(Reuters) - Bombardier Inc BBDb.TO aims to double deliveries of its flagship business jet during the back half of 2020 and break even this year on free cash, the company said on Thursday after missing quarterly earnings, hurt by higher rail costs.
Montreal-based Bombardier expects to roughly double by year’s end the 11 Global 7500 jet deliveries it made during the first six months of 2020. The company will become a pure-play business jet maker with the impending closings of deals to sell its rail and aerostructures businesses.
Corporate planemakers are reporting an uptick in interest as demand for private aviation flights rises, fueled by summer leisure travel. Fleet operators would likely look for sustained demand before ordering new aircraft, Chief Executive Eric Martel told reporters during a call.
“Doesn’t mean that they (passengers) are going to be buying a jet the next day, but they may fly and use an operator which ultimately will translate into more volume for us,” he said.
It’s unclear if private flights will be sustained by corporate travel in the fall.
Business jet deliveries are expected to fall industry-wide this year.
The maker of business jets and trains recorded a $435 million charge in its rail business during the second quarter, mainly related to costs for several late-stage projects in the UK and Germany.
This led to an adjusted quarterly loss of $319 million compared with a profit of $312 million a year earlier, the company said. Analysts on average were expecting Bombardier to report profit before interest, taxes, depreciation and amortization (EBITDA) of $39.33 million.
Business jet deliveries fell about 43% to 20 planes in the quarter because of the COVID-19 pandemic, with overall company revenue declining about 37% to $2.7 billion, but topped analysts’ expectation of $2.48 billion.
The company’s use of free cash more than doubled in the quarter from a year earlier to $1.04 billion, but it beat analysts’ expectation of $1.47 billion.
Chief Financial Officer John Di Bert said the company still aims to break even on free cash flow in 2020, “assuming operations continue to stabilize.”
Bombardier’s business aircraft backlog was $12.9 billion as of June 2020, down from $14.4 billion as of 2019 end.
The stock was down 1.74% in afternoon trade.
Reporting By Allison Lampert and Ankit Ajmera; Editing by Steve Orlofsky and Jonathan Oatis
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