Bombardier says interest in CSeries not undermined by airline woes
By The Canadian Press
Sept. 5, 2008, Montreal, Que. - Uncertainties that have prompted airlines to defer regional jet orders isn't undermining efforts to sell the recently launched fuel-efficient CSeries, Bombardier Inc., said Thursday.
By The Canadian Press
Sept. 5, 2008, Montreal, Que. – Uncertainties that have prompted airlines to defer
regional jet orders isn't undermining efforts to sell the recently
launched fuel-efficient CSeries, Bombardier Inc., said
Aerospace division president Guy Hachey said the company is
focusing more of its attention on overseas customers, where the
dynamics aren't as challenging as in the United States, where rising
fuel costs and a weak economy is forcing mergers.
“The interest is very high and we have a long list of potential
customers and some of them are getting much closer in terms of
getting to a deal,'' he said during a conference call to discuss the
company's second-quarter results.
The Montreal-based company, reporting in U.S. dollars, said
Thursday it earned US$246 million, up from a year-earlier loss of
$71 million, as revenue increased 22 per cent to $4.93 billion.
Net income was 14 cents per share, up from a loss of five cents
per share in last year's quarter ended July 31.
The company's total backlog stood at $57.2 billion, up from $53.6
billion at the start of the year.
However, Bombardier shares fell nearly seven per cent Thursday as
the company warned that orders for its business jets will slow in
the coming months after contributing significantly to the turnaround
in the quarter.
On the Toronto Stock Exchange, shares of the company lost 58
cents or 6.9 per cent at C$7.82,
Bombardier CEO Pierre Beaudoin said Bombardier's aerospace and
rail divisions have both delivered solid results during the quarter.
But the business jet market was a key driver of the
Hachey said that “we expect things to slow down somewhat.''
Revenue at Bombardier Aerospace was up 14 per cent from a year
earlier at $2.52 billion, while the Berlin-headquartered Bombardier
Transportation rail-equipment division grew its revenue by 32 per
cent to $2.42 billion.
Lufthansa became the first CSeries customer when it signed a
letter of interest for up to 60 aircraft, at a price of US$46.7
The deal is worth more than $2.8 billion if firm and
optional orders are exercised.
The order is expected to be firmed up by the end of the year.
Several other customers are expected to be announced this year.
The German airline indicated it doesn't expect to be the first
recipient of the new aircraft. Bombardier said it is working with
different customers interested in securing the first planes.
Airlines have different policies about when to take delivery of
new aircraft, Hachey said.
“We actually have customers that are eager to have the first
one. It all depends on the airline itself.''
Cameron Doerksen of Versant Partners raised his target price to
C$9.75 from $9 after Bombardier handily beat expectations.
He said the 9.5 per cent aerospace margin is sustainable
considering the price of business jet deliveries will be increased
for at least the next two years. The weakening Canadian dollars
should also provide a cushion.
“Bombardier's backlog remains very strong, which should shield
the company from a market slowdown,'' he said, referring to a
quarterly peak in business jet orders.