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Money News

Bombardier sees higher deliveries of flagship jet, after missing quarterly profit

(Reuters) - Bombardier Inc aims to double deliveries of its flagship business jet during the back half of 2020 and break even this year on free cash, after the company missed on quarterly earnings Thursday, hurt by higher rail costs and COVID-19.

Montreal-based Bombardier expects to roughly double by year’s end the 11 Global 7500 jet deliveries it made during the first six months of 2020, as the company becomes a pure play business jet maker with the impending closings of deals to sell its rail and aerostructures businesses.

Corporate planemakers are reporting an uptick in interest as demand for private aviation flights rises, although this rebound in travel has not yet translated into aircraft orders, Bombardier Chief Executive Eric Martel told analysts.

Business jet deliveries are expected to fall industry-wide this year as the pandemic keeps people under lockdown, disrupts global travel and slows economic activity around the world.

“We expect the next few quarters will be challenging and difficult to predict,” Martel said.

The maker of business jets and trains recorded a $435 million charge in its rail business during the second quarter, mainly related to costs for several late-stage projects in the UK and Germany.

This led to an adjusted quarterly loss of $319 million compared with a profit of $312 million a year earlier, the company said. Analysts on average were expecting Bombardier to report profit before interest, taxes, depreciation and amortization (EBITDA) of $39.33 million.

Business jet deliveries also fell about 43% to 20 planes in the quarter because of the COVID-19 pandemic, with revenue declining about 37% to $2.70 billion but topping analysts’ expectation of $2.48 billion.

Bombardier stock dipped 2.3% in morning trade.

The company, however, said it used free cash of about $1.04 billion in the quarter ended June 30, up from $429 million a year earlier, but better than analysts’ expectation of $1.47 billion.

Chief Financial Officer John Di Bert says the company still aims to break even on free cash flow in 2020, “assuming operations continue to stabilize.”

Bombardier’s business aircraft backlog was $12.9 billion as of June 2020, down from $14.4 billion as of 2019 end.

Reporting By Allison Lampert and Ankit Ajmera; Editing by Maju Samuel Steve Orlofsky

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