Bombardier Aerospace second-quarter EBIT falls 36.6%

Bombardier Aerospace reported a 36.6% dip in fiscal second-quarter operating profit to $154 million from the $243 million posted in the year-ago period.

Revenue fell 4% to $2.4 billion in the three months ended July 31 as the company delivered 80 aircraft comprising 51 business jets, 28 commercial aircraft and one amphibian. It delivered 89 in the year-ago period. Its order book for the quarter declined by a net of 38 units as it secured commitments for 15 commercial and 27 business aircraft but suffered 80 business cancellations. It booked 175 orders last year.

Commenting on the lower EBIT for the 2009 period, Bombardier cited "higher cost of sales per unit, mainly due to price escalations of materials and disruption costs in connection with changes in production rates, lower selling prices for business aircraft and the [different] mix between business and commercial aircraft deliveries." These factors were partly offset by liquidated damages from customers as a result of cancellations and other gains.

"We are taking the necessary actions to face the current difficult economic environment, which continues to have an impact on our results," Bombardier President and CEO Pierre Beaudoin said. "Overall, we have strong fundamentals, a large backlog, a solid liquidity position, and we remain focused on reducing costs and improving cash flow generation."

Last month, the company announced the cancellation of an order for 110 Learjets from Jet Republic of Portugal and 15 CRJ1000s for Italy's MyAir (ATWOnline, Aug. 12). In other bad news, the Supreme Court of Canada ruled last week that it will hear an appeal by Kuwait Airways related to its attempt to seize assets belonging to the Iraqi government, including 10 CRJ900s ordered by Iraq last year (ATWOnline, Sept. 4, 2008). Nine have yet to be delivered. The aircraft reportedly are valued at $398 million at list prices.

The order backlog at the end of the second quarter was valued at $19.6 billion, down from $23.5 billion on Jan. 31. The decrease reflects "significantly higher business cancellations," Bombardier said. In the commercial sector, "lower passenger traffic and airline profitability remain a concern." Companywide, it reported net income of $202 million for the fiscal second quarter, down 22% from $259 million last year.

by Sandra Arnoult

Originally published 4 Sep 2009 at: http://feeds.atwonline.com/~r/AtwDailyNews/~3/HaK1oaXiK7w/story.html