Despite significantly improved financials, Bombardier (BBD) put off the launch decision for the new 110- to 130-seat airliner. Pierre Beaudoin, president of Bombardier Aerospace, said the company expects to decide by January 31 whether it will go ahead with the US$2 billion project. It is also toying with a 90-seat version of its Q400 turboprop, a project now dubbed Q400X.

The company incurred a US$31 million charge for severance costs in the quarter related to 1,330 job cuts at its aerospace facilities in Canada and Belfast, Northern Ireland.

Financial results for Bombardier's third quarter 2007 show improvements in profitability for the company which earned $74 million in net income during the quarter ended October 31. This compares to a loss of $9 million in the year-ago quarter. Earnings before income taxes (EBT) from continuing operations amounted to $55 million for the third quarter, compared to $22 million before special items for the same period last year.

The overall order backlog reached $35 billion, a $3.4 billion increase since year-end. An $87-million increase for the three-month period mainly reflects increased deliveries of the larger regional jets and turboprops, the favorable mix and improved selling prices for business aircraft and higher services and system and signalling revenues in its transportation division. This was partially offset by lower selling prices for regional aircraft and decreased mainline revenues in Transportation. The $262-million decrease for the nine-month period reflects decreased mainline revenues in the United Kingdom and Germany in Transportation and lower deliveries of regional jets, mainly CRJ200 aircraft, partially offset by increased deliveries of, and improved selling prices for business aircraft.

Bombardier also undertook a comprehensive refinancing plan during the third quarter, which included tender offers of certain notes, a new issue of senior notes, as well as bank line renewals. The Euro1.9-billion issue of senior notes, which successfully closed in November, is one of the largest euro-denominated corporate issues ever completed.

Bombardier Aerospace revenues rose to US$1.84 billion from US$1.79 billion. Earnings before financing income, financing expense and income taxes (EBIT) totalled $43 million, compared to $31 million for the same period last fiscal year. The EBIT margin also improved, reaching 2.3 percent, compared to 1.7 percent for the corresponding period. The total number of aircraft deliveries remained stable at 73 deliveries, compared to 74 for the same period last fiscal year, despite a labor strike at the Learjet plant in Wichita. The Aerospace group recorded an increase in net orders during the three-month period with 95 compared to 53 during the same period last year.

Major restructuring within the U.S. airline industry continues impacting the regional aircraft market, said the company, which proactively adjusted its production schedule by reducing regional aircraft production of the CRJ700/900 aircraft, while ramping up production of 70-seat Q400 turboprops.

Bombardier had 38 net orders and 31 deliveries of regional aircraft in the quarter, compared with five net cancellations and 26 deliveries a year earlier.

Bombardier's total order backlog reached $11.6 billion at the end of the third quarter, compared to $10.7 billion at year-end.

Forecast

Bombardier forecasts predict smaller regional jet deliveries would number 7,400 aircraft in the 20- to 99-seat range, while larger jet deliveries between now and 2025 will reach 8,100 in the 100- to 149-seat range. Meanwhile, to meet that larger market, its CSeries - offering transcontinental range and short runway capability - is still under consideration, especially since its performance results in 230 percent more market coverage and the ability to serve 212 percent more airports.

It noted the resurgence in turboprop orders which will ultimately account for 37 percent of the regional deliveries with 100 plus per year.

Source: Bombardier