UPDATE 3-Bombardier profit falls short as CSeries costs rise
(Updates with downgrades from S&P and Moody's, details on CSeries flight tests, stock movement)
By Susan Taylor
TORONTO Feb 13 (Reuters) - Bombardier Inc reported a quarterly profit that fell well short of expectations on Thursday and cut its 2014 earnings forecast as it spends heavily on developing its new CSeries jetliner, news that spurred downgrades of its credit rating and pushed its shares sharply lower.
The Montreal-based plane and train maker is spending billions to develop the CSeries, a high tech narrow-body plane that will compete with smaller passenger jets made by Boeing Co and Airbus Group, but the program has been delayed four times and costs are rising.
Bombardier said on Thursday it was increasing the price tag for the CSeries by $1.05 billion from its original estimate of $3.4 billion: $750 million for tooling and $300 million in borrowing costs.
As well as the CSeries costs, fourth-quarter results at Bombardier's plane division were weighed down by tough competition in the commercial jet market and sales of low-margin sales business jets, executives said on a conference call.
RBC Capital Markets analyst Walter Spracklin said the quarter was weak "on many different levels," with free cash flow and spending in the aerospace unit of particular concern.
Fadi Chamoun, an analyst at BMO Capital Markets, also raised a flag about cash resources, which he said were "not at a comfortable level" at around $3.4 billion.
"Although expectations were muted going into the quarter and the stock has sold off in recent weeks, we expect Bombardier to come under pressure today," he wrote in a note. Continued...