(Reuters) - Bombardier reported quarterly results on Thursday that beat expectations thanks to its rail division, sending shares surging, and said a favourable decision by a U.S. trade agency gave it flexibility to deliver CSeries jets to Delta Air Lines this year.
The International Trade Commission on Wednesday said it rejected hefty U.S. duties on the CSeries jets partly because Boeing Co lost no sales or revenue when Delta ordered the aircraft in 2016 from the Canadian plane-and-trainmaker.
During a call with analysts, Bombardier Chief Executive Alain Bellemare called the ITC’s reasoning “good news” and said “it gives us the flexibility to ship the aircraft out of Mirabel (Quebec) to Delta” in 2018.
Bellemare said Bombardier still plans to set up a U.S. assembly line for the CSeries after a deal giving a majority stake in the jet programme to Airbus SE closes in 2018.
Bombardier said it expects revenue to grow to $17.0 billion to $17.5 billion in 2018. It is also targeting revenue of more than $20 billion by 2020.
Shares surged around 9 percent in morning trading.
The plane-and-train-maker is in the middle of a five-year turnaround plan to cut costs and boost margins, after years of heavy investments in two new aircraft programs pushed it to the brink of bankruptcy in 2015.
Bellemare said momentum was increasing for the company’s business jets and it was prepared to increase production volume if the market supports it.
BMO analyst Fadi Chamoun said in a note to clients Bombardier was “well positioned to achieve cash flow breakeven in 2018,” after coming in ahead of its 2017 forecast for cash flow.
Revenue at its transportation unit, which includes rail, surged 28 percent to $2.49 billion during the quarter.
The company reported $304 million in earnings before interest, taxation, depreciation and amortisation (EBITDA) for the fourth quarter, compared with $203 million a year earlier.
On an adjusted basis, the company made 2 cents per share, while analysts expected it to break even, according to Thomson Reuters I/B/E/S.
Revenue grew 8 percent to $4.72 billion and EBITDA margin before special items rose to 6.4 percent from 4.6 percent.
Reporting by Allison Lampert in Toronto and Nivedita Bhattacharjee in Bangalore; Editing by Patrick Graham and Bernadette Baum