Bombardier profit beats estimates but cash flow misses; shares fall

May 31, 2024

Members of the media wait to tour the interior of a new Bombardier Global 7500 business jet as the company celebrates its 10th delivery of this aircraft to VistaJet in Montreal, Quebec, Canada March 29, 2022. REUTERS/Christinne Muschi/File Photo

MONTREAL, Aug 3 (Reuters) - Canada's Bombardier (BBDb.TO) on Thursday reported a quarterly profit that beat expectations, boosted by demand for flying and maintaining private jets, but its free cash flow missed estimates, and its shares closed down 8.49%.

The Montreal-based business jet maker reported a second-quarter profit of $10 million from continuing operations, compared with a loss of $109 million in the year-earlier period.

Results of corporate jet makers have been powered by demand for private flying over the last few quarters, but companies are wrestling with supply chain challenges.

Bombardier reported a cash burn of $222 million compared with positive free cash flow of $341 million in the same period a year ago, due partly to a build-up in working capital to support higher deliveries.

Analysts polled by Refinitiv had expected negative free cash usage of $171 million.

CEO Eric Martel told reporters Bombardier sees opportunities with fleet operators including key customer VistaJet, part of Dubai-based Vista Global Holding Ltd.

An auditor raised a red flag about VistaJet several months ago but Martel said he did not have concerns about the company which has a subscription membership model that makes jets available on short notice without ownership, unlike some rivals that sell shares or fractions in private planes.

"When you take the time to look at the model and see what they are doing and how they are operating, you know, we do not have concern," Martel said.

In April, an auditor said “a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern," The auditor report, first published by the Financial Times in May, cited debt and net losses and referenced Vista's 2022 financial statements.

At the time, VistaJet's founder Thomas Flohr defended the company's financials, telling CNBC it was not at risk and was profitable on the basis of earnings before interest, taxes, depreciation and amortization (EBITDA).

Bombardier's after-market revenue, which comes from servicing planes, grew 19% on an annual basis in the second quarter, helping its profitability.

However, there are early signs that demand may be flattening. Bombardier said its backlog at the end of June was up just 0.7% from the end of March at $14.9 billion.

On a per share basis, quarterly adjusted profit was 72 cents, compared with a loss of 48 cents a year earlier. Analysts polled by Refinitiv had expected a profit of 28 cents per share.

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