The cockpit of the demonstration cabin of a Bombardier C Series plane.Fred Lum/The Globe and Mail
Bombardier Inc. is sticking to its end-of-June target for the takeoff of its first commercial airplane, the C Series, a relief for investors who have been burned in the past by the aerospace industry's broken promises.
The Montreal-based company is now undergoing the last series of tests on the smallest version of the C Series in order to get the go-ahead for its maiden flight, which was already postponed once. "To date, tests have shown results as expected," the company indicated in its first-quarter report, which was released before its annual meeting at the Montreal Fine Arts Museum.
"Most of the issues that could trip us up are behind us," added Guy Hachey, president and CEO of Bombardier Aerospace.
However, Mr. Hachey wouldn't commit to a first flight before or during the Paris Air Show, the biggest aerospace fair this year, which will be held in the suburb of Le Bourget from June 17 to 23. A successful first flight could persuade more airlines to commit to the C Series. What is more, manufacturers typically try to unveil new orders and garner excitement about their latest aircraft at this fair, which attracts top airline executives from around the world.
News that Bombardier is still on target with its C Series reassured analysts and investors, and helped send the company's stock up 5.7 per cent on the Toronto Stock Exchange, to $4.47.
If the exact takeoff date is still up in the air, Bombardier is already preparing for life after the first delivery of the C Series, promising better times for its fatigued shareholders.
Bombardier has invested $3.4-billion (U.S.) into the development of the C Series, a family of planes that will seat from 110 to 160 passengers. This investment and others have depressed the company's financials.
Bombardier will now wind down its capital investments by $500-million in 2014 and another $500-million in 2015, so that they will fall into the $1-billion-a-year range from their current peak of $2-billion. That may provide some assurance to shareholders, who have seen Bombardier's stock hover around $4, at the same level where it stood 10 years ago.
"Bombardier is at a turning point," said president and CEO Pierre Beaudoin, after qualifying the company's 2012 results as "not up to our potential."
In the next five years, Bombardier expects its annual revenues will increase by $10-billion to $16-billion – or close to double what they were in 2012. The first deliveries of the C Series, the new Learjet 70 and Learjet 75 business jets, and the entry into service of the very high speed train Zefiro 380, in China, will accelerate the company's growth. Bombardier's profit margin should also increase to between 8 and 9 per cent from its 2012 level of 5 per cent.
"Five years ago, we were talking about our new programs. Now, we can talk about the orders in our backlog. The revenues are just in front of us." Mr. Beaudoin said when asked why disappointed investors should believe Bombardier this time around.
Bombardier's order backlog stood at $63-billion at the end of March. That is slightly lower than it was at the end of last year, but orders increased by 19 per cent in 2012, almost entirely on the strength of new airplane sales.
The aerospace division propelled Bombardier's first quarter results. Revenues increased to $4.3-billion from $3.5-billion a year ago, a 25-per-cent jump. But net income decreased by 4.5 per cent to $148-million.
However, continued thrust is highly dependent on Bombardier delivering its new commercial airplanes on time, to take advantage of its lead on the updated versions of Airbus and of Boeing's smaller, single-aisle aircraft. Airline executives have become suspicious of the aerospace's industry's promises after companies failed to deliver technologically advanced planes such as Boeing's Dreamliner on time.