Bom­bardier expects tran­si­tion in 2016

China Daily (Canada) - - FRONT PAGE - By JACK FREIFELDER in New York jack­freifelder@chi­nadai­

Canada’s Bom­bardier Inc, the air­craft maker that also com­petes with China in the man­u­fac­tur­ing of trains, said it expects 2016 to be a “tran­si­tion year” with some fi­nan­cial head­winds due to the com­pany’s in­abil­ity to deal with a back­log of plane or­ders.

But a re­cent cash in­flux from Que­bec’s pub­lic pen­sion fund and the provin­cial gov­ern­ment could help the com­pany’s liq­uid­ity prospects in the short term, ex­ec­u­tives of the Mon­treal-based com­pany said Tues­day in a meet­ing with in­vestors in New York City.

Alain Belle­mare, pres­i­dent and CEO of Bom­bardier, said the com­pany’s plans cen­ter on re­build­ing earn­ings and cash flow over the next five years.

“De­spite short-term chal­lenges, the po­ten­tial for Bom­bardier is great and we are turn­ing the busi­ness around,” Belle­mare said. “We have great fun­da­men­tals and sig­nif­i­cant runway for im­prove­ment.”

Bom­bardier, which had rev­enue of $20.1 bil­lion in 2014, said the lon­gawaited roll­out of its CSeries com­mer­cial planes would help drive sales to $25 bil­lion by 2020. Over­all rev­enue is ex­pected to grow 5 to 6 per­cent per year un­til then, the com­pany said.

Cer­ti­fi­ca­tion for the CSeries planes was “very close”, Reuters re­ported on Tues­day, but the com­pany’s oper­a­tions have been hin­dered by a num­ber of de­lays over the last few years, in­clud­ing higher-than-ex­pected costs and lower-than-an­tic­i­pated or­ders for de­liv­ery. The jet pro­gram has left Bom­bardier with more than $9 bil­lion in debt.

With the ex­tra funds, Bom­bardier plans to have nearly $6.5 bil­lion in cash at the end of 2015, com­pany of­fi­cials said, adding that the funds would al­low in­tro­duc­tion of the CSeries and a new line of busi­ness jets.

Last month, Que­bec’s provin­cial gov­ern­ment said it would in­vest $1 bil­lion into the CSeries pro­gram. The gov­ern­ment is con­sid­er­ing a fur­ther con­tri­bu­tion, the Toronto-based Globe and Mail re­ported on Tues­day.

On Nov 19, Que­bec’s pen­sion fund agreed to buy one-third of the com­pany’s train and tran­sit group for $1.5 bil­lion. Prior to then, China’s top two train com­pa­nies, China CNR Corp Ltd and CSR Corp Ltd, had dis­cussed with Bom­bardier a pos­si­ble ac­qui­si­tion of its rail­way unit. The com­pany is the largest maker of trains out­side of China, The New York Times re­ported on Nov 19.

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