Bombardier posts loss, says business jet demand weak; stock down

Fri Aug 5, 2016 12:43pm EDT
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By Allison Lampert

MONTREAL (Reuters) - Canadian plane and train maker Bombardier Inc (BBDb.TO: Quote) on Friday reported a bigger-than-expected quarterly loss as it delivered fewer business jets and warned of weakness in the market for smaller corporate planes.

The results showed Montreal-headquartered Bombardier faces pressure in its higher-margin business jet segment because of a downturn in global demand, even as it works to win customers for its new CSeries program of narrow body aircraft.

"Business jet weakness is a source of concern to us and has the potential to materially slow down the pace of restructuring progress if it worsens," said an analyst following the company who asked not be identified.

Bombardier shares dropped 1.26 percent to C$1.97 in Toronto.

Business jets revenue declined nearly 19 percent in the second quarter. The sector, a key source of cash flow, accounted for more than a third of total revenue.

Chief Executive Alain Bellemare said on a conference call there had been "significant softness" in the market for smaller size business aircraft.

"It's a very competitive segment of the market so there's significant pricing pressure," he said.

Chief Financial Officer John Di Bert said the company would scale back investment in the CSeries next year, even as it boosts spending on the high-end Global 7000 business jet, which is expected to enter service at the end of 2018.   Continued...

A Bombardier flag flutters amidst storm clouds at the Singapore Airshow at Changi Exhibition Center February 18, 2016.  REUTERS/Edgar Su