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A worker assembles bullet fairings for the Global 7500 aircraft at Bombardier's Saint-Laurent Manufacturing Centre in Montreal.CHRISTINNE MUSCHI/Reuters

Éric Martel came back to Bombardier Inc. BBD-B-T as chief executive officer three years ago and found a heavily indebted company still in the throes of crisis. Now, he’s winning new investors as he tries to set one of Canada’s industrial giants back on course for the future.

Mr. Martel, who formerly led Bombardier’s private jet business before leaving for Hydro-Québec, was brought back to helm the transportation manufacturer in the spring of 2020 and handed a mess. The company was US$10-billion in debt, the result of massive development costs for its C Series airliner program that it eventually handed to Airbus SE. Employees were demoralized and its share price had fallen to lows not seen in a quarter century.

The CEO had to quickly complete three major asset sales, including the sale of its train business to France’s Alstom SA, and secure the proceeds. Bombardier was reinventing itself as a single-business manufacturer of private jets, just its business prospects were clouded by the fallout from the COVID-19 pandemic.

As spring 2023 begins, Bombardier has regained altitude. A company that once found itself teetering on the brink of bankruptcy enjoys several buy rating recommendations on its stock. And while the manufacturer remains far from an investment grade credit rating, it feels good enough about its trajectory that it’s boosting its financial targets as it pushes toward consistent profitability.

“We are confidently raising the bar,” Mr. Martel said Thursday ahead of the company’s investor day meeting with analysts. “We know that we have all the ingredients in place to remain a driving force in the industry.”

The CEO and chief financial officer Bart Demosky hatched a five-year blueprint for recovery in March, 2021, that hinged on cementing its share of new aircraft sales, cutting costs, paying down debt and dramatically increasing its aircraft repair and service capability. They’re also building out Bombardier’s defence business, and now see that unit being able to triple its revenue to more than US$1-billion in the second half of the decade.

The strategy is yielding results that are either meeting or exceeding initial plans, according to Bombardier. Jet sales are holding strong and other revenue streams such as servicing planes are helping fuel profit growth, prompting the company to hike its financial objectives on several key metrics.

Bombardier is now aiming to generate at least US$900-million in annual free cash flow by 2025, up 80 per cent from the US$500-million initially projected. Revenue should top US$9-billion within two years, up 20 per cent from the initial target of US$7.5-billion while adjusted earnings before interest, taxes, depreciation and amortization should hit a minimum of US$1.625-billion, up from the previous US$1.5-billion target, according to the company.

Progress has been quick and steady. The company, controlled by its founding Bombardier-Beaudoin family through a special class of supervoting shares, more than quadrupled its profitability on an adjusted EBITDA basis between 2020 and 2022 while increasing revenue 23 per cent. Including this year’s transactions, the corporation has cut its debt by 45 per cent over the past three years, earning credit rating upgrades from Moody’s Investors Service and Standard & Poor’s.

The company has now begun weighing what to do with its excess capital once it reaches its targets. Options include reinvesting in existing operations and product lines, launching new planes, building the business through acquisitions or strengthening the balance sheet further by paying down more debt, Mr. Demosky said.

Bombardier has “moved beyond survival mode to returning to growth and stability,” said Chris Murray, an analyst with ATB Capital Markets. “You have to feel pretty good about their prospects.”

Bombardier announced two years ago that it would narrow its manufacturing to bigger and pricier jets such as the US$75-million Global 7500 and end production of the smaller-cabin Learjet models. That decision is now paying dividends because the high-net-worth customers buying those planes are less affected by inflation and regional economic slowdowns than those with lesser means.

The corporation also benefitted from a surge toward private plane travel during the COVID-19 pandemic, seeing strong sales to individuals, companies and fleet operators as more people chose to avoid the airport chaos and flight schedule disruption that became common in commercial air travel. It now has a backlog of orders worth two years of work.

Walter Spracklin, an analyst at RBC Capital Markets, said the pandemic has “structurally increased demand” for private jets and private travel among wealthy individuals. Data from business aviation intelligence firm WingX shows business jet activity as measured by flights is down 3 per cent this year through March 13 compared with the same period last year but 16 per cent ahead of 2019.

Still, it remains to be seen whether the changing fortunes of Bombardier clients will affect demand. Soaring equity markets and rising valuations of everything from mansions to cryptocurrencies to commodities boosted the collective fortune of the world’s 500 richest people by more than US$1-trillion in 2021, according to Bloomberg data. Last year, the ultrawealthy had US$1.4-trillion erased from their net worth.

“With emerging concerns of another global financial crisis, we may well see further softening in business jet usage in the next few months,” WingX said in its latest weekly bulletin.

Mr. Martel told reporters Bombardier’s sales team is seeing “hesitation” among potential customers before placing their orders but that there’s been no change in the number of cancellations or progress payments they make as the aircraft gets built. The company is scheduled to report first-quarter earnings on April 27.

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