Bombardier Stock: The No. 1 Reason to Be Bullish on Bombardier, Inc.
Bombardier Stock Victim of Biased Media
Bombardier, Inc. (TSE:BBD.B) appears to be safely above penny stock territory. Yet, investors are still reluctant to consider Bombardier stock, let alone bet on it. They have been scared by overly negative reports of construction delays of the company’s excellent “C Series” airliners. Such has been the pessimism that you’d think no aircraft company ever suffered a delay in delivering a technologically groundbreaking airplane to customers.
Boeing and Airbus know more than they would like about delays—and about the billions these cost. The Boeing “787” was supposed to fly in 2009; deliveries did not begin until 2011 and the program cost $32.0 billion in delays alone. (Source: “Not just a load of hot air: Dream becomes reality as Boeing’s new carbon-fibre 787 Dreamliner heralds a new age of air travel,” Daily Mail, September 26, 2011; http://www.dailymail.co.uk/sciencetech/article-2041863/Boeing-787-Dreamliner-reality-carbon-fibre-plane-delivered-Japan.html.)
The fact is that the combination of competition, advanced technology, safety, reliability, and modern society’s litigious penchant make the design and production of airliners complicated.
Bombardier, despite the rumors, is actually beating the headwinds with the C Series’ production. Bombardier expects to deliver the first C Series, a “CS300,” to AirBaltic sometime in late summer or early fall of this year. (Source: “First customer CSeries aircraft near completion,” Air Transport World, March 9, 2016.) The first of these aircraft has made it to the last stages of assembly at the Bombardier Commercial Aircraft plant in Mirabel, near Montreal.
Meanwhile, the “CS100” for Swiss International Air Lines (SWISS) is complete. The company’s test pilots have started the Pratt & Whitney-geared turbofans (the first engines of their kind) on the Mirabel tarmac ahead of its first flight. (Source: Ibid.) That means that, as promised last summer, the CS100 will enter service with SWISS in June, according to Rob Dewar, Bombardier’s VP of the C Series program. (Source: “Bombardier C Series Aircraft Route-proving Takes Off in Europe,” Bombardier, Inc., March 7, 2016.)
Bombardier is targeting production of 15 to 20 planes in 2015 and 30 to 35 in 2016. Moreover, Canadian aviation authorities have certified the CS100. Certification is an important sales incentive. Dewar said that interest in the CS100 has grown considerably following its certification.
The market has good prospects, but Bombardier has not suggested any guidance on orders for beyond 2016. Perhaps that’s what’s missing from pushing Bombardier stock to a new “cruise” price, higher than CA$1.15–CA$1.30 per share?
The C Series is a new generation of aircraft for commercial airlines. It has been in development for more than a decade. Bombardier has touted it as an alternative to smaller models of passenger jets built by rivals Boeing and Airbus. However, it is two years behind schedule and at least $2.0 billion over budget.
Bombardier is still airborne and, in fact, the latest events suggest it is stabilizing or heading toward cleaner air. The company must certainly make good use of public and private funds and any aid from the Canadian federal government. Still, the authorities must also recognize that, if they are keen on Canada maintaining its presence in the aerospace sector, they must go beyond financial aid to support Bombardier’s employees and BBD.B stock investors.