Canadian Manufacturing

Bombardier increases backlog of private jet orders by US$1.3B

While airlines struggled amid the COVID-19 pandemic, use of business jets rose by 23 per cent in the United States and 53 per cent in Europe last quarter compared with a year earlier.

May 5, 2022   The Canadian Press

Bombardier Inc. bolstered its business jet backlog in its first quarter, ramping up cash flow as more wealthy high-fliers opt for private plane travel in the COVID-19 era.

The company increased its backlog of private jet orders by US$1.3 billion or 11 per cent to US$13.5 billion, with a book-to-bill ratio — the ratio of orders received to units shipped and billed — of 2.5.

The bookings uptick left Bombardier with free cash flow of US$173 million, far above analyst expectations of a more than US$200-million loss, though the company did still report an overall net loss.

While airlines struggled amid the COVID-19 pandemic, use of business jets rose by 23 per cent in the United States and 53 per cent in Europe last quarter compared with a year earlier, according to the U.S. Federal Aviation Administration and Eurocontrol. Those leaps build on large increases in 2021.

Advertisement

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 2021, according to a January report from Oxfam International — have helped drive demand for private aircraft.

Meanwhile airlines captured just 80 per cent of premium travel last year, down from 90 per cent before the pandemic, according to Alton Aviation Consultancy managing director Umang Gupta.

The horrific war in Ukraine following Russia’s invasion poses some challenges for Bombardier, said CEO Eric Martel. Russian customers account for roughly five per cent of Bombardier backlog, according to estimates from J.P. Morgan analyst Seth Seifman. The company has cancelled orders due to Russian sanctions, but views the situation as manageable.

“Despite everything going on right now with Ukraine and Russia and Western Europe, we did remain extremely solid,” he told analysts on a conference call on May 5.

Nonetheless, Bombardier reported a loss in its latest quarter compared with a profit a year ago when it completed the sale of its rail business to Alstom S.A.

The business jet maker, which keeps its books in U.S. dollars, said its loss attributable to equity holders totalled US$287 million or 12 cents per diluted share for the quarter ended March 31, compared with a profit attributable to equity holders of US$5.04 billion or US$2.03 per diluted share a year earlier.