Bombardier reports big Q2 loss but says profitable growth is ahead
Chief executive says company has made' very good progress' on its turnaround plan
Bombardier reported a $490 million US net loss Friday and said one of its coveted CSeries orders was scaled back after a quarter that saw the aerospace giant make its first delivery of the passenger jets.
The Montreal-based company said it agreed to revise a 2013 order by Ilyushin Finance Co. for 32 CSeries 300 planes in response to the Russian firm's market needs. Under the changes, the Moscow leasing company would now buy 20 CS300 and one Q400 aircraft.
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However, Bombardier CEO Alain Bellemare — who joined the company early last year as the CSeries program was mired in delays and cost overruns — said the company has made "very good progress" on its turnaround plan that included the delivery of the first CS100 to Swiss International Air Lines at the end of June.
"As we start the second half of the year, we are confident in our strategy, our turnaround plan and our ability to meet both our full-year guidance and 2020 goals," Bellemare told analysts during a conference call Friday.
"Our focus is on improving operational efficiency, flawlessly executing the ramp-up of our new programs and maintaining a disciplined and proactive approach, allowing us to perform in any market environment."
Revenue from all sources, reported in U.S. dollars, fell during the second quarter to $4.31 billion from $4.62 billion. Revenue from commercial aircraft was up but there were declines from business aircraft and the company's rail division.
As a result, Bombardier's net loss amounted to 24 cents per share — a sharp turnaround from the year-earlier profit of $125 million or six cents per share.
After adjustments, Bombardier's loss would have been $83 million or six cents per share in this year's second quarter, compared with a profit of $145 million or six cents per share a year earlier.
Analysts had estimated an adjusted loss of five cents per share and $4.17 billion of revenue, according to Thomson Reuters.
Bellemare joined Bombardier about a month after his predecessor, Pierre Beaudoin, announced that the company had put development of a new Learjet model on hold and would cut about 1,000 jobs in order to focus resources on the CSeries program.
The company — controlled by the founding Bombardier-Beaudoin family through a special class of shares — also suspended its dividend in February 2015, announced along with Bellemare's appointment.
Major CSeries orders
Under Bellemare's watch, the company has made a number of strategic decisions and deals, including major CSeries orders from Air Canada and Delta, thousands of additional job cuts and a $1-billion investment from the Quebec government.
Bellemare said Bombardier has seen "tremendous momentum" on the CSeries, with 127 firm orders and 80 options in the first half of 2016.
"In our commercial aircraft business, the largest driver of future growth is the CSeries," he said.
Once the provincial government makes its second $500-million instalment payment in September, it will own 49.5 per cent of a new limited partnership with all the assets, liabilities and obligations of the CSeries aircraft program, including larger versions of the plane beyond the CS100 and CS300 should they be developed.
Bombardier has asked the federal government to make a similar $1-billion commitment to the company but so far to no avail. Ottawa did play a role in a complex series of agreements that opened the door for Air Canada to make its order earlier this year.
Bombardier shares were down four cents to $1.95 in early afternoon trading.