MONTREAL – While the business jet market will take “several years” to return to pre-pandemic levels, Bombardier Inc. plans to capitalize on the growth in after-sales service to reach its target of $ 7.5 billion. US dollars in sales in 2025.
In its outlook published Thursday, the Quebec aircraft manufacturer said it expects its free cash flow to be positive next year and generate more than US $ 500 million by 2025.
Its operating profit is expected to reach $ 1.5 billion, while the adjusted operating margin target has been set at 20%.
“We know exactly where we are and (our model) is increasingly predictable,” CEO Eric Martel said during an investor presentation.
“The revenues will be more balanced thanks to the after-sales segment.
The 2025 targets are “quite ambitious,” Citigroup analyst Stephen Trent said in a note to clients.
“The market will need to assess whether (the new management of) Bombardier can meet its long-term goals compared to the failure of the previous team.”
Repair and maintenance of aircraft already in service, where margins are high, represent nearly 18% of Bombardier’s revenues, which amounted to approximately US $ 6.5 billion last year.
The company wants this proportion to reach 27%, or about US $ 2 billion within five years. The footprint of its service center is expected to increase by 50%, he added.
Since the sale of its rail operations to Alstom last January, Bombardier has focused exclusively on business jets, a sector more vulnerable to economic downturns.
Its strategy relies heavily on its luxurious Global 7500, which is priced at $ 75 million.
Last month, Bombardier announced the loss of 1,600 jobs and the end of production of the Learjet family by the end of the year. These measures are part of a plan to save US $ 400 million per year by 2023.
Bombardier’s net debt is approximately US $ 4.7 billion, which includes US $ 3.6 billion of net proceeds from the sale of Bombardier Transportation.
– This report by The Canadian Press was first published on March 4, 2021.