Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Bombardier's C-Series commercial jet takes off on its first flight on Monday, Sept. 16, 2013 in Montreal.

Ryan Remiorz/The Canadian Press

Bombardier Inc.'s new C Series jet promises reduced fuel burn. But there's another kind of combustion – a more worrisome one – that many observers and analysts are focused on these days: cash burn.

Is Bombardier – with the delays, engine problem and rising costs of the C Series as well as challenges on the Learjet 85 and other platforms – burning through its cash too quickly?

Last week's announcement of an aerospace division restructuring that includes the slashing of 1,800 jobs is a positive sign that management is moving to address concerns.

Story continues below advertisement

Still, some uncertainty remains as to what second-quarter earnings – out this Thursday – will reveal about the plane and train maker's balance sheet.

"Liquidity concerns top the list with investors unwilling to step in front of Q2/14 results with a potential cash burn risk with elevated new program costs," RBC Dominion Securities analyst Walter Spracklin wrote in his second-quarter preview.

"However, should cash burn come in relatively in line, then we believe sentiment could start to turn more positive."

Mr. Spracklin is anticipating cash burn of $400-million (U.S.) in the second quarter, following $915-million in the first, which aligns with management's full-year cash flow indications and keeps Bombardier in a viable liquidity position by the end of 2014.

A key factor is how quickly Bombardier can return to C Series flight testing after about two months' delay due to an engine-failure incident, observers have pointed out.

"The C Series delays, a levered balance sheet, and continued muted recovery in the core business aviation market are weighing further on the already tight engineering and cash resources of the company," BMO Nesbitt Burns analyst Fadi Chamoun said in a recent second-quarter preview.

Cormark Securities' David Newman is more positive. "We believe the market is gaining renewed confidence in the CSeries," he said in a recent note.

Story continues below advertisement

"More orders could be on the way, perhaps augmented by the recommencement of flight tests in the coming weeks."

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies