(Montreal) The firm S&P Global Ratings believes that Bombardier will succeed in reducing its debt, despite a potential slowdown in demand for private jets. The rating agency thus raises its rating on the debt of the Quebec company.
Bombardier’s rating thus goes from “B-” to “B”, with a stable outlook. This means that the firm still views the company’s liabilities as “highly speculative”, but the change reflects an improved outlook.
“Solid execution with an order book of 14.8 billion US and the repayment of debt ensure that the deleveraging is happening at a much faster pace than anticipated”, analyzes S&P.
The rating agency believes that Bombardier can cope with a “moderate slowdown”. It predicts that the company will still be able to reduce the weight of its debt, from 6 times earnings before interest and amortization (EBITDA) to “less than” 5 times in 2024.
His hypothesis estimates that a 10% reduction in new orders would result in a decrease of between US$120 and 150 million in the company’s cash.
Bombardier’s chief financial officer, Bart Demosky, sees S&P’s decision as a stamp of approval on the aircraft manufacturer’s strategy. “This improvement in the rating is eloquent proof of the solidity of Bombardier’s plan and its financial discipline, as well as the commitment of its talented teams”, he reacts.
Recall that Bombardier had raised the targets of its 2025 strategic plan in March, in particular with the objective of accelerating the repayment of its debt. Management said the move reflected confidence in an uncertain economic environment.
The pandemic has given a boost to the business jet industry, which many businesses and wealthy travelers have favored over commercial aviation.
President and CEO Eric Martel said last week that demand remains resilient in the business aviation industry. The end of March was marked by a slowdown in orders in the United States in the wake of the uncertainty that shook the American banking sector. This period of uncertainty would have been brief, he said. “We felt for two or three weeks hesitation on the part of customers. […] Since then, activities have returned to normal. »
In a report published at the end of April, the firm WingX affirms, for its part, that the favorable gap compared to the activity before the pandemic is narrowing.
Bombardier shares lost $1.45, or 2.42%, to $58.59 on the Toronto Stock Exchange in the morning.