Bombardier says its luxury jet business is generating more cash than previously expected
Bombardier says its business is generating more cash than previously expected as the Canadian luxury jet maker shakes off recession worries and taps a strong market for private plane travel, bolstering its chances of a turnaround.
Free-cash flow – the money left over from revenue after paying costs such as interest and other expenses – is now expected to be greater than US$515-million for fiscal 2022, compared with a previous US$50-million estimate, the Montreal-based aircraft manufacturer said in a news release accompanying second-quarter earnings on Thursday. The company said working capital is coming in stronger than expected and that it is also benefiting from more interest cost savings by speeding up debt repayment.
“It’s been a fantastic quarter for us – strong demand for business jets has carried through and our team has converted opportunities to grow our backlog significantly,” chief executive officer Éric Martel said. “With every passing month of airport and flight schedule disruption, business travel becomes a more appealing option.”
After years of turmoil at Bombardier that saw it teeter on the verge of bankruptcy, Mr. Martel is trying to stage a recovery for the industrial giant that hinges on a slimmed-down business model focused solely on selling and servicing private jets. The financials reported Thursday suggest the effort is on track.
Bombardier’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at US$201-million for the three months ended June 30, a 41-per-cent improvement over the same period last year. Revenue rose 2 per cent to US$1.56-billion in the quarter as the company delivered 28 new planes and tallied service and maintenance sales of US$359-million.
The aircraft maker posted a net loss of US$129-million or 48 cents a share for the three-month period. Other than its projected increase on free-cash flow, which is important because it indicates that Bombardier could be better placed to pay down more debt or handle unforeseen expenses, the company maintained its previous financial guidance. It still expects to deliver 120 planes this year and generate adjusted EBITDA of US$825-million on US$6.5-billion in revenue.
Bombardier continued to book new business in the quarter and boosted its backlog of orders not yet fulfilled by 37 per cent year-over-year, to US$14.7-billion. Its book-to-bill ratio was 1.8 during the period, meaning it is receiving close to twice as many new orders than it is currently shipping out.
The company is riding a surge in demand for private air travel during the COVID-19 pandemic, which has lured business travellers out of commercial airliners and into private jets. Many airlines drastically scaled back available flights over the past two years, pushing individuals to consider private flying options. theglobeandmail.com