the value of their aircraft drops below a threshold, a potential
drag on cash flow for Bombardier as older planes go out of
On Thursday, Bombardier Chief Financial Officer John Di Bert
said the deal should eliminate about $250 million of potential
liability. Bombardier disclosed early this year that its maximum
exposure from residual value guarantees was $991 million over
four years starting Dec. 31.
"I think we have come to a very positive arrangement with
SkyWest," he said, adding that Bombardier has allowed for more
settlements in its forecasts.
Asked about debt, Di Bert said the company is likely to
refinance maturities coming up in 2019 and 2020, but noted that
no final decision has been made.
"What we're putting together is a business that will have
strong access to markets," he said. "We don't have to make that
One factor that could improve Bombardier's cash flow is
increased demand for the company's business jets. The new
ultra-long-range Global 7000 jet, said by the company to have a
strong order book, is expected to play a key part in
Bombardier's five-year turnaround plan.
Production of the company's largest business jets, which
slowed this year to match weaker market demand for corporate
planes, is expected to pick up slightly in 2017, a source
familiar with the matter said, although a broader industry
rebound is not expected.
Production of Bombardier's Global 5000 and 6000 jets is
expected to rise slightly from one in 10 days to one in seven
days next year, said the source, who spoke on condition of
anonymity because the company does not disclose such figures.
A Bombardier business jets spokesman declined to disclose
global production rates for competitive reasons.
Shares were up 2.9 percent at C$1.97, boosted by new
forecasts released late on Wednesday. Bombardier said it is
aiming for consolidated earnings before interest and taxes and
before special items in the range of $530 million to $630
million in 2017.
(Writing by Allison Martell in Toronto; Editing by Meredith
Mazzilli and James Dalgleish)