By Allison Lampert and Aatreyee Dasgupta
MONTREAL, July 30 (Reuters) – Bombardier on Thursday reported second-quarter profit above analysts’ expectations, helped by robust demand for private jets that also drove a turnaround in free cash flow and expanded the planemaker’s order backlog.
Business jet makers are benefiting from strong demand, as a surge of wealth from AI startups and SpaceX creates new customers for private aviation. Bombardier shares rose 1.3% in morning trade after the company described efforts to pay down debt and deliver more planes.
The Montreal-based company said its quarterly revenue grew 6% compared with the same three months a year ago to $2.15 billion, helped by strong demand for aftermarket services, and despite delivering four fewer planes.
Bombardier CEO Eric Martel told analysts the company was considering aftermarket performance by weighing a possible acquisition that would grow maintenance services.
Analysts say aerospace supply chains have improved since the COVID-19 pandemic with overall deliveries rising this year, but that there are lingering concerns.
Bombardier delivered 32 business jets during the quarter, down from 36 planes a year earlier. The planemaker expects to hand over more planes to customers during the fourth quarter.
“There is still a drag in terms of our cost and delivery profile, but we’ve been managing through this environment for several years now,” Martel said about supply chain challenges.
He described one-off supply chain issues that are being fixed rapidly.
Earlier this week, Bombardier’s U.S. rival Gulfstream Aerospace, a division of General Dynamics Corp, said deliveries rose by three planes to 41 on an improving supply chain, while Cessna business jet maker Textron Inc said they are still dealing with issues from some key components.
Martel also said the company is interested in a decision by Canada to join Europe’s delayed Global Combat Air Programme(GCAP) fighter jet.
“I’m happy that Canada is at the table now,” he said.
Bombardier also sees further defense opportunities for the special mission planes it produces with Swedish partner SAAB as Canada and Europe diversify away from the United States due to trade and geopolitical tensions.
Martel said Bombardier is looking at establishing a Canadian site to support the Global Eye program.
Bombardier’s backlog stood at $21.8 billion as of June 30, up by $4.3 billion from December-end.
The company reported $228 million in second-quarter free cash flow, a metric closely watched by investors, compared with a negative $164 million a year earlier, boosted by customers’ firm deposits on new planes orders.
Analysts estimated the company’s free cash flow at $45.42 million, according to data compiled by LSEG.
On an adjusted basis, quarterly profits came in at $2.50 per share, compared with analysts’ estimates of $1.41 per share.
(Reporting By Allison Lampert in Montreal and Aatreyee Dasgupta in Bengaluru; Editing by Leroy Leo)
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