Bombardier shares surge on Q1 results, CSeries test flight schedule

MONTREAL – Bombardier reassured investors Thursday that its “game-changing” CSeries remains on schedule for its maiden flight next month unless unforeseen events prompt a short delay.

“We’re still feeling very good about flying in June,” Bombardier Aerospace president Guy Hachey said after the company’s annual meeting.

“Obviously, there’s always some risk until the end. I don’t anticipate any major delays if something were to happen.”

He said the first completed CS100 is days away from being transferred to the testing centre where it will undergo weeks of taxiing around Mirabel airport and be subject to ground vibrations and other tests.

Virtual testing of the airplane’s systems, including fly-by-wire, is expected to be completed in early June. The final of seven tests on the aircraft structure is slated to be completed next week.

“Most of the issues that could trip us up are behind us,” Hachey told reporters.

He said the company hasn’t nailed down a firm date for the first flight because of potential last-minute problems and the number of groups that are involved in the event.

Weather on that day also has to be ideal, added CEO Pierre Beaudoin.

With just weeks remaining ahead of the scheduled deadline, analysts welcomed Bombardier’s (TSX:BBD.B) confidence about the first test flight.

“We believe this will continue to help to lift sentiment — particularly if it is matched with new orders going into the Paris Air Show next month,” said analyst Walter Spracklin of RBC Capital Markets.

Bombardier said one unnamed customer facing financial difficulties cancelled its order for three CSeries planes.

However, analyst Cameron Doerksen of National Bank Financial said the move was “immaterial.”

“We view management’s confidence in its target at such a late stage in the safety-of-flight testing as a good sign,” he wrote in a report.

Despite years of stagnant share price, Bombardier told shareholders that the CSeries and other airplane and railway projects will boost the company’s revenues and profits in the coming years.

“Bombardier is at a pivotal point: 2013 is the solid foundation on which we will achieve our growth ambitions,” Beaudoin said.

The company expects its revenues will grow by US$10 billion to US$16 billion over more than five years, while profit margins should increase by three to four percentage points.

The company’s shares hit a new 52-week high Thursday after it reported strong first-quarter results. Shares reached C$4.55, but were up 27 cents or 6.38 per cent at C$4.50 in afternoon trading on the TSX.

Revenues surged 25 per cent on higher-than-expected aircraft deliveries.

Bombardier earned US$148 million or eight cents per share in the three months ended March 31, down from US$155 million, also eight cents per share, in the same 2012 period.

Revenue totalled US$4.3 billion, up from US$3.5 billion.

On an adjusted basis, net income increased four per cent to US$156 million, up from US$150 million.

That equalled eight cents per share, one penny below analyst expectations.

It delivered 53 aircraft, up from 37 last year, but orders decreased to 28 from 40 a year ago.

Hachey said he hopes its business jets will have another good year in 2013, while noting economic challenges in key markets such as Europe.

“Challenges persist in the market and we anticipate that the recovery could still take another year,” he warned.

Bombardier said a prototype for the new Montreal subway cars should be added to the city’s network by the end of this year, after months of testing.

The first cars being assembled at its plant in La Pocatiere, Que., are slated to be tested this month, transportation president Andre Navarri told shareholders.

“Even in this period of continuing uncertainty, the world rail market is full of potential and remains resilient, with a stable annual growth rate of 2.8 per cent,” he said.

Meanwhile, Bombardier chairman Laurent Beaudoin said the board will consider a policy at its July meeting that would allow the company to recover compensation if an executive is convicted of fraud or illegal activities.

The move follows SNC-Lavalin’s (TSX:SNC) decision to withhold payment to former CEO Pierre Duhaime, pending his trial for fraud.