Bombardier Declines on Outlook for C Series and Business Jetsby
Bombardier Inc. dropped to a five-month low on anxiety over cutbacks in the business-plane unit and additional delays to the production ramp-up of the C Series jetliner.
“Investors are concerned about another potential production cut in 2017, particularly for the Global 5000/6000 models, which carry the highest margins in Bombardier’s business-jet portfolio,” Konark Gupta, a Macquarie Capital Markets analyst, said in a note to clients.
The possibility that the Global 7000 could enter service later than planned also weighed on the stock. The Montreal-based planemaker has said that deliveries of the business jet would begin in 2018.
A supplier has been struggling with “the wing of the 7000, which will be a profitable product,” said Cai Von Rumohr, a Cowen & Co. analyst. “The target is to start delivering it in 2018, and that could be an issue.”
Shareholders also are worried about potential slippage in planned deliveries of the C Series, Gupta said. Pratt & Whitney on Friday cut the 2016 target for shipments of its new geared-turbofan engine, which the C Series uses, as it grapples with production issues. Bombardier previously slashed the delivery forecast for C Series aircraft to seven this year from 15, citing delays in receiving turbines from the United Technologies Corp. unit.
Bombardier’s widely traded Class B stock tumbled 5.1 percent to C$1.66 at 2:57 p.m. in Toronto. The shares earlier touched C$1.61, their lowest level since April 19. Bombardier fell Friday and Monday.
Mike Nadolski, a Bombardier spokesman, didn’t immediately respond to a request for comment.