Thinking about a new plane, making acquisitions and rewarding shareholders: scenarios that seemed unlikely at Bombardier can finally be studied, a sign that profitability is finally on the way after its painful restructuring.
The Quebec aircraft manufacturer was not content to raise the targets of its recovery plan – which should culminate in two years – on the occasion of its investor day on Thursday. The Quebec multinational also gave a taste of what it could do with the money that continues to accumulate in its coffers.
“My memory doesn’t go far enough, I don’t remember when it happened,” said Bombardier President and CEO Éric Martel, who took over from Alain Bellemare at the helm. company in the spring of 2020.
With the exception of his five years at the head of Hydro-Québec, Mr. Martel has had no other employers than the aircraft manufacturer since 2002. He was at the forefront of the liquidity problems that forced Bombardier to to dispose of a multitude of assets to refocus on the construction of business jets.
But the tide is turning despite the recent pullback caused by fears of recession, which are slowing private jet sales. The aircraft manufacturer expects to generate cash of US900 million in 2025, or US400 million more than the original target.
At a time when competitors like Gulfstream and Dassault are banking on new jets and Bombardier has just set up a defense division in hopes of seeing this niche generate revenues of around US$1 billion by the end of the decade , the company has options at its disposal.
Mr. Martel wants to take his time, however. There is no question of announcing a new aircraft in the short term, especially since Bombardier must complete the certification of the Global 8000, which should be done in the fourth quarter of 2025.
“I watch the market to see if we need to launch something new,” illustrated Mr. Martel. Could it be an (improvement of an existing model)? It’s possible. But for a new program, I don’t see any urgency by 2025.”
This kind of project would probably cost several billion dollars. Year in and year out, the company’s capital expenditure fluctuates between 200 and 300 million US. This envelope made it possible to offer a facelift to the Challenger 350 in 2021 and to relaunch the Global 8000 project. Bombardier’s caution was welcomed by financial analysts.
“It’s a good decision, because it requires less capital,” said Benoit Poirier of Desjardins Securities. Creditors appreciate it more and it’s less risky. A new aircraft may generate resistance among investors. »
If Bombardier completes transactions, it is to be expected that they will be complementary to its activities. On March 8, for example, the aircraft manufacturer bought the aeronautical wiring activities of the French group Latécoère in Mexico. An acquisition could also, for example, allow the multinational to increase its manufacturing footprint in the defense sector.
The private jet maker hasn’t paid a dividend since early 2015. Its chief financial officer, Bart Demosky, isn’t making any promises, but that option is part of what could be explored to reward shareholders, a- he explained to La Presse.
“That’s one of the things that will be part of the discussion, that’s for sure,” he said.
A dividend would also line the coffers of the Beaudoin-Bombardier family — which controls the aircraft manufacturer — since it owns some 12 million Class A and B shares.
Furthermore, Mr. Demosky revealed that Bombardier is not expected to pay much tax in the next few years. The reason ? The accumulation of tax losses in recent years.
“They are on our balance sheet and are an asset as we increase our profitability,” said Bombardier’s CFO. This means that we will pay very little tax for a while. »
After a significant gain at the start of the session, the title of Bombardier sold part of its gains on the Toronto Stock Exchange. The stock closed at $63.56, up $1.74, or 2.8%. Last year, the company completed a 25-to-1 reverse stock split.
Disgruntled lenders who claim to have been wronged by Bombardier are hedge funds that have no interest in the long-term prospects of the aircraft manufacturer, said its president and chief executive, Éric Martel. Cautious in his comments, he nevertheless attacked the reputation of Antara Capital Master Fund and Corbin Opportunity Fund. Millions are at stake in this legal dispute. Both lenders turned to New York courts alleging that Bombardier breached the terms of a bond’s trust deed by selling assets. The case is still in court. “We see that there are people who are professionals trying to take advantage of problems that they themselves create,” Martel said. A sign that the aircraft manufacturer is sure to win the case, it has not put money aside in the event of an unfavorable judgment.
