Bombardier shares surge 20% on higher cash flow, improved guidance

A Bombardier Inc. Challenger 650 business jet on display at the Singapore Airshow held at the Changi Exhibition Centre in Singapore. Photo by SeongJoon Cho/Bloomberg files

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Bombardier Inc.‘s chief executive says that the aerospace company has delivered on its five-year turnaround plan after generating the highest level of free cash flow in nearly two decades during its recently completed first quarter.

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“In 2021, we set ambitious financial objectives for where we aimed to be … and further laying the foundation for our future,” Eric Martel said at the Quebec-based company’s annual meeting on Thursday. “I must say, at the time, we were met with some skepticism (but) looking at where we stand today, I am proud to say that we delivered top to bottom.”

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The company said it now expects free cash flow to exceed $1 billion, revising an earlier forecast of between $600 million and $1 billion. Revenue is still expected to come in at more than $10 billion with more than 157 aircraft deliveries.

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Martel, in his address to shareholders, said the company has multiple drivers of growth that will extend through 2030 across its core platforms of business jet sales and service and a smaller defence business.

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“Bombardier defense represents a significant growth opportunity,” he said. “The fundamentals of demand remain strong, and we see opportunities to expand our presence on this market thanks to the relevance of our platforms, mission versatility and deep, long standing customer relationships.”

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Cameron Doerksen, an analyst at National Bank Financial told clients in a note Thursday that Bombardier’s defense segment has “momentum,” particularly following reports this week that Saab AB’s GlobalEye early warning aircraft system, which is based on Bombardier’s Global 6500 business jet platform, would be selected to replace NATO‘s aging fleet of airborne early warning aircraft.

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Bombardier executives did not confirm or deny those reports and had little to say about earlier, widely touted talks with Saab about producing its Gripen fighter jet in Canada. Those talks also involved the Canadian government, which is reviewing whether to follow through on a rival contract to purchase a fleet of F-35 fighter jets from the United States.

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Martel said Ottawa’s move to ensure more domestic procurement can only help Bombardier, particularly alongside global discussions about beefing up defence spending in light of tensions with the U.S. and growing geopolitical conflict.

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“That’s a positive sign for the Canadian aerospace industry and defense, which we’re part of. There’s definitely all kinds of conversation happening with a lot of governments, but including Canada,” he said.

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“People are considering to accelerate their purchases, their spending, which is a very positive trend for all of us.”

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He said the company’s partnership with Saab is paying off in Europe, specifically France, where the French Air Force agreed to buy two GlobalEye craft in December. A couple of months earlier, the Republic of Korea Air Force selected Bombardier and partner L3Harris Technologies to provide its new early warning surveillance system in a contract valued at nearly $2.3 billion.