Bombardier working hard to turn its finances around
By The Canadian Press
Bombardier says it has strengthened its balance sheet and is on track to turn its finances around, nearly two years after it teetered on the verge of bankruptcy.
By The Canadian Press
The manufacturer of aircraft and trains, which keeps its books in U.S. dollars, said Friday it lost $296 million (U.S.) or 13 cents per share in its second quarter, an improvement from its loss of $490 million or 24 cents per share in the same period a year ago.
In adjusted profits, it earned $39 million or two cents per share, its highest in two years.
“We had a very strong first half of the year,” CEO Alain Bellemare said during a conference call. “We’re confident that we will be able to deliver on all of our commitments.”
Revenue for the quarter ended June 30 slipped to $4.09 billion from nearly $4.31 billion a year ago as a result of lower production of business aircraft.
Shares in Bombardier increased by 6.2 per cent, gaining 15 cents at $2.56 (Canadian) in midday trading on the Toronto Stock Exchange.
The results, which beat analyst expectations, came as the company said it expects to hit the high end of its full-year guidance, which is now between $580 million (U.S.) and $630 million in earnings before interest and taxes.
Bombardier has implemented a cost-cutting plan that has resulted in thousands of layoffs around the world. It has also secured funding from the federal and Quebec governments, as well as an investment from Quebec’s pension fund manager, for its C Series passenger jet program.
During the quarter, Bombardier delivered six C Series planes, raising the total number in service to 16. It expects to ship about 30 of the aircraft for the year. Bellemare said C Series sales have been held back. He said that’s because airlines are examining how the 100- to 150-seat planes can be used on routes that best accommodate that number of passengers versus smaller regional jets or larger Boeing 737s or Airbus A320s.
The earnings come as Bombardier is in a trade dispute with Boeing. The Chicago-based rival has petitioned the U.S. International Trade Commission alleging that the Montreal company has been selling C Series planes in the U.S. below cost because of subsidies that violate trade rules. Bombardier has denied the accusations.
If Boeing is successful, that would have a “material adverse impact” on the C Series program, Bombardier warned in its results. But Bellemare said there is no effect so far on discussions with potential customers.
“People understand that these are long processes,” he said.
The company also announced that former auditor general Sheila Fraser has resigned from the board of directors for personal reasons.