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Bombardier president and CEO Eric Martel introduces the new Challenger 3500 in Montreal on Tuesday, September 14, 2021.Paul Chiasson/The Canadian Press

When Eric Martel started as Bombardier Inc.’s chief executive officer in early April of last year, investors were gripped with anxiety over a global health emergency that many feared could trigger a deep recession and damage the heavily indebted company beyond repair.

What’s happened since was unexpected: The COVID-19 pandemic helped the maker of luxury jets by luring business travellers out of commercial airliners and toward private air travel. The CEO now sees that shift as a lasting one. And if he’s right, it will be a welcome tailwind as the company tries to get back on track after years of crisis.

“Clearly the pandemic has been an accelerator for us,” Mr. Martel told analysts on a call to discuss third-quarter earnings Thursday, which beat expectations on several key metrics. Trends toward a greater adoption of private air travel such as convenience and safety that might have taken five to 10 years to play out have been sped up, he said.

“When things come back to more normal, will [the trends] stay? We do believe there will be some leakage but we do believe that the majority will continue to fly business aircraft,” Mr. Martel said. “The airlines will become a bit of a competitor with us in terms of attracting people in the premium seats.”

The CEO’s optimism is bolstered by statistics showing an industry picking up momentum. Deliveries of private aircraft from all manufacturers in the third quarter increased 22 per cent compared with last year and business-jet utilization is back to prepandemic levels in the United States, while recovering quickly in Europe. Meanwhile, used plane inventories are at low levels not seen in 20 years, which is positive for sales of new aircraft.

It’s a godsend for the Canadian industrial giant and its controlling Bombardier-Beaudoin family, as the company tries to stage a recovery that hinges on a slimmed-down business model focused solely on selling and servicing private jets. While French train maker Alstom SA struggles to fix the train business it bought from Bombardier more than a year ago, Bombardier is riding an unforeseen surge in private air travel as it executes other internal initiatives designed to improve its balance sheet.

Third-quarter results suggest the turnaround is taking hold. Revenue came in 17 per cent higher than last year’s third quarter at US$1.4-billion, fuelled in part by a strong recovery in aircraft maintenance and servicing as customers used their planes more often than they did before the COVID-19 pandemic started.

The company generated US$100-million in free cash flow during the three-month period, representing an improvement of US$747-million year over year and the second straight quarter it has improved this measure. The result is mostly because of stronger order intake and better payment terms on new orders, it said. Bombardier also padded its order book by US$500-million to US$11.2-billion.

Bombardier has reduced its debt by US$3-billion since the start of the year, to about US$7-billion, and has no debt maturing until December, 2024. Adjusted earnings before interest, taxes, depreciation and amortization was US$142-million for the three months ended Sept. 30, a 69-per-cent increase over the same period last year. The net loss was US$377-million.

“An investment in Bombardier requires some faith that the company can improve its EBITDA from only US$200-million in 2020 to a targeted US$1.5-billion in 2025, but we believe this goal is achievable,” National Bank analyst Cameron Doerksen said in a note.

Significant threats loom, however, and potential supply chain disruption is near the top of the list. Some of Bombardier’s smaller suppliers are facing labour shortages and the company is dispatching a team of its own specialists into different regions to work with them and help identify and fix any problems, Mr. Martel said. While there is pressure on logistics, it is not affecting Bombardier operations, the CEO said.

Competition is another issue. Announcements by rivals U.S.-based Gulfstream Aerospace Corp. and Dassault Aviation SA of France that they intend to bring new jets to market have increased the pressure on Bombardier to refresh its own lineup further, according to analysts such as Konark Gupta at Scotiabank. But the company’s weak financial position and pledges – it plans to limit capital expenditures at about US$200-million annually for the next several years – have raised questions about how long it can go without ramping up product development spending in a major way.

Mr. Martel played down the competition concerns on Thursday. He insisted the company had foreseen all the new planes being launched by rivals and said Bombardier’s current lineup will hold its own, even when it comes to older aircraft such as the Challenger 650.

“Right now I have no reason to believe that I need to change that [capital spending] plan,” Mr. Martel said. “We feel extremely strong with our product portfolio.”

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