Plane maker has cash flow turbulence

Source: Xinhua | 2018-11-19

Bombardier’s top executives have met with investors in Montreal after a disappointing free cash flow forecast as well as regulatory action, which sent the plane and train maker’s shares down 20 percent.

The Canadian company said it would only be able to meet its 2018 free cash flow estimate by using US$635 million in proceeds from the sale of a Toronto plant earlier this year.

Analysts had expected Bombardier to achieve its target of breaking even on cash without relying on those proceeds.

Bombardier chief executive Alain Bellemare, credited with improving Bombardier’s finances after a crippling 2015 cash crunch, sought to reassure investors that the company would still achieve the company’s five-year turnaround plan.

On Thursday, the province of Quebec’s securities watchdog asked Bombardier to halt stock trades under a plan set up to facilitate share sales by certain senior company executives.

The Autorité des marchés financiers said it was “reviewing” transactions and “various announcements” related to Bombardier’s creation of an Automatic Securities Disposition Plan on August 15.

Bombardier stock closed down 20 percent at C$1.67, (US$1.27) adding to last week’s 31 percent slide.

The sell-off in the stock also spread to bonds. Bombardier has about US$$9.35 billion of bonds outstanding.

Jamie Koutaoukis, Moody’s lead Bombardier analyst, said that she downgraded the company’s senior unsecured debt in 2017 “highlighting at that time that we expected continued negative free cash flow in 2018, in contrast to guidance.”