Bombardier Closes 2Q20 With Net Loss, Strong BacklogBy Alicia Arizpe | Thu, 08/06/2020 - 12:08
In line with other planemakers, Bombardier Aviation reported a complex second quarter as some of its business aircraft and aerostructures operations were paused due to measures to contain COVID-19. The company, however, begins the second half of the year with access to significant liquidity thanks to recently secured loans and a strong backlog in its transportation and aviation segments.
Rail and business aircraft manufacturer Bombardier closed a turbulent 2Q20 as both its rail and jet operations suffered temporal halts in key locations in Europe and North America. These included key locations for aerostructures in Mexico and Belfast and for business jets in Canada, placing a significant burden on Bombardier’s 15,000 strong workforce. Limited production led the Canadian company to reduce its workforce by 2,500 positions in June in its Aviation division. Bombardier closed 2Q20 with US$2.7 billion in revenue (a 37.4 percent year-on-year contraction), of which US$1.2 billion came from its aviation segment and US$1.5 billion from its transportation division. The latter division is currently being acquired by French rail manufacturer Alstom, for which it acquired approval from the European Commission on July 31. Bombardier is also divesting its aerostructure division to Spirit AeroSystems Holdings to consolidate its business jets segment in an agreement first disclosed in late 2019 that is expected to be finalized this fall. With this deal, Spirit AeroSystems will acquire Bombardier’s aerostructure, aftermarket and maintenance operations in Belfast, Morocco and Dallas, allowing the Canadian company to “focus on core capabilities in Montreal, Mexico and its Global 7500 wing operations in Texas.”
While the company closed its second quarter with a net loss of US$223 million, the company starts its third quarter with about US$3.5 billion in pro-forma liquidity, referring to cash and cash equivalents. This includes US$1.7 billion of cash on hand, access to US$738 million from its credit on the Transportation unit and US$1.0 billion of a recently secured loan. “We have also improved our liquidity position with solid cash management, cost reduction actions and a new secured credit facility, providing additional flexibility as we work to address our balance sheet challenges and close the sale of Bombardier Transportation and our aerostructure business,” said Éric Martel, President and CEO of Bombardier.
Bombardier, which was the first company to invest in Mexico under USMCA with a US$160 million plant in Chihuahua, has already a strong presence in the country with numerous offices and plants in Mexico City, Chihuahua and Queretaro.