Canada’s Bombardier Inc missed quarterly earnings estimates on Thursday, hurt by higher costs in its train business and a more than 40% drop in business jet deliveries due to the COVID-19 pandemic.
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 of $39.33 million.
Corporate planemakers are reporting an uptick in interest as demand for private aviation flights rises, although this has not yet translated into aircraft orders, Bombardier Chief Executive Eric Martel told analysts.
Business jet deliveries are expected to fall industry-wide this year as the pandemic keeps people under lockdown, disrupts global travel and slows economic activity around the world.
“We expect the next few quarters will be challenging and difficult to predict," Martel said.
He said Bombardier expects to deliver approximately twice the number of its flagship Global 7500 business jets in the second half of the year as the 11 it delivered during the first six months of 2020.
Bombardier said it used free cash of about $1.04 billion in the quarter ended June 30, up from $429 million a year earlier, but better than analysts’ expectation of $1.47 billion.
Chief Financial Officer John Di Bert says the company still aims to break even on free cash flow in 2020, “assuming operations continue to stabilize."
Montreal-based Bombardier aims to become a pure-play business jet maker after agreeing to sell its rail business to France’s Alstom SA, in a deal expected to close in 2021. The sale of its aerostructures business to U.S. aero parts maker Spirit AeroSystems is expected to close this falld.
Bombardier’s business aircraft backlog was $12.9 billion as of June 2020, down from $14.4 billion as of 2019 end.
Business jet deliveries fell about 43% to 20 planes in the quarter, with revenue declining about 37% to $2.70 billion but topping analysts’ expectation of $2.48 billion.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor