â€™s Global aircraft family is driving a recovery from the sustained economic malaise in the business jet market, leading to a 16% boost in the Aerospace groupâ€™s backlog and contributing to a nearly $500 million increase in overall revenues in the third quarter.
The Aerospace group took in 34 net aircraft orders during the third quarter ending Oct. 31, increasing backlog to $22.3 billion, compared with $19.2 billion at the end of Jan. 31 (the conclusion of Bombardierâ€™s previous fiscal year). Business aircraft accounted for 30 of those orders, more than double the 13 reported in the third quarter of 2010. The commercial aircraft business, however, languished, with just four orders, down from 10 in the same period a year earlier.
Analyst J.P. Morgan notes the â€śmore drawn-out recoveryâ€ť in new business-aircraft demand and lowered its 2012 production estimates for Bombardier. The bulk of the decline, however, comes from themodels, J.P. Morgan says, adding, â€śDemand for [the Global and Challenger lines] has recovered relatively well, particularly for the Globals, thanks to emerging markets.â€ť
Bombardierâ€™s Global backlog is 34 months worth of production, surpassing the companyâ€™s goal of having production sold out for 24-30 months. Bombardier President and CEO Pierre Beaudoin notes that the market remains strong for the large aircraft.
The Challenger backlog is 12 months, behind the target range of 15-18 months. While backlog slipped there, Beaudoin says, â€śthe Challenger is still in good demand. I feel comfortable with the underlying demand.â€ť
However, the same cannot be said about the Learjet line, and a number of market indicators for smaller aircraft â€“ utilization, used aircraft for sale and consumer confidence â€“ have recently deteriorated. The Learjet backlog is six months, the bottom end of Bombardierâ€™s target range â€“ and that is at low levels of production.
For the commercial side, Bombardier has a six-month backlog, well beneath the 18-21 month target range, and the CRJ series backlog stands at 12 months, also beneath the 18-21 month target range.
â€śDemand for Bombardierâ€™s in-production commercial aircraft remains moribund, with few signs of turning,â€ť J.P. Morgan notes.
Beaudoin agrees that for commercial aircraft, â€śIt has been a challenging year so far.â€ť He cites the economic uncertainty, but adds the company is in â€śadvanced discussions on several potential orders.â€ť Bombardier also is focusing on its development program for the, he says.
Despite its diminished backlog, Beaudoin says the company has plans for only minor adjustments to its production plan for commercial aircraft. â€śWith the orders we have and the ones we are working on, we feel good about next yearâ€™s production. But some of these discussions need to conclude soon,â€ť he says.
In spite of diminished order intake on the commercial side, commercial deliveries in the third quarter were up alongside business aircraft deliveries. Bombardier delivered 68 aircraft in the third quarter, up from 51 in third quarter 2010. Of the 68, business aircraft accounted for 43, compared with 31 (including Flexjet orders) in third quarter 2010. Commercial aircraft were up from 19 in third quarter 2010 to 24 in the most recent quarter, while amphibious aircraft deliveries remained at one in each of the past two third quarters.
Bombardierâ€™s third-quarter revenues reached $2.3 billion, a 26% increase that Bombardier SVP and CFO Pierre Alary credited to increases in business aircraft deliveries and stronger pricing for those aircraft.
Business aircraft accounted for nearly two-thirds of the manufacturing revenues, bringing in $1.1 billion. This was a significant increase over the $794 million in the third quarter of 2010.
Commercial aircraft manufacturing, meanwhile, brought in $526 million, up from $431 million in the third quarter of 2010.