Bombardier posts loss after rail charge and drop in business jet deliveries
Canada's Bombardier missed quarterly earnings estimates on Thursday, hurt by higher costs in its train business and a more than 40% drop in business jet deliveries due to the Covid-19 pandemic.
The maker of business jets and trains recorded a $435m charge in its rail business during the second quarter, mainly related to costs for several late-stage projects in the UK and Germany.
This led to an adjusted quarterly loss of $319m compared with a profit of $312m a year earlier, the company said. Analysts on average were expecting Bombardier to report profit before interest, taxes, depreciation and amortisation of $39.33m.
Corporate aeroplane makers are reporting an uptick in interest as demand for private flights improves, though this has not yet translated into aircraft orders, Bombardier CEO Eric Martel told analysts.
Business jet deliveries are expected to fall globally in 2020 as the pandemic keeps people under lockdown, disrupts global travel and slows economic activity around the world.
“We expect the next few quarters will be challenging and difficult to predict,” Martel said.
He said Bombardier expects to deliver about twice the number of its flagship Global 7500 business jets in the second half of the year as the 11 it delivered during the first six months of 2020.
Bombardier said it used free cash of about $1.04bn in the quarter ended June 30, up from $429m a year earlier, but better than analysts' expectation of $1.47bn. CFO John Di Bert says the company still aims to break even on free cash flow in 2020, “assuming operations continue to stabilise”.
Montreal-based Bombardier aims to become a pure-play business jet maker after agreeing to sell its rail business to France's Alstom, in a deal expected to close in 2021. The sale of its aerostructures business to US aeroplane parts maker Spirit AeroSystems is expected to close in autumn.
Bombardier's business aircraft backlog was $12.9bn as of June 2020, down from $14.4bn at the end of 2019.
Business jet deliveries fell about 43% to 20 in the quarter, with revenue declining about 37% to $2.7bn but topping analysts' expectation of $2.48bn.
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