Buoyed by the strength of the business jet market, Bombardier plans to increase its production rate to deliver between 15% and 20% more aircraft in 2023, the Montreal multinational announced Thursday.
This would mean that the company would be able to deliver between 138 and 144 next year, estimates Benoit Poirier, of Desjardins Capital Markets. The company would thus exceed its initial objective of reaching between 130 and 135 devices in 2025. “It is more than what we expected”, comments the financial analyst.
Bombardier’s activities, which now focus on the business jet segment, have become “much more predictable”, judges Éric Martel, the company’s president and CEO. He points out that the company has exceeded its financial forecast for 2021. The company will be hiring to increase the production rate.
“For increases in 2023, we are already starting that,” replied Mr. Martel during a press briefing. Bombardier plans to hire nearly 1,000 people worldwide. “Yes, we are going to call back to Quebec,” he specifies. We’re talking about 300 of the jobs we have to fill. »
On the side of the machinists’ union, it is insisted that priority will have to be given to employees laid off by Bombardier in 2020 when the pandemic has hit the aviation industry hard.
“As a union, our role is to remain vigilant so that this increased pace translates into the return to work of members who have been laid off since the start of the pandemic,” said Éric Rancourt, the affairs of the International Association of Machinists and Aerospace Workers and responsible for labor relations at Bombardier.
In March 2020, the company had carried out 2,500 layoffs, including 1,500 in Quebec. Less than 1,000 Quebec-based employees remain on its recall lists for Montreal manufacturing centers. Bombardier is approaching the threshold of 8,000 employees in Quebec.
Fewer deliveries in the fourth quarter
While Bombardier plans to increase the production rate for 2023, it delivered six fewer planes in the fourth quarter than in the same period last year, according to financial results released earlier Thursday. The company delivered 38 aircraft in the three months ended Dec. 31, up from 44 a year earlier. She attributes the decline to the fact that the number of Global 7500 deliveries would be “more evenly distributed over the rest of the year.”
While several companies had to deal with a surge in absenteeism in December and January due to the Omicron variant, Bombardier says it has already caught up with the delay in returning from the Holidays. “We had a small increase in absenteeism, says Mr. Martel. It lasted about two or three weeks. We had fallen behind a little bit, but we have already made up for all that delay. »
The CEO is pleased to have contained the contagion in his ranks. “Hundreds” of screening tests were carried out every day in Bombardier factories after the holidays. The employer remains “extremely cautious” in relation to COVID-19 and claims “not to have lowered its guard” regarding the adoption of health measures, despite the drop in cases in the population before the arrival of the Omicron variant.
In the fourth quarter, Bombardier announced a net profit of US$238 million compared to a loss of US$337 million for the same period last year. The company’s revenues, for their part, increased by 7% to reach 6 billion. Adjusted earnings per share reached US$0.03, compared to a loss of US$0.20.
Prior to the earnings release, analysts had expected an adjusted loss per share of US$0.03 and earnings relatively similar to what the company disclosed, according to data released by Refinitiv.
Ukraine and debt repayment
Despite geopolitical tensions in Ukraine, orders in Europe and Russia saw a recovery in the second half of 2021, Martel said. If Canada were to adopt sanctions against Russia, Bombardier will follow federal instructions, but he points out that North America provides it with its largest pool of customers. “If ever the situation were to change in Ukraine, we will follow what is happening closely. »
Bombardier’s financial situation is also improving. The company generated 100 million in cash flow in 2021, while it had burned almost 1.9 billion in 2020. Tim James, of Desjardins Securities, points out that Bombardier reduced its debt by almost 3 billion in 2021 and that the company has no debt securities maturing before December 2024.
The company is also on track to meet its cost reduction targets of $400 million by 2023, Chief Financial Officer Bart Demosky said during a conference with financial analysts. The company reported savings of 135 million in 2021, more than the target of 100 million. The chief financial officer foresees cost reductions of 250 million in 2022.