December 3, 2009 / 11:58 AM / 8 years ago

UPDATE 3-Bombardier profit falls, sees 2010 aerospace lift

* Q3 EPS $0.09 vs $0.12 year ago, in line with estimates

* Revenue flat at $4.6 billion, beats estimates

* Sees signs of stabilization in business jet market

* AMR Eagle Holding firms order for 22 CRJ700 jets (Adds details from conference call. In U.S. dollars unless noted)

By John McCrank

TORONTO, Dec 3 (Reuters) - Bombardier Inc (BBDb.TO) said on Thursday a prolonged slump in aerospace pulled down its quarterly profit by 26 percent even as its rail-equipment business flourished, but it forecast a gradual improvement in aircraft orders next year.

The world’s No. 3 civil aircraft maker and No. 1 train maker has cut more than 5,000 aerospace jobs this year as new orders slowed to a trickle and cancellations increased, forcing it to slash production of the regional and business aircraft it makes.

Still, its stock price, down 3 Canadian cents at C$4.66 on Thursday afternoon, has more than doubled from March, when the outlook for the aerospace sector was at its most dire.

Bombardier earned $168 million, or 9 cents a share, in its third quarter ended Oct. 31, in line with analyst expectations. That was down from $226 million, or 12 cents a share, a year earlier. Revenue was flat at $4.6 billion.

Analysts had expected earnings of 9 cents a share on revenue of $4.58 billion, according to Thomson Reuters I/B/E/S.

“We think that this was a solid quarter for Bombardier in a tough environment,” Rama Bondada, an analyst at Macquarie Equities Research, said in a note to clients.

“As we had expected, aero headwinds were offset by gains in transportation, and we think this scenario will likely continue into the near term.”

The Montreal-based company said its third-quarter aerospace revenue was down 9 percent from a year earlier, at $2.06 billion.

It said the once-lucrative business aircraft market is still experiencing difficulties due to a lack of customer financing, but that there are “signs of stabilization”.

“We are very pleased that in Q3, for the first time in four quarters, we had more gross orders (for business jets) than cancellations,” said Bombardier Chief Executive Pierre Beaudoin in a call to analysts and media.

“Our view is that that is going to continue improving at a slow rate.”

The company delivered 61 aircraft in the quarter, compared with 80 in the same period last year.

Bombardier also said AMR Eagle Holding Corp, parent company of American Eagle Airlines Inc, has signed a firm order for 22 CRJ700 regional jets. The deal, which was not included in the third-quarter results, is worth $779 million.

The company said it is negotiating with a handful of customers on its new CSeries 100-to-149-seat aircraft, due to hit the market in 2013. It said, however, that airlines are still finding it difficult to secure long-term financing.

“Most of our customers are not in a very healthy position,” said Guy Hachey, president of Bombardier Aerospace. “They are taking out capacity, they are much more worried about what’s happening in the next few quarters -- whether they’ll make it through the winter.”

He said that he expects the market to pick up in the second half of 2010, and the tailwind to bring a jump in new orders.

TRANSPORTATION STRONG

Bombardier Transportation, the company’s rail segment, saw quarterly revenue, profitability, and free cash flow all rise.

Government stimulus spending on railways in China, France, and the United States has been positive for the company, said Andre Navarri, president of the transportation segment.

During the quarter, Bombardier was part of a consortium that won a $4 billion deal to supply China with 80 very-high-speed trains. In France, it is in exclusive talks to supply regional trains in a deal worth up to 8 billion euros ($12 billion)..

Navarri said he doubts there will be any new stimulus spending on top of what has already been announced in Europe.

“Where I see there will be commitments to spending more, is in China -- they are committed to spending even more next year (than they did this year) -- and in India, where they plan to invest in more metros and more modern locomotives.”

$1=$1.05 Canadian Reporting by John McCrank; editing by Peter Galloway Additional reporting by Bhaswati Mukhopadhyay in Bangalore john.mccrank@thomsonreuters.com; +1 416 941 8083; Reuters Messaging: john.mccrank.reuters.com@reuters.net

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