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Bombardier at crucial point in C Series saga

Bombardier's C Series100 takes off on its maiden test flight on Sept. 16, 2013 in Mirabel, Que.

Ryan Remiorz/The Canadian Press

So far, Bombardier Inc.'s new C Series jetliner is flying smoothly through the hoops set up to prove its airworthiness and provide confirmation it does all the things management said it would do.

And the recent confirmation that a previously undisclosed conditional customer is a Chinese aircraft leasing company is good news as it gives Bombardier a crucial foothold in the "can't-afford-not-to-be-there" Chinese market.

But the Montreal-based plane and train maker still has to come up with more orders to convince investors it has a winner on its hands.

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President and chief executive Pierre Beaudoin and his team will no doubt provide an update on the critical C Series program when Bombardier unveils third-quarter financial results Thursday.

Some analysts anticipate a delay in the C Series' entry into service.

Cameron Doerksen of National Bank Financial believes the September, 2014, target is overly optimistic and that a more realistic date is the first quarter of 2015.

New-order announcements would be a "key catalyst for the stock," he said in a recent research bulletin. "The key risk is a lack of orders that erodes investor confidence in the program."

Also likely to be discussed during the third-quarter conference call is the company's existing aerospace programs in the regional- and business-jet markets.

Mr. Doerksen doesn't expect Bombardier to lower its guidance on aircraft deliveries of 190 business jets and 55 regional aircraft for the full year. For the third quarter, he's forecasting 45 business jets and 12 regional jets delivered, compared with 44 and 12 in the year-earlier period.

David Newman of Cormark Securities estimates 34 business jets and 11 regional aircraft delivered.

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On the rail side, Mr. Doerksen notes that orders slowed in the third quarter with announced contracts of $1.3-billion (U.S.), well below his forecast of $2.3-billion.

But he says that margins in the rail division should show improvement in the quarter: 7.1 per cent versus 6 per cent.

He's calling for earnings-per-share of 10 cents and revenue of $4.7-billion in the quarter, but says results could come in slightly below his estimates because of lower-than-expected aircraft deliveries.

Mr. Newman has lowered his EPS forecast to 9 cents from 10 cents. The consensus estimate is 10 cents.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More


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