Bombardier cancels Learjet 85, suffers $4 billion loss, gains $1 billion investment

MONTREAL, P.Q., 3 Nov. 2015. Bombardier, manufacturer of the popular Learjet family of business jets (bizjets) in Montreal, Quebec, has reported a net loss of $4.9 billion (U.S. dollar value) for Q3 of 2015, due to “special items mainly related to impairment charges on C Series and Learjet 85 program tooling,” company officials reveal. Officials in the Government of Quebec are investing $1 billion to enable Bombardier to bring the C Series through certification to market.

“After just a few months, we have strengthened the management team, we have conducted in-depth reviews of our business and have a much clearer picture of what we need to do,” explains Bombardier Inc. President and Chief Executive Officer Alain Bellemare. “We are taking the right actions and we have solidified our liquidity position, giving us the confidence to execute our long-term strategic plan.

“Today, we are proud to announce that the government of Québec will invest $1 billion in the C Series aircraft program. This partnership comes at a pivotal time, with the C Series on the verge of certification. The market is there, our leadership is in place, we have the best product, and with the support of the government, we are ready to make this aircraft a commercial success,” Bellemare adds.

For the third quarter ended 30 Sept. 2015, revenues totaled $4.1 billion for the quarter, compared to $4.9 billion for the same period last fiscal year. Earnings (loss) before financing expense, financing income, and income taxes (EBIT) totaled a loss of $4.6 billion, compared to earnings of $171 million for the same period last fiscal year.

The net loss of $4.9 billion in Q3 compares to a net income of $74 million for the same period the previous year. On an adjusted basis, net income amounted to $2 million for the third quarter, compared to $222 million for the same period the previous year.

The overall backlog reached $61.8 billion as of 30 Sept. 2015, compared to $69.1 billion on 31 Dec. 2014.

Bombardier has completed a bottom-up assessment of the operational changes needed to succeed since launching its transformation plan in the second quarter of 2015, officials say. Transformation teams identified key initiatives to deliver cash savings over the next five years. The focus is currently on reducing inventory and product costs, which represent important drivers of Bombardier’s competitiveness.

In September 2015, Bombardier appointed Nico Buchholz as senior vice president and chief procurement officer, Bombardier Inc.; Buchholz spent 14 years at Lufthansa, where he was in charge of the corporate fleet, including the procurement of airframes and engines.

On 28 Oct. 2015, Bombardier cancelled the Learjet 85 aircraft program due to the lack of sales following the prolonged market weakness. As a result, a $1.2-billion charge was recorded in special items in the third quarter of fiscal year 2015, mainly related to the impairment of the remaining Learjet 85 development costs as well as to an increase in other provisions. “Bombardier remains committed to the Learjet family of aircraft,” officials say.

Following an in-depth review of the C Series aircraft program, a charge of $3.2 billion was recorded in special items in the third quarter of 2015, mainly related to the impairment of aerospace program tooling. “Bombardier continues to believe that the C Series aircraft program meets specific market requirements and that it has long-term market potential,” officials say.

The type certification for the CS100 aircraft is targeted for completion by the end of 2015. Given parts commonality and the same type rating, the CS300 type certification is expected to follow approximately six months after that of the CS100 aircraft.

Bombardier is a manufacturer of planes and trains headquartered in Montréal, Canada.