Bombardier, the Canadian aerospace company, exceeded analysts’ expectations in its third-quarter financial report, triggering a 9% surge in its stock price during morning trading.
The positive results were primarily attributed to strong demand for its premium business jets and aftermarket services.
The global corporate jet industry has been grappling with supply chain disruptions, hindering their ability to meet the growing demands of affluent customers who turned to private aviation during the pandemic.
However, despite these challenges, some aircraft manufacturers are striving to increase production to satisfy the surging demand.
In contrast to this demand surge, recent economic headwinds and signs of slowing demand are causing concerns among investors.
In September 2023, North American flight activity declined by 4.2% compared to the same period the previous year, as reported by Argus International.
Bombardier’s CEO, Eric Martel, stated that the company is preparing for increased deliveries in 2024, though specific figures were not disclosed.
This marks an uptick from their target for this year, which aimed to deliver more than 138 aircraft. Furthermore, the Montreal-based company has set an ambitious goal of delivering 150 jets in 2025.
While the order backlog for Bombardier decreased slightly to $14.7 billion at the end of the third quarter from $14.9 billion in the second quarter, the company has strategically increased its inventories to support higher delivery volumes, surpassing the 123 deliveries achieved in 2022.
Bart Demosky, Chief Financial Officer of Bombardier, emphasized that although navigating the challenging supply chain environment is difficult, they are committed to meeting their delivery commitments and not using it as an excuse.
Textron, the manufacturer of Cessna business jets, recently revised its annual profit outlook upward, anticipating improved supply chain conditions and higher deliveries in 2024.
In terms of financial performance, Bombardier generated $80 million in free cash during the third quarter, a notable increase from $52 million in the same period the previous year.
Additionally, the company reported an 11% rise in revenue from its aftermarket business, which offers maintenance services.
In conclusion, Bombardier’s strong third-quarter results have exceeded expectations, driven by robust demand for business jets and aftermarket services.
Despite supply chain challenges and signs of market stabilization, the company remains optimistic about its future prospects.