Bombardier Inc. shares surged 20% after the company reported its highest free cash flow in nearly two decades and raised its financial guidance for the year. Chief Executive Eric Martel declared the aerospace firm's five-year turnaround plan complete, highlighting strong first-quarter earnings and growing opportunities in the defence sector.
Turnaround Achieved
Speaking at Bombardier's annual meeting on Thursday, Martel noted that the ambitious financial objectives set in 2021 have been met, despite initial skepticism. "Looking at where we stand today, I am proud to say that we delivered top to bottom," he said. The company now expects free cash flow to exceed $1 billion, up from an earlier forecast of $600 million to $1 billion. Revenue remains projected at over $10 billion, with more than 157 aircraft deliveries anticipated.
Defence Growth Opportunities
Martel emphasized that Bombardier's defence segment is a significant growth driver, with strong demand fundamentals and opportunities to expand through its business jet platforms and long-standing customer relationships. He pointed to the company's partnership with Saab AB, whose GlobalEye early warning aircraft—based on Bombardier's Global 6500 jet—is reportedly set to replace NATO's aging airborne early warning fleet. While Bombardier executives did not confirm these reports, they noted ongoing discussions with governments about accelerating defence purchases amid geopolitical tensions.
Analyst Cameron Doerksen of National Bank Financial said Bombardier's defence business has momentum, particularly after reports of the NATO selection. Martel also highlighted recent successes, such as the French Air Force's agreement to buy two GlobalEye craft in December and a $2.3 billion contract with the Republic of Korea Air Force for an early warning surveillance system.
Domestic Procurement Boost
Martel noted that Ottawa's push for increased domestic procurement is a positive sign for Canadian aerospace and defence. "People are considering accelerating their purchases and spending, which is a very positive trend for all of us," he said. The company's partnership with Saab in Europe continues to yield results, and Bombardier is well-positioned to benefit from rising global defence budgets.
