Emerging from the roils of a debt-laden multifaceted corporation, Bombardier is proving its ability to endure as a pure-play business jet manufacturer, according to Brian Foley of Brian Foley Associates.
Releasing a new analysis on the Montreal-headquartered manufacturer, Foley noted that “things are banging on all cylinders” for Bombardier. “Slimming down from a multinational conglomerate to a one-trick pony with a crushing $9 billion debt load would seem like the beginning of the end, but during its first two years the reconstituted company has proven otherwise,” he said.
The first “scare” as a pure-play manufacturer came as Covid-19 lockdowns disrupted factory operations and supply chain, as well as brought economic uncertainty. But Covid became a boon to the industry and Bombardier shared in the sales prosperity, Foley maintained.
However, Bombardier has remained cautious about increasing production, he noted. “For whatever reason, be it supply chain challenges or not wanting to further extend itself, Bombardier only produced the same number of airplanes in 2022 as they did in 2021, undoubtedly missing out on making more deliveries and revenues,” the consultancy said. “Despite this, airplane backlogs continued to grow and like a responsible borrower, the company dutifully paid down its debt by almost half, raising its credit ratings.”
Foley noted that as a result of this, Bombardier recently revised its 2025 projections upwards by 20 percent for revenues and 8 percent for profits.
While in a better place, he does see the potential risk in the “Cinderella story,” including the need for “expansive, meaningful” improvements to the Challenger models to remain competitive and differentiate them in the preowned market. Also, the transfer of Global production to a new facility could cause disruptions, and these models are facing a bevy of new products from competitors Dassault and Gulfstream.
Other challenges that could bring an ebbing of demand are industry-wide: reduced charter usage, increased preowned aircraft inventory, and potential for speculators in the order book.
Regardless, Foley sees upside beyond the challenge. “I forecast that the business aviation industry as a whole will enjoy a permanent 10 percent addressable market expansion thanks to some of those new flyers sticking with private air travel even after things return to normal.”
