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Bombardier says it can afford to build CSeries and BizAv jets

“These products will deliver revenue and cash flow as they enter into service,” Chief Executive Officer Pierre Beaudoin said in an interview in Davos, Switzerland. “We have the liquidity — and we can demonstrate that — to deliver our plan.”

Beaudoin is seeking to reassure investors after Bombardier shares plunged this month when the company said it would pause work on the Learjet 85 business aircraft. At least five analysts predict the Montreal-based company will need to sell more than $1 billion in debt this year to shore up reserves.

Bombardier’s available short-term capital resources stand at about $3.8 billion, including cash and cash equivalents of about $2.4 billion, the CEO reiterated today.
The shares rose as much as 5.4 percent, their biggest gain since April. They were trading at C$2.91, up 3.9 percent, at 10:36 a.m. in Toronto, while the Standard & Poor’s/TSX Composite Index gained 1.5 percent.

Standard & Poor’s cut its rating on Bombardier’s debt to B+ from BB- on Jan. 15, the day the company announced that Learjet work is stopping and it will cut 1,000 jobs and book $1.4 billion in pretax fourth-quarter costs. Moody’s Investors Service placed Bombardier’s rating under review the following day for a possible downgrade. The company’s bonds are rated as junk at both firms.

Spending on airplane development takes priority over immediately regaining an investment-grade credit rating, Beaudoin said in today’s interview at the World Economic Forum. “Investment grade is a medium-term goal, not tomorrow morning,” he said.

Beaudoin also reiterated the entry into service target date of the second half of this year for the CSeries, a plane beleaguered by multiple delays and budget overruns. The smaller CS100 model is set to debut first, with the larger CS300 to follow six months later.

“I’m not surprised there are people questioning the ups and downs,” he said. “The airplane’s performing very well so we’ve just got to continue on with this project that we started and do the work.”

Bombardier had set a target of 300 firm purchases for the plane by the time it enters service. So far, the company has 243 and Beaudoin said today he’s confident he’ll reach the goal.

Bombardier also said Jan. 15 that its trainmaking and aerospace units won’t meet its profit goals, while cash flow for the latter business fell short of a target it had reaffirmed in October.