Bombardier executives say demand for private planes remains strong despite the cooling economy.
Chief Executive Eric Martell said Thursday that business jets are not included in the market downturn that threatens to drag Canada’s economic output this year.
“The proportion of wealthy people is still about the same,” he told analysts on a conference call, adding that despite the economic environment, people still need to move.
“We’ve done a lot of work over the last few years with Microsoft Teams and Zoom, but it’s still very important to go to the factory and assess what’s really going on and talk to the customer. .Pickup in Asia”.
Martell said charter services are becoming more and more popular, even as corporate and ultra-high net worth ownership slows slightly.
“Some companies make the choice to say, ‘I don’t have my own fleet anymore.’ It’s pretty good for us,” he said.
“If the economy really goes bad, will there be a business slowdown? Probably.”
But Martell believes the $14.8 billion aircraft backlog remains unchanged, reducing the risk of order cancellations. “We had speculators. Today we don’t have them. They are actual individuals or companies who want to have planes.”
For now, the main challenge is keeping up with demand amid the sector’s ongoing supply chain bottlenecks, he said.
Bombardier posted slightly more shipments than the previous quarter and posted a profit of US$302 million, boosting revenue by 17%.
One of the analysts on the call mentioned the problems facing rival Gulfstream Aerospace.
“We are probably facing the same kind of challenges that they face. It’s lessened,” Martel said.
“We’re pretty happy with the outlook we’ve provided for this year.”
Last month, Bombardier raised its 2025 financial targets, raising 2025 revenue from about $7.5 billion to more than $9 billion.
The aircraft maker aims to increase production of private jets from 121 in 2022 to 138 this year, and the assembly process is progressing well, an executive said Thursday. It launched 22 Challenger and Global jets, up from 21 a year ago, and also built the historic Learjet, which is no longer in production.
Martell said the banking crisis that roiled the market put a pause on new bookings earlier this year, but it lasted only a few weeks.
Meanwhile, about 5% of the world’s pre-owned business jets are currently for sale. That’s up from 3.1% in February 2022 (the lowest in more than 25 years, according to market data firm Jetnet IQ), but it’s still a sign that new products are a more viable option for buyers. means to deliver, which bodes well for Bombardier.
Martel called the percentage of used inventory on the market “very low,” compared to the more common range of 10-14%.
Business at Bombardier service centers across six continents also surged, reaching US$433 million, up 15% year-on-year and accounting for 30% of US$1.45 billion in revenue.
The global business jet market is expected to grow to $23.7 billion by 2028 from $18.4 billion last year, according to a March report from market research firm IMARC Group. This is despite a year-on-year decline in business jet use of about 4% in the US last quarter and a slight decline in Europe, according to the Federal Aviation Administration and Eurocontrol. Both 2021 and 2022 saw a significant increase in private his jet use.
Since selling its remaining stake in the Airbus A220 jetliner program in 2020, Bombardier has focused on the burgeoning business jet market while continuing to reduce its debt burden.
The 81-year-old company paid off an additional $400 million in debt in the first quarter, reducing its net debt to adjusted earnings ratio to 4.9x, down from 8.2x a year ago. By the end of 2025, it is expected to reach a 2.5x ratio.
Bombardier on Thursday reported net income of $302 million for the quarter ended March 31, after a loss of $287 million in the same period last year. Earnings increased from $1.25 billion to $1.45 billion.
The Montreal-based company, which keeps its books in U.S. dollars, posted first-quarter earnings of USD 2.98 per diluted share, compared with a loss of USD 3.09 per diluted share a year ago. said to have reached
On an adjusted basis, the aircraft maker earned US$1.06 per diluted share in its latest quarter, compared with a loss of 80 cents per share in the same quarter last year. The figure is 839% above analyst expectations of a loss of 14 cents per share, according to financial markets firm Refinitiv.
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