GRAHAM WARWICK / WASHINGTON DC
Revenue fall nudges aerospace business into loss despite deliveries staying steady
Bombardier's aerospace business plunged to a C$7 million ($5.1 million) loss in the first quarter of the Canadian's company's 2003-4 fiscal year, although deliveries dipped only slightly from the same period last year, to 63 business and regional aircraft.
Aerospace revenues declined 10% in the quarter ended 30 April to C$2.38 billion, with lower deliveries of business jets and higher deliveries of smaller 40- to 44-seat regional jets mainly responsible for pushing the group from a C$158 million pre-tax profit a year ago to a C$7 million loss.
Overall, Bombardier's first-quarter revenues fell 4%, to C$4.9 billion, and net income slid to C$80.7 million from C$197.2 million a year earlier. "This company is profitable, but we have to make it more profitable," says Paul Tellier, who took over as chief executive at the beginning of the year. A C$1.2 billion equity offering was completed in April, Belfast City airport has been sold for C$77.7 million, and plans to sell Recreational Products and Defence Services are proceeding.
Bombardier delivered 16 business jets in the first quarter - down from 28 a year earlier - and shipments of high-value Challengers and GlobalExpresses almost halved to seven aircraft. Regional aircraft deliveries increased to 47, from 37 a year ago, with more CRJ200s and CRJ700s offsetting the reduction in turboprop deliveries from six to just one.
Tellier believes aerospace can achieve a 3% margin by year-end through cost-cutting, including 3,000 job cuts now under way. The company has renegotiated labour agreements at the Learjet plant in Wichita, Kansas, and de Havilland in Toronto, and is beginning talks with its Montreal workforce.
Bombardier is reviewing the location of work "on an ongoing basis", says Tellier, ranging from fuselage manufacture to final assembly. The Learjet 40, 45 and 60 programmes will remain in Wichita, he says, but no decision has been made on where the Challenger 300 will be completed. Outfitting of the new super mid-size business jet, scheduled for certification this month, had been planned for Tucson, Arizona.
Source: Flight International
