Bombardier posts wider loss in first quarter
Private-jet deliveries to drop
Bombardier Inc. said it has reached out to governments for financial support in case of a prolonged COVID-19 related slump after reporting a first-quarter loss and warning of a plunge in business- jet shipments. The adjusted loss for the period widened to US$169 million, or 10 cents a share, from US$122 million, or 7 cents a year earlier, Bombardier said. Revenue rose five per cent to US$3.69 billion.
The results are the company’s last under Alain Bellemare as chief executive. Bombardier replaced Bellemare with former Hydro- Québec CEO Éric Martel last month after a five- year run that saw Bombardier agreeing to exit such longtime businesses as trains and commercial aviation.
All previously announced divestitures are “continuing to progress toward closing,” Bombardier said Thursday. The planned sale of the CRJ program to Mitsubishi Heavy Industries, which will bring in about US$ 550 million, is expected close June 1.
First-quarter results were “weak,” Desjardins Capital Markets analyst Benoit Poirier said Thursday in a note to clients. The cash burn “caused further deterioration in the balance sheet,” said Poirier, who cut his rating on Bombardier to “hold” Sunday while awaiting “better visibility” into the pandemic’s impact.
Bombardier’s widely traded Class B stock dropped 13 per cent to 46 cents in early afternoon trading Thursday in Toronto. The shares are down about 75 per cent this year.
Deliveries of private planes — which are poised to become Bombardier’s sole business in 2021 — will probably sink as much as 35 per cent this year, Martel said. Production rates “are being aligned to market demand,” the company said without being specific.
Business activity will probably hit a low point in the second quarter before gradually recovering in the second half, Bombardier said.
Bombardier halted manufacturing activities in the second half of March in several countries — including Canada — as the pandemic worsened. It announced a gradual resumption of operations on April 28.
“It is clear that we are facing a complete new reality,” Martel said Thursday on a conference call with financial analysts. “We will need to change significantly how we operate.”
Bombardier officials have also approached governments in such jurisdictions as Canada, Belgium, Germany and the U.K. to inquire about additional financial assistance if the pandemic persists, the CEO said.
Free cash flow in the first quarter was hurt by delayed aircraft deliveries and postponed train approvals due to travel restrictions and production shutdowns.
“We got caught with a lot of aircraft that we couldn’t deliver,” Di Bert said.