Bombardier touts new jet’s first flight

Global 7000 business aircraft on track for late-2018 takeoff

Bombardier Inc. says it’s applying lessons learned from its troubled CSeries program to its new Global 7000 business jet program.

During a conference call with analysts on Thursday, CEO Alain Bellemare touted last week’s first flight of the all-new, long-range business jet, which will be built at Toronto’s Downsview facility.

“A lot of people didn’t believe that we would fly this year. We did, as per plan,” Bellemare said, after releasing third-quarter earnings.

He noted that the company is using what it learned from the CSeries and applying it to the Global 7000 program’s flight-testing program.

“When you look at the flight test maturity, we are already starting from a good place versus where we started on the CSeries,” he said, adding the business jet has already flown again since its first flight.

The new business jet, with a flying range of more than 13,000 kilometres, remains on target to enter commercial service in the second half of 2018 as planned, said Bellemare, emphasizing the company is focused on operational efficiency to meet targets.

Due to weaker demand for business jets, the company had earlier slowed its production schedule.

It delivered 36 aircraft in the third quarter, for a total of 109 deliveries to date this year.

“We now expect to exceed our original guidance of150 deliveries for the full year, with better revenue and EBIT (earnings before interest and taxes) performance,” Bellemare said.

RBC Capital Markets analyst Walter Spracklin said in a note to investors that the business aircraft segment was an area of strength for the company.

“A healthy mix and good cost controls led to an EBIT margin of 6.4 per cent, which was a 290 basis points improvement year over year and above our 6-percent estimate,” Spracklin said.

Bombardier insists its company-wide turnaround plan is already working, by cutting costs, improving efficiencies and slashing jobs worldwide.

In the third quarter, it reported a net loss of $94 million. A year ago, Bombardier, which reports in U.S. dollars, recorded a loss of nearly $4.9 billion in the third quarter, when the company wrote down the value of its troubled CSeries commercial jet program and one of its Learjet business jet programs.

Bombardier said its adjusted loss for the third quarter was $10 million, or less than a cent per share for the third quarter of 2016. Analysts had estimated an adjusted loss of three cents per share, according to Thomson Reuters.

Bellemare emphasized that the aerospace division was making progress with its CSeries aircraft, with three planes now in commercial flight with Swiss Air Lines, and the first larger CS300 plane, which is certified, set to be delivered to airBaltic next month.

Bombardier’s CSeries program has suffered with cost overruns, and production schedule delays, prompting the Quebec government to invest $1 billion (U.S.) into the program.

Earlier this year, it hit another bump when Pratt and Whitney, maker of the geared turbo fan engine, ran into production troubles.

That meant Bombardier could only deliver seven planes this year, down from the original 15.

But Bombardier says it expects Pratt and Whitney to meet the engine delivery schedule next year, so it can deliver 30 to 35 CSeries planes.

Bellemare emphasized that the company is focused on restructuring, noting that it has completed almost 80 per cent of the first wave of job cuts, announced in February to slash 7,000 jobs by the end of 2017.

Three weeks ago, Bombardier announced plans to eliminate 7,500 positions — more than 10 per cent of its global workforce — by 2018’s end.

Bellemare said during the Oct. 21 announcement that the second round of job losses would be partially offset by more than 3,700 hires as it ramps up production of the CSeries, the Global 7000 and transit rail cars.

Bombardier has outsourced some work to Mexico for its train and plane divisions to cut costs, and the company was asked about potential impact given Donald Trump’s election in the United States, and his vow to renegotiate trade deals.

“It would be too early to speculate,” Bellemare told analysts. “But it should not impact our operations at all.” With files from Star wire services