Bombardier expects transition in 2016
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.