Bombardier delays jet

Photo: Contributed

Bombardier said it will delay the debut of a new business jet it had touted as an example of its forward-thinking as it announced plans Thursday to cut costs amid a drop in profits.

After his first full quarter at the helm, CEO Alain Bellemare said he has a stronger grasp of what the company needs to do to turn around and it is looking to reduce the cost of making its planes and trains.

"After five months on the job, I have a better understanding of our challenges and opportunities," said Bellemare, who took over in February, on a conference call with investors.

"We are taking specific action, including the launch of our Bombardier transformation plan, a disciplined approach to cash management and the strengthening of our leadership team to reshape the company and ensure our long-term success."

The company said the debut of its new Global 7000 business jet will be delayed until 2018, two years after its original schedule of 2016.

Bellemare said a review of the project was nearly complete and that the first test-flight plane is currently being assembled in Toronto.

Bombardier reported a second-quarter profit of US$125 million, down from $155 million a year ago, as a stronger U.S. dollar hurt revenue.

Chief financial officer Pierre Alary said falling demand for its business jets from China and Russia helped drag down its profits, but the company expects demand to rebound in the second half of the year.

In May, the company said it would cut about 1,750 employees in Montreal, Toronto and Ireland, citing the same weak demand for its business jets.

Bombardier is looking for new options for its rail business as it prepares an initial public offering for a minority stake in the division.

Bellemare said the company is open to an alternative but it is not considering selling the entire rail unit.

Net orders for its business airplanes fell to eight during the second quarter from 30 a year earlier, the company said, while orders for its commercial aircraft fell to three from 18 last year.

The plane and train maker, which keeps its books in U.S. dollars, said its profit amounted to six cents per share for the quarter ended June 30. That compared with a profit of eight cents per share a year ago.

Revenue totalled $4.6 billion for the quarter, compared with $4.9 billion in the same quarter last year. However, excluding the impact of foreign exchange, revenue was up two per cent.

On an adjusted basis, Bombardier said it earned $145 million or six cents per share, down from $192 million or 10 cents per share a year ago.

Bombardier has been under pressure in recent months as it has struggled to develop its new C Series commercial aircraft.

The company said Thursday that C Series flight testing is progressing rapidly, with more than 2,000 hours completed and performance exceeding targets.

The aircraft is on track to enter into service in the first half of 2016, Bombardier said.