- `We have addressed the liquidity issue,' CEO Bellemare says
- Falling corporate-aircraft output to be key drag on results
Bombardier Inc. predicted a drop in 2016 earnings as the beleaguered planemaker confronts lower output of its biggest current business jets and costs from the C Series airliner.
Falling production rates for the Global 5000 and Global 6000 corporate aircraft will be a key driver of next year’s results, Montreal-based Bombardier said Tuesday at its annual investor day in New York. The C Series, due to enter service in 2016, will continue to be a drag on expenses, Bombardier said.
Bombardier’s event gave analysts and investors an updated look at a company struggling with its marquee model, the C Series, after twin rescues in its home province of Quebec. Pension-fund manager Caisse de Depot & Placement du Quebec agreed last week to take a 30 percent stake in the rail business, and on Oct. 29 Quebec said it would invest $1 billion to prop up the C Series program.
“We have addressed the liquidity issue,” Chief Executive Officer Alain Bellemare said.
Bellemare, who became CEO in February after Bombardier reported its first annual loss in almost a decade, has sought to shore up a balance sheet weakened by development of the C Series, which is running two years behind schedule. The company’s aircraft woes extend to business jets, as well, including the canceled Learjet 85.
Bombardier said Tuesday it is targeting a C Series fleet of more than 250 aircraft by 2020 as it hopes to generate companywide sales of more than $25 billion and margins of as much as 8 percent. Bombardier said it hopes to deliver 30 to 35 C Series jets in 2017 and as many as 55 the year after, rising to a range of 90 to 120 in 2020.
The company didn’t give specific targets for 2016 sales or earnings before interest and taxes, the two measures that it said would decline. Analysts expect both gauges to fall, based on estimates compiled by Bloomberg.
Lining up more buyers for the C Series is critical for Bombardier, whose 243 firm orders are short of the target of 300 by the time the jet enters service next year. The plane is intended to crack the Boeing Co.-Airbus Group SE duopoly in single-aisle commercial planes. The C Series can seat 108 to 160 people, a step up in size from Bombardier’s signature regional aircraft.