Fitch downgrades Bombardier after C-Series delay

Mon Nov 12, 2012 12:30pm EST
 
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* C-Series' first flight delayed by six months

* Demand for regional aircraft, business jets still weak

* Issuer default and other ratings cut to BB from BB+

Nov 12 (Reuters) - Fitch Ratings downgraded its debt ratings on Canadian plane and train maker Bombardier Inc on Monday, citing high development spending on its C-Series regional jet as the company tries to crack a market dominated by Boeing Co and Airbus.

Fitch, which cut Bombardier's issuer default rating and long-term ratings to BB from BB+, also cited "execution challenges" in the rail division.

Last week Bombardier reported weaker-than-expected quarterly revenue, said it would cut 1,200 jobs in the rail unit, and pushed back the C-Series' maiden flight by six months.

"The change does not increase project costs, but (Bombardier) may incur some penalties, and the delay slightly extends the negative cash cycle," Fitch said.

The delay raised fresh concerns about slow orders for the new 100- to 149-seat C-Series, Bombardier's biggest plane to date.

Fitch said Bombardier's regional-aircraft and business-jet segments have been slow to recover from the recession. It called Bombardier's backlog "solid", but also said many of the orders are to be delivered over several years.   Continued...