With the trade dispute with Boeing Co. no longer weighing down its future prospects, Bombardier Inc.'s chief executive said the company is focused on the next step of its five-year turnaround plan and will begin deliveries of its marquee CSeries jet into the U.S. this year.
“We are moving full-steam ahead,” chief executive Alain Bellemare said in an earnings conference call with analysts on Thursday morning, adding that last month's unanimous ruling in Bombardier's favour by the U.S. International Trade Commission will give the company the flexibility to ship the CSeries jet out of its Mirabel, Que. facility to Delta Air Lines Ltd. this year.
“This ITC win is going to help us a lot,” he said. “It will increase confidence for our (existing) and potential customers… It clears the way to finalize our path with the Delta team, and that's what the team is working on as we speak.”
Bellemare also said the company is moving ahead with its partnership with Airbus SE, which will see the European planemaker take control of the CSeries program and assemble U.S.-bound jets in a facility in Alabama. The deal is expected to close in 2018.
Last month, Bombardier secured a surprise victory after the ITC rejected the nearly 300 per cent duties imposed against the planemaker, ruling that Boeing was not materially injured or threatened by the sale of 75 CSeries jets to Delta Air Lines Ltd.
The 194-page written decision, made public Wednesday evening by Leeham News, a trade publication, and confirmed by a Bombardier spokesperson, shows that the commissioners found that Boeing not only did not compete for the Delta order, but that the sale did not come at Boeing's expense.
“Given that Boeing's 100- to 150-seat (large civil aircraft) did not meet the purchaser's requirements for this sale, however, and Boeing did not offer any new aircraft for this sale, we do not find that Bombardier secured this sale at Boeing's expense,” the commissioner's report concluded.
“There is also insufficient evidence for us to conclude that Bombardier is likely to secure additional sales for importation of subject 100- to 150-seat (large civil aircraft) in the imminent future, or that any purchase of subject imports in the imminent future would likely be at the domestic industry's expense.”
It was not yet clear whether Boeing will seek to appeal the ITC's decision.
Delta Air Lines on Thursday said it intends to take as many U.S.-made Bombardier CSeries as possible, but at least some of its earlier deliveries will likely be Canadian imports due to contractual obligations on timing.
“We have contractual commitments to begin taking deliveries later this year and the (U.S. International Trade Commission) decision clears the way for Delta to accept deliveries in Canada as well,” Delta spokesman Morgan Durrant said.
Bellemare told analyst on Thursday that the ruling was “a victory for innovation, competition, and the rule of law.”
“The ITC recognized that the (Boeing) 737 family of aircraft, with a deep backlog and record profits, is not under threat from our sale to Delta,” he said.
“The CSeries serves a smaller aircraft market that Boeing abandoned years ago. We are looking forward to bringing this innovative plane to the market.”
Bellemare also said that now that it has completed its second full year of its five-year turnaround plan, the company's focus will shift from “an investment cycle into a strong growth phase”, with the pending launch of its new Global 7000 business jet. Bombardier's chief financial officer John Di Bert said entry into service of the jet will provide a free cash flow tailwind.
Bombardier reported a quarterly adjusted net income of $51 million in the three-month period ending December 31, compared to a $141 million loss at the same time last year. Revenues in the quarter jumped to $4.72 billion from $4.38 billion. Free cash flow, a key indicator watched by investors, improved by 76 per cent to $872 million this year from $495 million last year.
For 2017, Bombardier reported a loss of $553 million, or 25 cents per diluted share, an improvement from its loss of $981 million, or 48 cents per share, a year earlier.
The company also saw its ownership stake in its lucrative transportation division increase from 70 to 72.5 per cent after it exceeded undisclosed financial targets set as a result of the investment by Caisse de dépôt et placement du Québec. The Quebec pension fund's stake in the transportation division is reduced from 30 to 27.5 per cent.
Bombardier's order backlog for its transportation division, its most profitable sector, increased to $34.4 billion at the end of 2017 from $30.1 billion last year. Revenues for the transportation division increased to $8.52 billion from $7.57 billion in 2016.
Bombardier's stock was up more than 10 per cent to $3.64 on the Toronto Stock Exchange.