Bombardier’s Q1 earnings plummet after pandemic shuts factories

MONTREAL — Bombardier Inc. took a major earnings hit last quarter — with more losses to come — as fallout from the COVID-19 pandemic blocked aircraft deliveries and shut down operations.

The company, which keeps its books in U.S. dollars, reported a $200-million US loss in its first quarter despite a five per cent revenue boost and burned through $1.6 billion in cash as borders and factories closed in March.

The virus wound up costing the company between $600 million and $800 million last quarter, said CEO Eric Martel, who rejoined Bombardier last month after a five-year stint as the head of Hydro-Quebec.

Though plants are gradually ramping up again, the plane-andtrain maker expects business activity to hit a low point in the second quarter before mounting a slow comeback in the second half of the year.

“We saw a significant impact in Q1, with more to come in Q2, as a large part of our operations have been shut down for the past eight weeks,” Martel said on his first conference call as head of the company.

Travel restrictions meant that “we got caught with a whole bunch of airplanes that logistically we just couldn’t deliver,” said chief financial officer John Di Bert.

Business jet deliveries could drop by up to 35 per cent this year, Bombardier said, with the backlog down $800 million for the quarter to $13.6 billion. The second quarter alone could see another $1.6 billion in total cash burn, Martel said.

Helping to offset the losses is the expected completion of a pair of divestitures amounting to more than $1 billion US.

The $550-million US sale of Bombardier’s CRJ jet program to Mitsubishi is expected by June 1, Martel said. The $500-million US sale of its aerostructures business in Belfast and Morocco to Spirit Aerosystems — initially anticipated in the first half of 2020 — should close “in the coming months.”

Martel said he does not foresee any pandemic-related delays to the $8.2-billion US sale of its rail division to French giant Alstom SA — now undergoing regulatory scrutiny in the European Union — expected to close in early 2021.

Bombardier recently negotiated an additional $386-million US “equity injection” from the Caisse de dépôt et placement, upping the Quebec pension fund manager’s stake in Bombardier’s train division to 36 per cent and leaving the company with $2.9 billion in financial liquidity — including $2.1 billion in cash — as of March 31.

The 78-year-old firm continues to grapple with share-price lows, credit downgrades and a debt of more than $9 billion.