Bombardier sees good results but starts layoffs
At Bombardier Aerospace, revenues increased to $10 billion compared to $9.7 billion last fiscal year, while EBIT rose to $896 million, compared to $563 million last fiscal year. This represents an EBIT margin of 9%, versus last year’s 5.8% (8.6% before EOAPC charge).
Bombardier Aerospace’s backlog reached $23.5 billion as at January 31, 2009, compared to $22.7 billion at the same date last year. Since February 5, 2009, the number of net orders and deliveries for fiscal year ended January 31, 2009 has been revised downward. The group registered 367 net orders for business, commercial and amphibious aircraft, compared to 698 aircraft last fiscal year. Deliveries totalled 349 aircraft, versus 361 last fiscal year. In the business aircraft market, Bombardier Aerospace maintained its leadership, on a revenue basis, with 235 deliveries as well as 251 net orders, for a book-to-bill ratio of 1.1. Commercial aircraft net orders totalled 114 aircraft, while 110 aircraft were delivered during the year, for a book-to-bill ratio of 1.0.
Although Bombardier Aerospace has the most comprehensive product line of all business aircraft manufacturers, with an offering in 95% of the total market, business aircraft demand has deteriorated rapidly during the second half of calendar 2008 and is expected to remain weak for the foreseeable future. As a result, Bombardier Aerospace now expects to deliver approximately 25% less business aircraft this fiscal year compared to fiscal year 2009, while still expecting to increase deliveries of its commercial aircraft by 10% compared to last fiscal year.
Bombardier Aerospace is revising downward all of its business and regional jets production rates and implementing measures to meet the continuing challenges facing the aviation industry. This adjustment will result in a further reduction of approximately 10 percent of Bombardier Aerospace’s total workforce, or approximately 3,000 employees, at its facilities in Canada, the United States, Mexico and Northern Ireland by the end of calendar year 2009. This latest manpower reduction is in addition to the 1,360 layoffs announced last February 5 when Bombardier adjusted the production rates of its Learjet and Challenger aircraft. Severance costs associated with these layoffs are expected to total approximately $30 million.
Bombardier Aerospace believes that EBIT margin will be negatively impacted until markets return to normal economic conditions, but remains committed to its objective of an EBIT margin of 12% by fiscal year 2013.