FILE PHOTO: The Bombardier logo is seen at the Bombardier factory in Belfast, Northern Ireland September 26, 2017. Picture taken September 26, 2017. REUTERS/Clodagh Kilcoyne
November 2, 2017
By Allison Lampert
(Reuters) – Bombardier Inc scaled back CSeries jet deliveries by around a third because of engine delays, but reported improved earnings and a quarterly loss in line with analyst estimates.
The Canadian plane-and-train-maker also said it received a letter of intent from a European customer for 31 firm CSeries orders, the plane program’s first order in about 18 months from an undisclosed European customer.
European planemaker Airbus SE recently agreed to take a majority stake in the CSeries program for $1, in a deal expected to boost the plane’s sales and reduce costs.
It’s not clear whether the Airbus venture contributed to the preliminary order, which would be valued at about $2.4 billion based on list prices, with 30 additional options. Airline customers, however, benefit from heavy discounts of around 50 percent on orders.
The Montreal-based company reported third-quarter earnings before interest, taxes and special items (EBIT) that surged 90 percent to $165 million. It expects full-year EBIT of at least $630 million, which is at the high end of its forecast of $580 million to $630 million.
Bombardier said it now expects to deliver about 20-22 CSeries narrowbody jets, down from 30, in 2017 following engine delays by supplier Pratt & Whitney, a division of United Technologies Corp.
Bombardier said its free cash flow usage for 2017 would be about $1 billion, or at the higher end of its forecast range, because of the fewer deliveries.
Pratt & Whitney is expected to provide Bombardier with a supplier advance that will help the planemaker’s liquidity, starting in the fourth quarter. The support, aimed at mitigating the cost of excess inventory generated by the engine delays is subject to a preliminary deal to be finalized by year’s end, Bombardier said.
Revenue in the quarter was $3.8 billion, slightly up from $3.74 billion last year, because of a stronger performance from the company’s rail unit. The company improved margins before special items in both its key business jet and rail divisions.
Bombardier, which is in the middle of a five-year turnaround plan after facing a cash crunch in 2015, delivered 31 business jets in the third quarter ended Sept. 30, compared with 36 in the same period last year.
Bombardier posted a net loss of $117 million, or 5 cents a share, in the quarter, compared to a loss of $94 million, or 4 cents per share, in the same quarter last year.
The per-share loss matched analysts’ average expectation, according to Thomson Reuters I/B/E/S.
(Reporting by Nivedita Bhattacharjee and Allison Lampert; Editing by Sai Sachin Ravikumar and Bernadette Baum)
