Bombardier leans on C-Series to double its aerospace revenues
The plane-maker is taking baby steps when it comes to ramping up production of its new CSeries jet to avoid saturating its own market
MONTREAL—Airplane and train maker Bombardier Inc. says it will nearly double its revenues and boost profit margins by developing new planes and expanding sales to emerging markets.
The Montreal-based company hopes to add between $10 billion and $16 billion in revenue to its current base of $18 billion.
The company is investing primarily in new business and commercial planes at a time when the economy is challenged, causing a hit on cash flow.
“But we’re doing that for a reason, because we want to position this company to be a significantly different company beyond five years from now,” says CEO Pierre Beaudoin.
He did, however, decline to specify when it expects to reach its revenue growth target.
But, the investments should deliver $8 billion to $12 billion a year in additional aerospace revenues, including up to $8 billion from the CSeries and related services.
Bombardier’s CSeries and Learjet 85 planes are set to enter into service by the end of 2013.
The company is fully booked to produce CSeries planes in 2014 and 2015 and is two-thirds full for 2016, receiving about 300 orders and letters of interest from 10 customers.
The larger CS300 is slated to begin deliveries by the end of 2014.
Bombardier has selectively pursued orders to help get the program off the ground and minimize discounts that would eat away at profits.
Selling too many planes early would reduce the launch price and the aircraft’s profitability, Beaudoin said.
With rivals Boeing, Airbus and Embraer deciding to upgrade existing planes, Bombardier should have a long-term advantage from having the only all-new airplane.