Bombardier’s business jet deliveries dropped by 15 units for a total of 20 in the second quarter and associated revenues plummeted 28 percent as the company continues to recover from Covid-19 pandemic-related factory shutdowns, albeit at a lower production rate. In the second quarter, Bombardier delivered nine Globals, including five 7500s, along with nine Challengers and two Learjets. This compares with 16 Globals, 17 Challengers, and two Learjets handed over in second-quarter 2019.
While the five Global 7500 deliveries provided a boost to revenues, Bombardier's business aircraft revenues fell from $1.38 billion in the second quarter of 2019 to $998 million in the most recent quarter. A decline in new sales during the pandemic helped contribute to the slide in backlog from $14.4 billion at year-end 2019 to $12.9 billion as of June 30.
The drop in results was largely expected after the Montreal-headquartered manufacturer announced in June that it was laying off 2,500 workers and adjusting production as the industry braced for an estimated 30 percent decline in shipments.
Speaking to analysts Thursday morning, recently appointed Bombardier president and CEO Eric Martel said he was comfortable with the lowered rate for the time being. “We expect the next few quarters to be challenging and difficult to predict as it is still unclear how the pandemic will unfold and what the economic recovery will be.”
Martel also was hesitant to predict rates heading into 2021. However, he did say that Bombardier delivered 11 of its flagship 7500s in the first half and expects to at least double that amount in the second half. This would approach Bombardier’s ramped-up Global 7500 production goals of between 35 to 40 annually but assumes no further interruptions of manufacturing operations.
Despite the down results, “We are cautiously optimistic about some of the early positive trends we are seeing across our industries,” Martel said, citing improving business aviation traffic levels in Europe and the U.S. He further noted that preowned business jet inventory remains healthy, cancellations have been “very limited,” and new interest in private travel is generating sales activity.
Bombardier also shored up its cash position, recently lining up a $1 billion secured loan. The company expects to draw $750 million of that in part to help its effort to realign production to market demand, the company said.
Company-wide, Bombardier posted an adjusted EBIT (earnings before interest and taxes) loss of $427 million for the quarter. This loss reflected a $435 million charge in its transportation unit. The divestitures of its non-business aviation entities are progressing, with the sale of aerostructures business to Spirit AeroSystems anticipated in the third quarter and recent European approval for the sale of the rail business to Alstom.
