Bombardier has broadly laid out a plan to return to profitability in the coming years as a standalone aviation company that will deliver 100 to 120 business jets annually.
Toward that end, executives are planning to restructure Bombardier’s operations, cut costs and find new aviation revenue streams.
“We need to figure out our company – to make money, be profitable with a 100 to 120 airplane rate,” Bombardier chief executive Eric Martel says during the company’s third-quarter earnings call on 5 November.
“We still have an infrastructure designed to support twice the capacity of the current market,” he adds.
Martel’s comments came as Bombardier reported that its aviation business posted a $9 million profit in the third quarter, down 91% year on year.
That business generated $1.4 billion in third-quarter revenue, down 10% year on year. The decline partly reflects loss of revenue from Bombardier’s CRJ programme, which the company sold to Mitsubishi Heavy Industries on 1 June.
“I am encouraged by our progress and the market stabilisation we have seen in the third quarter,” Martel says.
For the first time, Bombardier’s financial results list the company’s soon-to-be-sold train business within a discontinued-operations bucket.
Bombardier expects to sell the train business – its “transportation” segment – to French company Alstom in the first quarter of 2021, with expected proceeds of $4 billion.
“With the sale of Bombardier transportation nearly completed, we are looking forward to our future as a pure-play business jet company,” says Martel.
Bombardier delivered 24 aircraft in the third quarter, including eight Global 7500s – the most of that type Bombardier has handed over in any quarter. By comparison, the company delivered 20 jets in the second quarter. Bombardier delivered 75 aircraft in the first nine months of 2020.
Martel notes Bombardier “realigned” jet production rates earlier this year due to the pandemic.
“Global 7500 deliveries are expected to accelerate in the fourth quarter to approximately a dozen,” says Martel. “This delivery acceleration during the second half of 2020 demonstrates our continued progress ramping up the programme so that we are at a more-stable delivery profile.”
Bombardier plans to maintain current aircraft production rates “going into 2021”, though it eventually envisions producing 100-120 business jets annually.
Executives do not say when Bombardier might reach such rates, but first they are planning major structural changes.
“The real focus will be on cost reduction… Significant cost take out over the next year or so,” says Bombardier chief financial officer John Di Bert.
The company also aims “to ensure that a bigger portion of our revenue over the next five years will come from businesses that are more resilient”, Martel says.
He cites “missionised aircraft” and aftermarket support as examples.