Business & GA

Bombardier Focuses on Improving Operational Efficiency in Q2 Financials

Bombardier Global 6500 (Bombardier)

Bombardier has reported its second-quarter 2018 financial results. The Canadian company is on pace to achieve its 2018 guidance and 2020 targets in the wake of its turnaround plan with total Q2 revenues of $4.3 billion, a 3% year-over-year (YOY) increase.

“With our heavy investment cycle largely behind us, our focus is now on ramping-up production and improving operational efficiency to accelerate growth,” said President and CEO Alain Bellemare.

During the quarter, Bombardier closed the Airbus C series partnership ahead of schedule. Meanwhile, the business aircraft segment has made headway on a slew of new Global jets coming out over the next 2 years.

Business Aircraft Notes

  • During the second quarter, revenues totaled $1.3 billion on 34 deliveries, with aftermarket revenue growing 21%, offset by lower aircraft revenues from fewer pre-owned aircraft available. On a year-to-date (YTD) basis, revenues total $2.4 billion.
  • YTD, deliveries reached 65 aircraft, in line with plan and last year, tracking to full-year guidance of 135 aircraft deliveries.
  • Margins continued to trend above the greater than 8% guidance, with earnings before interest and tax (EBIT) margin before special items reaching 8.5% and 8.7% respectively, for the three- and six-month periods ended June 30, 2018.
  • Aircraft backlog at the end of the second quarter increased to $14.1 billion, reflecting strong market activity for the third consecutive quarter. Demand continues to be fuelled by North America while Asia Pacific, Greater China and Europe are exhibiting good momentum.

Commercial Aircraft Notes

  • In July, Bombardier closed the C Series partnership formed by Airbus (50.01%), Bombardier (33.55%) and Investissement Québec (16.44%). The partnership brings together two complementary product lines, and the benefit of Airbus’ global reach creating significant value for the C Series.
  • During the quarter, Bombardier delivered 18 total commercial aircraft, consisting of eight C Series, five CRJ Series and five Q400s. With YTD deliveries of turboprops and regional jets totaling 18, the segment is on track to meet annual guidance of 35 deliveries.
  • With $1.1 billion in YTD revenue and EBIT loss before special items of $139 million, Bombardier is updating the segment’s full-year guidance to $1.7 billion in revenue and $250 million in EBIT loss before special items. This reflects the deconsolidation of the C Series from Commercial Aircraft’s results starting in the third quarter, replaced by the equity pick-up.
  • The second quarter saw a book-to-bill ratio of 4.2:
    • The CRJ Series backlog grew to 60 aircraft, with two CRJ900 aircraft orders totaling 35 aircraft from American Airlines and Delta. These orders are the first with the new ATMOSPHÈRE cabin.
    • Other orders included 16 Q400 aircraft from Ethiopian Airlines and African Aero Trading bringing the backlog to 56 aircraft.
    • AirBaltic entered into a firm purchase agreement for 30 CS300 aircraft with options and purchase rights for an additional 30 aircraft.
    • Subsequent to the end of the quarter, CSALP received a letter of intent from JetBlue for 60 aircraft and 60 options, and a memorandum of understanding for 60 aircraft from a future U.S. airline with majority investor David Neeleman.

Aerostructures and Engineering Services Notes

  • Aerostructures and Engineering Services is poised for growth as it continues the production ramp-up of C Series and Global 7500 aircraft; activities are progressing well, with a large share of 2018 and 2019 component production underway.
  • Revenues for the quarter were slightly above last year’s, while EBIT before special items more than doubled, yielding a margin of 12.5% for the quarter.

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