Bombardier to ramp up production over next two years

Bombardier Inc. plans to ramp up production over the next two years amid rising demand for private planes, as the business jet manufacturer tests how far it can push capacity.

Swinging to a surprise profit in its latest quarter after nudging output up in 2021, the Montreal-based company aims to exceed last year’s 120 aircraft deliveries in 2022 and boost them by another 15 to 20 per cent — up to 144 Global and Challenger planes — as soon as 2023.

Bombardier’s new guidance forecasts an eight per cent bump in business jet revenues to US$6.5 billion this year after solidifying its backlog at US$12.2 billion by December, up US$1.5 billion from a year earlier.

“The increased and more balanced backlog is the result of an increased demand, which, combined with healthy pricing, is giving us the predictability and resilience at exactly the right time,” chief executive Eric Martel said in a statement.

While the commercial aviation market struggled amid the COVID-19 pandemic, use of business jets rose by 42 per cent in the United States and 33 per cent in Europe in 2021, according to the U.S. Federal Aviation Administration and Eurocontrol.

Flight cancellations, wariness of exposure to the virus and surging wealth among the ultra-rich — the world’s 2,755 billionaires saw their combined wealth rise by US$5 trillion since March, according to a January report from Oxfam International — have helped drive demand for private aircraft. The taste for luxury has seen buyers snap up used business jets as well, leaving the total number for sale at 3.6 per cent of the worldwide fleet, its lowest level since 1989, according to market data firms Jetnet IQ and Ascend — and making new products a likelier option.

Competition remains a potential obstacle, with Georgia-based Gulfstream Aerospace Corp. and Dassault Aviation of Paris announcing plans to bring new planes to market. Martel acknowledged uncertainty over whether swifter production lines were needed to keep up.

Bombardier has streamlined operations in recent years to become a pure-play manufacturer of business jets following the sale of its rail and commercial aircraft divisions.

The company aims to grow capacity by expanding service centres in Singapore and the London area and building new facilities in Miami and Melbourne this year following construction of service and maintenance stations in Berlin, the U.S. and Dubai in 2021.

In line with expectations, deliveries dipped to 38 in its fourth quarter from 44 a year earlier due to a more even distribution of Global 7500 completions throughout the year, Bombardier said.

Last year marked its first full year of positive free cash flow — a closely watched figure that measures what’s left after expenditures on operations and asset maintenance — since 2010. Full-year business jet revenues rose seven per cent to US$6 billion.