Bombardier expects to record an average loss of $3.93 million on 127 orders and commitments for the CSeries added to the backlog since February, the company says in a quarterly filing released on 28 April.
Since mid-February, Air Canada signed a letter of intent for 45 CS300s, Air Baltic converted options for seven CS300s to firm orders and Delta Air Lines signed a firm order for 75 CS100s.
“In conjunction with the closing of these firm purchase agreements, we expect to record an onerous contract provision of approximately $500 million as a special item in the second quarter of 2016,” Bombardier says in the filing.
IFRS accounting standards, Bombardier’s preferred standard, defines an onerous contract as a loss-making deal.
A previous Bombardier leadership regime attempted to build the CSeries backlog without signing loss-making deals early in the production programme.
But a new leadership team installed since last year has signaled more flexibility as it searched for two deals with “marquee” airlines, represented now by Air Canada and Delta.
Source: Cirium Dashboard
