Mounting uncertainty about on-time delivery of the new C Series jet is adding to Bombardier Inc.’s worries as it posted disappointing quarterly results.
Montreal-based Bombardier said on Thursday that flight testing for the new C Series aircraft is proceeding as anticipated despite there having been only four test flights.
The plane had its first flight Sept. 16 but has undergone only three more tests in the six weeks since, far less than what most other aircraft test programs have achieved after that length of time.
Bombardier president and chief executive officer Pierre Beaudoin said on a conference call for analysts and media Thursday that a review of the flight-test timeline is ongoing.
Asked if he still expects a commercial launch about one year after the initial test flight, he said that remains the company’s target.
But several analysts now say Bombardier will likely miss its 2014 deadline and push the date into 2015.
“The pace of C Series flight testing has been slow so far with the fourth flight since first flight on Sept. 16 only completed [on Wednesday],” National Bank Financial analyst Cameron Doerksen said in a note.
The total number of firm orders so far for the C Series is a modest 177 and Bombardier is sticking to its target of 300 by the time the plane enters service.
Bombardier shares fell more than 10 per cent to close at $4.74 Thursday on the Toronto Stock Exchange after a 9.1-per-cent drop that was the biggest intraday slide since Feb. 21.
The company booked net profit of $147-million (U.S.) or 8 cents per share, down from $172-million or nine cents in the year-earlier period.
On an adjusted basis, profit was $165-million or nine cents, down from $173-million or nine cents. Analysts’ consensus estimate was 10 cents per share.
Third-quarter revenue was $4.1-billion, compared with $4.2-billion in the same period last year, and below analysts’ estimate of $4.56-billion.
“In aerospace, results were in line with our guidance, but the low order intake and overall market conditions were a disappointment,” Mr. Beaudoin said.
The company also cited “execution” difficulties on some undisclosed rail contracts.
Bombardier delivered 45 aircraft in the quarter ended Sept. 30, 2013, down from 57 in the year-earlier period. Only 26 net orders were received in the third quarter, down from 83.
“Overall, the quarter was much worse than we expected. Both segments [aerospace and rail] had weak sales and margins,” Canaccord Genuity analyst David Tyerman said in a note Thursday.
Mr. Beaudoin said discussions are going well with potential customers for regional and turboprop planes, two areas requiring new orders if production levels are to be maintained.
Bombardier says the fourth quarter is traditionally a big one for deliveries.
The company has forecast delivery of 245 planes – 195 business jets and 55 regional aircraft – in 2013, compared with 233 in 2012.
In the rail unit, new orders added up to $1.7-billion in the quarter, down from $2.2-billion.
In terms of profit margins, earnings before interest and taxes were 6 per cent in the rail division, down from 6.3 per cent a year earlier; and 4.3 per cent in the aerospace unit, compared with 5.2 per cent.
Bombardier has provided guidance of 8 per cent in rail and 6 per cent in aerospace by 2014.
The company also said on Thursday it has appointed Google Inc. chief financial officer Pierre Pichette to the board.Report Typo/Error