Bombardier to slash 50-seat production

spinproof

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Jets, gain boost Bombardier profit
Wednesday August 24, 11:44 am ET
By Robert Melnbardis



MONTREAL (Reuters) - A 41-percent jump in business-jet deliveries propelled Bombardier Inc. (Toronto:BBDSVB.TO - News) to a higher quarterly profit, but the company said on Wednesday it would slash production of its 50-seat regional jet.

Bombardier, the world's top train-maker and third-largest civil-aircraft manufacturer, said it earned $117 million or 6 cents a share in the second quarter ended July 31, compared with $23 million or 1 cent a share a year earlier.


The latest second-quarter profit includes a $121 million after-tax gain on the sale of the inventory finance operations of the company's Bombardier Capital unit.

Income from continuing operations before special items was $59 million or 2 cents a share, in line with analyst estimates. That compared with income of $42 million or 1 cent a share a year earlier.

Quarterly revenue slipped to $3.68 billion from $3.85 billion, mainly because of lower revenue from train-making units in Britain and Germany.

In a research note, Desjardins Securities analyst Benoit Poirier described the results as lackluster and said revenue was below the $3.9 billion expected by analysts.

Bombardier's class B shares fell 20 Canadian cents or 5.5 percent to C$3.40 on the Toronto Stock Exchange on Wednesday.

Bombardier, Canada's biggest manufacturer and a top-traded stock, said it would chop production of its 50-seat CRJ200 passenger jet to 18 deliveries a year for fiscal 2007, from 54 deliveries expected for fiscal 2006, which ends Jan. 31.

It maintained its forecast to deliver 329 aircraft in the current fiscal year, matching the previous year's figure. It expects the mix of aircraft to include more business jets and 70-seat and 90-seat regional jets.

"The price of oil is pushing for larger aircraft," Pierre Beaudoin, president of Bombardier Aerospace, said on a conference call.

In the first six months of this year, Bombardier delivered 162 aircraft, up from 152 in the year earlier period.

FEWER JOB CUTS

With the ramp up in business jet output, Bombardier said it expects to only cut 1,135 aerospace jobs instead of the 2,000 announced in October.

At its train-making unit, some 5,100 jobs have been cut of the 7,600 it targeted. Bombardier has closed four train-making plants and expects to shutter three others -- in Germany, Sweden and Britain -- in the fourth quarter.

Second-quarter income at Bombardier's aerospace division rose to $65 million from $42 million, while profit in its train making unit was flat at $43 million.

Bombardier said it delivered 41 business jets in the quarter, a 41 percent increase from 29 a year earlier. Net orders for business jets jumped 63 percent to 49.

Regional-aircraft deliveries, which include its passenger jets and turboprops, dropped to 39 in the quarter from 52 a year earlier.

The company did not give an update on progress in officially launching the $2.1 billion development program for its CSeries 110-seat to 130-seat jet.

Beaudoin said Bombardier was in talks with prospective customers and suppliers for the jet program, but it has yet to nail down agreements.

The CSeries program could define Bombardier' future as a civil-jet maker. Although still the world No. 1 maker of regional aircraft, it faces stiff competition from Brazilian rival Embraer SA (Sao Paolo:EMBR4.SA - News).

Analysts have also noted that almost half of Bombardier's regional-jet order backlog is related to US Airways (OTC BB:UAIRQ.OB - News), Northwest Airlines (NasdaqNM:NWAC - News) and Delta Connection (NYSE:DAL - News), which are facing financial problems.
 
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General Lee

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"The price of oil is pushing for larger aircraft," Pierre Beaudoin, president of Bombardier Aerospace, said on a conference call."


I would expect quite a few 50 seaters will be parked if oil continues upward. There are some cities that can have profitable 50 seaters, but those would have to be cities without LCCs. I expect more 70 seaters (Grinstein hinted with first class maybe) at DCI, absolutely.


Bye Bye--General Lee
 

viper548

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General Lee said:
I expect more 70 seaters (Grinstein hinted with first class maybe) at DCI, absolutely.


Bye Bye--General Lee
SkyWest has -700 models with a 3 class cabin on the UAL side.
 
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WSurf

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Yea, and flying them for 50 seat rates!!! Lovely, just Lovely!!
 

michael707767

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spinproof said:
"The price of oil is pushing for larger aircraft," Pierre Beaudoin, president of Bombardier Aerospace, said on a conference call.

.

I'm shocked!! You mean a 50 seat RJ is not an efficient aircraft? Say it isn't so.
 

michael707767

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WSurf said:
Yea, and flying them for 50 seat rates!!! Lovely, just Lovely!!
one day there won't be any more 50 seaters and it will just be the 70 seat rate;)
 
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