Bombardier’s business aircraft deliveries and revenues dropped in the second quarter of 2016, but executives were encouraged that the results were in line with previously announced cuts and the company remains on target for its planned 150 deliveries for the year. At the same time, though, company executives, who released second quarter results today, expressed concern to analysts about ongoing weakness in the light end of the market and said they are closely monitoring the Learjet series' position in that market.
Bombardier delivered 42 business jets in the second quarter, down five from a year earlier. Global deliveries were down six units to 14 for the quarter, leading the second quarter decline, and Challenger 350s down by two to 16. But Challenger 605/650 deliveries helped offset some of that drop, increasing by four units to seven. Learjet deliveries were unchanged at five in each of the past two second quarters.
As Global deliveries slid, so too did revenues by 19 percent to $1.473 billion for the quarter. But with cost cuts in place, profit jumped by 78 percent to $212 million (earnings before interest and taxes).
For the first half, deliveries are down by 19 units to 73, with Globals accounting for nine of that dro and Learjets down by eight. Despite the decline, the 73 deliveries bring Bombardier nearly to the halfway point for the business jet delivery target in 2016.
Pointing to last year’s announced plans to cut Global production rate, Bombardier president and CEO Alain Bellemare said the company was a year ahead of its competitors, who are now evaluating the market, and said Bombardier executives “feel pretty good” about the rate. “This is …the right level of production and volume given market demand.”
For the first half, Bombardier achieved a book-to-bill ratio of 1.0, with net orders more than doubling to 70. This compares with 27 orders in the first half of 2015 and a book to bill of 0.3.
Orders for the Learjet series did improve in the second half, but Bellemare stressed the company is evaluating the positioning of the aircraft in the market and cited ongoing softness for light aircraft sales and “significant pricing pressure.” With Learjet deliveries less than half of those a year ago, he added Bombardier is “constantly monitoring this. We keep on pushing sales and we’ll see wher it goes.”
