Bombardier reported a consolidated net loss of $138 million for the first quarter of 2016, reversed from a consolidated $100 million net profit in 1Q 2015.
First-quarter revenue for Bombardier’s commercial aircraft sector was down 8.5% year-over-year to $616 million, compared to $673 million in 1Q 2015.
However, simultaneously with the Canadian manufacturer’s quarterly financial results, Bombardier announced that it had secured a firm order from Delta Air Lines for 75 CS100 aircraft with options for an additional 50 CSeries aircraft, valued at approximately $5.6 billion at list prices. Deliveries of the aircraft are schedule to begin in 2018.
“Our turnaround plan is gaining traction … we remain on track to achieve both our 2016 guidance and 2020 goals,” Bombardier president and CEO Alain Bellemare said. “The addition of Delta to our … CSeries customer list gives us tremendous momentum as we approach entry-into-service this summer.”
Bombardier booked two orders for commercial aircraft (both CRJ900s to undisclosed customers) in the three months ended March 31, compared to 25 orders booked in 1Q 2015. Twenty aircraft were delivered during the quarter, including 12 CRJ900s (seven to American Airlines, three to undisclosed customers and two to China Express), two CRJ1000s to Spanish regional carrier Air Nostrum, and six Q400 turboprops (three to Canadian regional carrier WestJet Encore, two to Canada’s Chorus Aviation/Jazz and one to Okinawa-based Ryukyu Air Commuter).
Following the end of the first quarter, Latvian flag carrier Air Baltic converted its remaining seven options to firm orders for CS300 aircraft, valued at $506 million. Additionally, during the second quarter Bombardier expects to sign a firm purchase agreement with Air Canada for 45 CS300 aircraft, with options for an additional 30 CS300 aircraft, including conversion rights to the CS100 aircraft, an order valued at $3.8 billion.
Bombardier said it expects to record an onerous contract provision of approximately $500 million as a special item in the second quarter of 2016, in conjunction with the closing of the anticipated 127 firm purchase agreements from Delta, Air Canada and Air Baltic. Bellemare explained to analysts and reporters that the $500 million is included in the previously announced $2 billion investment required to get to cashflow-positive CSeries production in 2020. The $2 billion breaks up into $500 million to complete the CS300 and $1.5 billion to ramp up (including contract losses).
Bombardier plans to enter into service its first CSeries CS100 aircraft in July; the first aircraft is to be delivered in June to Swiss International Air Lines (SWISS), which plans to operate the aircraft as of July 15, 2016.