Bombardier Inc. reported its fourth quarter and full year 2020 results, provided guidance for 2021, and outlined several actions to drive profitability and productivity as the Canadian company focuses exclusively on designing, building, and servicing business jets.
“With our strategic repositioning now complete, we are very excited to embark on our journey as a pure-play business jet company,” said Bombardier Inc. President and CEO Éric Martel. “We are encouraged by our momentum in the fourth quarter and are confident in the actions we are taking to navigate through the pandemic and better position the company for a market recovery.”
- Revenues from Business Aircraft activities reached $5.6 billion in 2020, growing 3% year-over-year on 114 deliveries, 44 of which were in Q4 2020, including a record 16 Global 7500 aircraft deliveries.
- The year’s 114 aircraft deliveries, including specialized aircraft, consisted of 59 Global, 44 Challenger, and 11 Learjet.
- Business aircraft manufacturing revenues increased 11% year-over-year, driven by the Global 7500 market shares gains in the extra long-range segment.
- In December 2020, Bombardier announced a firm order for 10 Challenger 350 aircraft in a transaction valued at $267 million, based on list prices. The firm commitment from an undisclosed customer represents one of the largest business jet orders of 2020.
- Services revenues were $988 million, 21% lower year-over-year, as the COVID-19 pandemic drove business jet use across the industry lower.
- The corporation added capacity to its global aftermarket services network with major expansion projects underway in Singapore, London, Melbourne, and Miami.
- Business aircraft’s multi-year backlog totaled $10.7 billion at the end of 2020.
For 2020, the company reported $912 million in earnings before interest and taxes (EBIT), reflecting accounting gains on disposal of the CRJ and aerostructures businesses. Full year free cash flow usage from continuing operations was $1.9 billion, reflecting pandemic-related disruptions, and corporate and interest expenses.
Other aviation revenues from commercial aircraft and aerostructures activities, which were divested during 2020, were $895 million.
Bombardier begins 2021 with approximately $5.4 billion in cash, including the proceeds from the recently closed sale of its Transportation (rail equipment) division to Alstom for $3.6 billion and net debt of approximately $4.7 billion.
Workforce, Learjet cut
Bombardier has and will be launching several actions to improve profitability and cash generation, to make the organization more efficient and agile while also establishing a lower cost base to grow from, once the market recovers.
Bombardier is consolidating Global aircraft completion work in Montréal; reviewing options for underused hangar and industrial space at its Québec facilities; and reducing its overall workforce by approximately 1,600 positions, including reductions associated with progress on the Global 7500 learning curve. These reductions, together with the completion of previously announced restructuring actions and the divestiture of the electrical wiring interconnection system business in Querétaro, Mexico, will bring the corporation’s global workforce to about 13,000 by year-end.
“Workforce reductions are always very difficult, and we regret seeing talented and dedicated employees leave the company for any reason,” said Martel. “But these reductions are absolutely necessary for us to rebuild our company while we continue to navigate through the pandemic.”
Bombardier also announced it will end production of Learjet aircraft in Q4 2021, focusing instead on its more profitable Challenger and Global aircraft families and accelerate the expansion of its customer services business.
“With more than 3,000 aircraft delivered since its entry-into-service in 1963, the iconic Learjet aircraft has had a remarkable and lasting impact on business aviation. However, given the increasingly challenging market dynamics, we have made this difficult decision to end Learjet production,” Martel explained.
Bombardier will continue to fully support the Learjet fleet well into the future, and to this end, has launched the Learjet RACER remanufacturing program for Learjet 40 and Learjet 45 aircraft. RACER program includes a bundled set of enhancements, including interior and exterior components, new avionics, high-speed connectivity, engine enhancements, and improved aircraft maintenance costs. The RACER remanufacturing program will be offered exclusively through Bombardier’s service center in Wichita, Kansas.
The Wichita facility will continue to serve as the company’s primary flight-test center and be a key part of its global services network. In addition, Bombardier has designated Wichita as the Centre of Excellence for its special mission modification aircraft business.
With Bombardier’s repositioning to a pure-play business aviation company essentially complete, management expects 2021 revenues to be better than 2020 based on a gradual economic recovery.