Bombardier stock price plummets on profit warning and Airbus deal fears

Alud Davies
By Alud Davies January 16, 2020 19:05

Bombardier stock price plummets on profit warning and Airbus deal fears

Bombardier’s stock price plunged on Thursday morning after the company issued a profit warning and hinted at the potential or possible collapse of its C Series deal with Airbus.

Bombardier’s stock closed at 1.79 CAD on Wednesday night (January 15th). When the markets reopened on Thursday the stock had dropped to 1.25 CAD. Within 30 minutes it had fallen further to 1.11 but has since remained stable at around the 1.24 – 1.25 CAD range.

In a statement, the company said its financial results for the past financial year were expected to be below guidance, mainly due to challenging projects in its transportation division.

The company now expects lower-than-previously-guided financial performance, mainly as a result of actions taken to resolve challenging rail projects, the timing of milestone payments and new orders at Transportation, and the delivery of four Global 7500 aircraft slipping into the first quarter of 2020,” said the release.

Bombardier further commented on its commercial aircraft joint venture with Airbus, saying that it is currently reassessing its participation in the partnership.

Airbus acquired a 50.01% stake in Bombardier’s then struggling C Series commercial airliner in 2017.

Since then, Airbus has renamed the aircraft as the Airbus A220. According to Bombardier, recent successful sales campaigns mean that a production ramp-up will be needed.

To do this Bombardier says that it would need to invest more cash in the partnership. The company said in a statement that the need for investment “… pushes out the break-even timeline and generates a lower return over the life of the programme. This may significantly impact the joint venture value”.

The company promises to disclose the amount of any write-down when it reports its fourth-quarter and 2019 full financial year results on February 13, 2020.

Alud Davies
By Alud Davies January 16, 2020 19:05

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