Bombardier liftoff will be slow: analyst

It could be a while before Bombardier sees sunny skies in its business forecast, an aerospace analyst predicted Tuesday.

Montreal-based Bombardier Inc. faces a long road to recovery in the business jet market with no material rebound until 2012, Cameron Doerksen of Versant Partners wrote in a research note to clients.

"Our conclusion is that the business jet market is bottoming," he said.

There is a glut of used jets on the market, he noted.

"New business jet orders will likely stay depressed through at least this year, and deliveries of new jets will probably decline again in calendar 2010," Doerksen wrote.

Without any new orders, Doerksen also believes Bombardier will have to reduce its production rate for the CRJ regional jet.

However, rates for the Q400 turboprop are more secure because of recent orders. Olympic Air ordered eight Q400s in June and there were a further five Q400 orders in early August from an undisclosed customer. Additionally, Porter Airlines, which firmed up two orders recently, has publicly stated its desire to order additional Q400s, Doerksen noted.

Total business jet deliveries at the company fell by 36 and 40 per cent, respectively, in the first two quarters of 2009.

The General Aviation Manufacturers Association said industry-wide business jet deliveries decreased by 40 per cent in the quarter, suggesting this year's deliveries will be the lowest since 2005.

Doerksen said Bombardier is looking for ways to cut costs as production rates are reduced to address lower demand.

In an interview with The Canadian Press, Bombardier spokesman Marc Duchesne would only say the company is always trying to get the best deal from its suppliers, who will be delivering fewer parts because of reduced production levels.

"As a manufacturer, we're always looking for the best part at the right price, and it's a constant challenge not only during more difficult times," he said.

Revenue, profit expected to fall

Doerksen isn’t expecting any surprises forthcoming from the company’s transportation division either, which means the key catalyst for any sustained upward move in Bombardier’s share price will be early signs of a rebound in the business jet market.

He’s expecting revenue of $4.8 billion, and earnings per share of nine cents. That’s below the 14 cents per share that the company earned during the same period last year.

The company is set to release quarterly results on Sept. 2.

Doerksen has a price target of $3.90 on Bombardier shares. The company's widely traded B shares rose 2 per cent to $4.15 on the Toronto Stock Exchange on Tuesday.