Bombardier management is hopeful of reaching an agreement “soon” with its 1,800 unionized employees in Dorval and Saint-Laurent, says President and Chief Executive Officer Éric Martel when unveiling first quarter results .
This was said Thursday, the leader to financial analysts, during a call to discuss the results of the first quarter. At a press conference a little later, Mr. Martel added that the negotiations were going well. “We remain very confident that we will manage to get along, he adds. You have to take the time to explain things properly. We are still in discussion and we still have discussions to have with them next week, before finalizing our offer. Once we have had a discussion, we will prepare a counter-offer. »
Negotiations got off to a bad start as workers rejected the latest employer offer by 99.6% and gave themselves a strike mandate by 98.8% on April 24. The International Association of Machinists and Aerospace Workers (IAMAW) felt that the wage offer was insufficient to offset the rising cost of living. Bombardier has reportedly offered wage increases of 2.5% for the first year and then 2.25% for the final two years of a three-year collective agreement, the union reported. A few days later, the IAMAW said it was seeing progress at the bargaining table.
For his part, Mr. Martel ensures that the company will take inflation into account in its salary offer. Uncertainty about the level of inflation, however, complicates the development of an offer, he said at a press conference. “The challenge of a collective agreement is to predict what inflation will be in the second and third year. »
In its operations, however, Bombardier manages to offset the effects of inflation. “The environment is favorable for selling prices,” Bart Demosky, chief financial officer, told financial analysts. The price is also advancing slightly faster than inflation. The wind is favorable for 2022.”
The financial situation is improving
The round of bargaining is taking place as Bombardier’s financial situation continued to improve during the first quarter. The business jet maker managed to generate cash, a figure closely watched by analysts, and repaid US$400 million in debt.
The company’s cash flow reaches US$173 million. Analysts anticipated that the company would rather draw 230 million from its reserves, according to figures from Desjardins Capital Markets.
The fact that Bombardier has not used its cash reserves is welcomed by Tim James of TD Securities. “Each quarter that management appears on track to meet its 2025 targets builds credibility for the company and the new team that has managed to turn the tide since taking office in 2020.”
While the number reflects an improvement in business, President and CEO Eric Martel said one shouldn’t expect to see regular quarterly cash flow above $100 million. On the other hand, red ink will be “clearly a rarity” for the next results, he adds.
In the first quarter, the net loss for continuing operations was 287 million, compared to 251 million in the same period last year. The adjusted loss per share was 3 US cents.
Revenues from the sale of business jets and after-sales service totaled $1.2 billion. The company also reports delivering 21 aircraft in the first three months of the year.
Despite a good start to the year, Bombardier has decided not to touch its forecasts due to the uncertainty linked to the conflict in Ukraine. Benoit Poirier, of Desjardins Capital Markets, believes that the decision could reflect an excess of caution given the results of the first quarter.
Mr. Martel specified, in a press briefing, that the activities should continue on their momentum if the geopolitical situation and its repercussions on the economy do not worsen. The effects of the fight against inflation on the economy also raise questions. With its backlog, the company is in good shape to weather economic headwinds, he said. “We are able to temper these upheavals for the future. »