Revenue breakdown showed the manufacturing segment contributed $1.7bn (up $448m YoY) to the total revenue, while the remainder $507m (up $79m YoY) came from services segment.

The company delivered 20 medium and 19 large business aircraft during the 2Q 2024, up from 15 and 14 respectively in the second quarter of 2023. Overall, during the six months, the company has so far delivered 59 business jets (32 medium and 27 large) against a target of 150-155 announced at the start of 2024.

However, despite higher sales and deliveries, at the end of second quarter, the company’s backlog stayed flat at $14.9bn on unit book-to-bill ratio of 1.0x relative to first quarter.

“Revenue and deliveries for the second quarter saw impressive growth. We’re up for more than 30% year-over-year in both of those columns,” said Matti Lehmus, CEO, Bombardier. “We are very clearly outperforming our peers when it comes to consistency and predictability on aircraft deliveries.”

However, Lehmus warned that the ‘supply chain is still a headwind.’ But he said the company is working closely with engine makers to ensure production timelines still are within the targets.

“We’ve delivered impressive double-digit growth in deliveries, revenues, services, and profitability. We’re on track to meeting our full year guidance, and we have strong momentum as we enter the second half of the year,” added Bart Demosky, Bombardier’s chief financial officer.

“Our business is continuing to grow rapidly with Q2 revenues increasing by almost a third versus 2023. Our services revenues crossed above the $500m mark for the first time, and that’s a milestone that we’ve been talking about for the past three years, putting us in the right place to reach our 2025 services revenue objective of $2bn, but doing it one year early.”

Despite better prices and higher sales supporting topline growth, the company’s gross margin shrunk by 190 basis points to 20.2% during the second quarter. In addition, the company’s EBIT margin also declined 590bps to 8.7%.

On the liquidity front, the company has no long-term debt maturing until 2026. However, it does have a large debt repayment of $983m due in 2027.

However, the company said that its current liquidity of $1.3bn is adequate in the short-term. But it added that it will “continue to opportunistically refinance or deploy excess liquidity towards debt pay down.”

Bombardier is targeting 150-155 business jet deliveries while growing revenue by $400-600m to $8.6bn from 2023’s $8bn in 2024.

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“This most recent upgrade highlights Bombardier’s strength and resiliency, as well the effectiveness of our team’s strategic and disciplined financial management, which has allowed us to steadily meet or exceed the company’s guidance for the past three years,” said Bart Demosky, executive vice president and CFO, Bombardier on the ratings upgrade.

“S&P’s latest upgrade comes on the heels of Moody’s recent upgrade of Bombardier’s credit rating to B1 with a stable outlook. This further demonstrates the company’s strengthened financial profile, which is built on a strong and diversified backlog that continues to provide solid ground for the team to stand on and gives us a clear line of sight on our deliveries for the upcoming years.”

S&P also raised rating on the company’s preferred shares to ‘CCC+’ from ‘CCC’. The upgrade follows a period of strong performance for Bombardier.

The company has been growing its higher-margin aftermarket services business, which helps maintain revenue from existing aircraft. Beyond that, S&P noted that Bombardier’s $14.9bn order backlog provides a foundation for earnings growth in 2025. The company is increasing aircraft deliveries this year (from 138 to 150) and expects to maintain that level in the future.

This growth, along with higher prices and strong aftermarket services, should improve profitability.

Furthermore, the company’s healthy liquidity position, with over $1bn in cash on hand, also contributes to the positive outlook.

“Our upgrade also incorporates the flexibility offered by Bombardier’s sizable cash balance (about $1.2bn on March 31, 2024) that we assume will remain above $1bn over the next few years and that we do not net against debt in our leverage calculation,” S&P said in its rating commentary.

However, S&P said there are some risks to this outlook. Demand from traditional business jet customers (ultra-high net worth individuals and fleet operators) might slow down after 2024 due to a potential economic slowdown and increased competition from new aircraft models.

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The OEM has been restructuring its debt over the last few years, having reduced it by more than $4.5bn, or 45%, since 2020.

The debt repayment marked “an important milestone” and demonstrated “continued commitment to strengthening the balance sheet” according to Bart Demosky, executive vice president and CFO, Bombardier. He said that this translates into a “significantly improved credit risk profile”, adding that the average maturity of the firm’s long-term debt is now 4.7 years with annual interest charges reduced by more than $330m since 2020.

In January, Bombardier closed an offering of $750m senior notes due February 1st 2029, which carried a coupon rate of 7.5% per year. The company previously issued more than $2bn in senior notes in March 2019 at a comparatively high-yield to finance tender offers that were due in 2020 and 2021.

Bombardier is set to provide further updates on its capital structure and strategic progress during its Investor Day this week.

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