Bombardier lifted by CSeries order, strong results

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Bombardier Inc reported a stronger-than-expected rise in quarterly profit and announced a long-awaited order for its new C-Series commercial jetliner, propelling its stock higher.

Bombardier said its aerospace unit has received firm orders worth US$665 million for 10 C-Series jetliners from Sweden’s Braathens Aviation, breaking a 16-month drought for the narrow-body commercial aircraft.
“It is encouraging to see a C-Series order again this morning,” said BMO Capital Markets analyst Fadi Chamoun, Reuters reports.
“That adds another customer and validates the superiority of the aircraft in some of the short-haul and parts of the European market where we think it’s going to have great success,” Chamoun said.

The order takes to 100 the total number of firm orders for the C-Series, which is set to enter the market in 2013 and will compete with Boeing Co’s 737 and Airbus Industrie’s A320 aircraft.

Braathens Leasing Ltd, a member of Braathens Aviation of Sweden, has placed a firm order for five CS100 and five CS300 mainline jetliners.

Braathens also took options on an additional 10 C-Series aircraft and if those are converted to firm orders the deal value could go up to about US$1.37 billion.

Investors have been hopeful that Bombardier, the world’s No. 3 civil aircraft maker after Boeing and Airbus, will garner C-Series orders at the Paris Air Show later this month.

The announcement on Wednesday “is a very important one because it takes a little pressure off Paris,” RBC Capital Markets analyst Walter Spracklin said.

RESULTS BETTER THAN EXPECTED

Montreal-based Bombardier earlier said first-quarter earnings rose 13 percent, beating market expectations. The results reflected higher-than-expected aircraft deliveries and more shipments of higher-margin Global Express business jets.
“It’s still early in the day but they look to be having a good day so far. They came in better than expected both on the top line and the EPS line,” said Scott Rattee, an analyst at Stonecap Securities.

Bombardier, which is also the world’s largest train maker, reported net profit of US$220 million, or 12 cents a share, compared with $195 million, or 11 cents a share, a year ago.

Analysts, on average, had expected earnings of 10 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 9 percent to US$4.66 billion.

Overall backlog was US$55.1 billion as of April 30, compared with US$52.7 billion on Jan. 31, Bombardier said.

Business jet orders, which fell sharply in 2009 as companies cut spending and tighter credit made purchases difficult, are getting back on track with the global economic recovery.

Bombardier forecast in March that it would deliver 150 business jets and 90 commercial aircraft in calendar 2011, an estimate based on an 11-month financial year.
“Our commercial aircraft segment, although slower to recover, is seeing an improved level of interest from customers,” said Chief Executive Pierre Beaudoin.

Revenue at the aerospace segment rose 10 percent to $2.2 billion. The aerospace segment received 86 net orders during the quarter, up from 61 in the year-ago period.

Bombardier’s aerospace unit got a major lift in March from a massive order of up to 120 business jets from Warren Buffett’s NetJets Inc, a deal that could be worth as much as US$6.7 billion.

The transportation segment’s revenue was up 9 percent at $2.5 billion.



Bombardier said free cash flow usage rose to $409 million in the first quarter, a seasonally weak quarter for the Montreal-based company. That compared with a usage of $217 million last year. Bombardier’s stock leapt at the start of trading, adding as much as 7 percent, or 50 Canadian cents, to C$7.25 on the Toronto Stock Exchange.