From the conference call...Came across this excerpt from the conference call. I find it easier and faster to read these things than listen to them, but don't normally find printable transcripts and this looks like a fairly large segment of the Q&A (about a dozen pages):
Bombardier Inc Q1 2012 Earnings Conference Call Transcript
38 page (18323 word) report published Jun 01, 2011
Price $54.00, add to your cart Report Overview Preview Q&A Search Inside About Thomson StreetEventsAbstract: Final Transcript of BBD.B.TO earnings conference call or presentation, 1-Jun-11 3:00pm ET Brief Excerpt: ...Shirley Chenier Bombardier Inc. - Senior Director IR Pierre Beaudoin Bombardier Inc. - President, CEO Pierre Alary Bombardier Inc. - SVP, CFO Guy Hachey Bombardier Inc. - President and COO, Bombardier Aerospace...
Report Type: TranscriptSource: Thomson StreetEventsCompany: Bombardier Inc
Ticker: BBD.B.TO
The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Walter Spracklin - RBC Capital Markets - Analyst: Obviously, you have had --.
Answer By: Shirley Chenier - Bombardier Inc. - Senior Director IR
Question: Walter Spracklin - RBC Capital Markets - Analyst: Okay, no problem. So first of all, good afternoon everyone was my first part. Then the second part here on the Aerospace side. Obviously, you've had some fairly strong margins in the first quarter coming head of what -- of the guidance you have provided earlier in the year. My question is, in the first quarter were you expecting a little bit of a seasonality associated with your margins that might revert, or is this -- are these margins coming in better than expected due to the mix effect of some of your large cabin business jet deliveries?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Walter Spracklin - RBC Capital Markets - Analyst: Okay. My second question, I guess -- first of all, congratulations on the CSeries order that you got earlier today, or you announced earlier today. That is fantastic. I am just curious though, when I look at the estimated value based on, as you indicate, list prices, I am getting a figure on a per aircraft basis much higher than what I have just been benchmarking here for future delivery. So can you update us perhaps on what you're considering to be the list price on the CS100, CS300, and perhaps each too whatever indication you can provide? How much of the -- how are the pricing negotiations going with customers today on your CSeries aircraft?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Walter Spracklin - RBC Capital Markets - Analyst: It fits nicely in your production profile and the early aircraft to give it on a smaller order base as well. Okay, (multiple speakers).
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Walter Spracklin - RBC Capital Markets - Analyst: Great. I appreciate your time and look forward to your updates in Paris. ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Question: Hamzah Mazari - Credit Suisse - Analyst: The first question is probably for Guy. Guy, just on how investors should think about the production rate for the CSeries, I know it is going to be less as you get up the learning curve -- it is going to increase, but how should we think about that? Then the 300 orders that you guys have mentioned by 2013, is it fair to say that is going to be -- you already have 100, so most of that is going to come in 2012, or how should we think about the ramp up to get to 300 orders?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Hamzah Mazari - Credit Suisse - Analyst: That is very helpful. Just to follow up -- last question, on the Q400 backlog, how are you guys thinking about decreasing the production rates there? And if you do decide to do that, can you shift into -- can you shift that production into BizJet, because they are manufactured on the same line? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Hamzah Mazari - Credit Suisse - Analyst: Okay, great. I appreciate it. Thank you.
Question: Cameron Doerksen - National Bank Financial - Analyst: Just a couple of questions on the CSeries. First, it looks like this order is -- announced today is for one of the -- it is going to have some early delivery slots locked up. I'm just wondering if you can talk about the progress you have made on finding customers for the first deliveries of the CS100?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Cameron Doerksen - National Bank Financial - Analyst: Okay, good. I guess second question also on the CSeries. Airbus has had the A319 and NEO now in the market for a number of months now. I am just wondering if you can kind of characterize the discussions you are having with customers who are making ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by a narrow-body decision. Has the entrance of the A319 NEO made discussions more challenging for you guys or has it actually resulted in catalyzing a decision with customers now that they have something to compare the CSeries to?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Cameron Doerksen - National Bank Financial - Analyst: Okay, thanks very much.
Question: Turan Quettawala - Scotia Capital - Analyst: quarter. How should we be looking at the rest of this year?.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Turan Quettawala - Scotia Capital - Analyst: Great. And I guess just on the business jet side, on the low-end business jet, Guy, can you give us some sense of how the sales campaigns are looking, and what you're hearing from the customers? Obviously, all the external data here seems to be a little negative.
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Turan Quettawala - Scotia Capital - Analyst: That is great color. Thank you very much, Guy.
Question: Joe Nadol - JPMorgan - Analyst: On the Aero margin run rate, Guy, it just seems like -- I know you provided sort of flat or 5 percentage guidance. But you switched accounting standards here, and it seems to me that looking at your data from last year you were probably in the 6% to 6.5% range, and you just did that again in Q1. So I'm wondering what you expect the rest of the year that will get you really below 6%?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Joe Nadol - JPMorgan - Analyst: Okay, fair enough. The commentary you provided earlier on the CSeries production ramp, you said a base year and then doubling -- and almost doubling, was that -- do you mean 2013 or 2014 as your base year.
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Joe Nadol - JPMorgan - Analyst: 2014. ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Joe Nadol - JPMorgan - Analyst: Okay, understood. And then on the -- could you provide some color. You talked about the turboprops. You talked about the Learjets. Could you give some color on the CRJs?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Joe Nadol - JPMorgan - Analyst: Okay, congrats on a good quarter.
Question: David Newman - Cormark Securities - Analyst: I just a quick question, and more of a mechanical one on the margins again. Not to beat a dead horse, but how did the tooling amortization come in versus your full-year guidance based on the units of production versus the, I guess, 10-year amortization previously? So in other words, you had a certain expectation when we had the IFRS day, and how did that come in based on that full-year guidance at the 5%?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: David Newman - Cormark Securities - Analyst: Like I mean based on the deliveries that you are kind of anticipating at that time. Obviously, it is a unit of production basis, so you're not going to be bearing the full amortization versus maybe a 10 year. Is it coming in kind of in-line with your thinking?
Question: David Newman - Cormark Securities - Analyst: Okay.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: David Newman - Cormark Securities - Analyst: Okay, very good. Second, when you mentioned, Guy, some push out to the right. And the GAMA shipments were down for business jets, and traffic is easing in commercial to a certain degree from, obviously, exogenous events, etc. Do you view this as short-term noise or is there a trend? Certainly the US airlines haven't stepped up yet. They are making noise of stepping up on the commercial side. But how do you view that?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: David Newman - Cormark Securities - Analyst: Okay, and on the commercial side, just on the push to the right, how much is related to the volatility of fuel? And do you sense in your conversations with some of the commercial customers that there is a price at where they just say, forget it, batten down the hatches, we are not forging ahead with the CapEx plan? Like is it $120 million, $130 million? Like how do they think about it? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: David Newman - Cormark Securities - Analyst: Right, right. Exactly. Okay, very good. Thank you very much.
Question: Marko Pencak - GMP Securities - Analyst: This is directed towards Pierre Alary. Note 12 to your financial statements, page 52, you provide, which I think is a new schedule for us with respect to provisions. I want to make sure that I understand what you are presenting here. I see that your total balance ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by at the start of the period was $1.812 billion and it ended at $1.806 billion. So does that mean that you have effectively expensed a net $6 million through your income statement during Q1?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Marko Pencak - GMP Securities - Analyst: Okay, so if I look at this correctly, and I am specifically focused on the credit residual value guaranteed column. In the line item, accretion expense, so you've got $5 million this year, you had $6 million last year. Is that notionally what you run through based on all your assumptions as a regular periodic expense?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Marko Pencak - GMP Securities - Analyst: Okay, and then the utilization, if I look at $46 million, does that mean -- so that is actually what you incurred in terms of the actual guarantees that you had to provide for?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Marko Pencak - GMP Securities - Analyst: So if I compare that to last year, essentially you guys would have had a fairly significant hit in terms of paying those guarantees this quarter. So call it $45 million greater than last year. Is that how I am to interpret this?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Marko Pencak - GMP Securities - Analyst: Okay, but --.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Marko Pencak - GMP Securities - Analyst: Okay. So just so I am clear, so basically none of that flows through the P&L. The only thing that flows through the P&L is the additions, and I guess the accretion does as well. (multiple speakers).
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Marko Pencak - GMP Securities - Analyst: Okay, so when I look at your Aerospace -- because I presume this is all in Aerospace, right, this particular column. And so does that mean that your free cash flow for Q1 would have included this $46 million drop?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Marko Pencak - GMP Securities - Analyst: Okay, thank you. That's it.
Question: Ron Epstein - Bank of America - Analyst: A question for Pierre. Can you walk through just in more detail the cash flow in the quarter, because I was just a little bit concerned about the usage of cash in the quarter seemed pretty high.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Ron Epstein - Bank of America - Analyst: Okay. So great. That is all I had. Thank you.
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Ron Epstein - Bank of America - Analyst: Okay. Then maybe one more come if I can. As we go through the rest of the year, the margins in this quarter were, I think, better than at least what we were expecting. And if you look at the guidance that you gave previously, it implies that margins go down in the rest of the year or is the guidance meaningfully conservative?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Ron Epstein - Bank of America - Analyst: Yes.
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Ron Epstein - Bank of America - Analyst: Great. Thank you.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Ron Epstein - Bank of America - Analyst: Okay.
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Ron Epstein - Bank of America - Analyst: Okay, great. Thank you.
Question: Benoit Poirier - Desjardins Securities - Analyst: A question on the backlog for business jet. It seems that your target has increased for the Challenger and Global, so previously 9 to 12 on the Challenger and now it is 15 to 18, and also an increase for the Global family, any color on that?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Benoit Poirier - Desjardins Securities - Analyst: Okay, a very good explanation. And my second question is related to the turboprop and the CRJ. So I heard your comment pretty well about the marketing campaigns and everything. But if you look at the order flow since the beginning of 2010 it seems that you underperformed both Embraer and ATRs on the turboprop and the regional side. Is there anything that is making your product less competitive than before versus peers?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Benoit Poirier - Desjardins Securities - Analyst: Okay, thanks for the time.
Question: Michael Willemse - CIBC - Analyst: If I look at the business jet orders over the last couple of quarters there a couple of large ones. One with NetJets, obviously, and one with VistaJet. I'm just wondering if you looked out, now that these two orders are in the past, do you see any large orders of this magnitude coming up again or could the business jet market go quiet for a while? Then just if you could give us a sense of the mix the last couple of quarters -- the charter airlines, the fractional ownership airlines, the high net worth individuals and then corporates, and then maybe how you see that mix changing going forward?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Michael Willemse - CIBC - Analyst: Okay, great. Thank you.
Question: Chris Murray - PI Financial Corporation - Analyst: I have a question for Guy. And something you talked about for a little bit is the Learjet 85 program. You mentioned in your discussion a little bit about some of the program, but I was wondering if you could give us maybe a first kind of update on some of the key milestones that will be upcoming? As well if you can give us some sort of indication -- I know you have been talking about that about some weakness in the small jet market about what your starting order backlog are, and similar to what you talked about the CSeries, what kind of initial production rate should be like?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Chris Murray - PI Financial Corporation - Analyst: When are you expecting first flight our first test flight, I guess, would be the best way to think about it? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Chris Murray - PI Financial Corporation - Analyst: Then should we be thinking about, similar to the CSeries, towards the end of the year in 2013 or something earlier in the year in terms of EIS?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Chris Murray - PI Financial Corporation - Analyst: Okay, that would be towards the end. Okay, great. Then maybe for Pierre, I guess -- first of all, I guess congratulations on getting the letter of credit facility renewed and freeing up the invested collateral. One of the things I think that we have always talked about for a long time was your pursuit of an investment grade rating, which may have helped that. Now that that is out of the way, what do you think is left to do in terms of the balance sheet in terms of either new financing or structure or other sort of key goals I think you may have moving forward?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Chris Murray - PI Financial Corporation - Analyst: Weren't you expecting to be able to free up that working capital in terms of your capital spending plan over the next while to support CSeries?
Answer By: Shirley Chenier - Bombardier Inc. - Senior Director IR
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Chris Murray - PI Financial Corporation - Analyst: Was part of your financial plan when you did some of the debt rollover, were you anticipating freeing up the invested collateral in order to support the CSeries development?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Chris Murray - PI Financial Corporation - Analyst: Then just if I may, just to recap, so we talked about free cash flow briefly. Is it still fair to think that you will be -- you will recover a majority of the working capital through the balance of the year, so by Q4 you will be essentially neutral for the year?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Chris Murray - PI Financial Corporation - Analyst: Okay, great. Thank you very much guys.
Question: David Tyerman - Canaccord Genuity - Analyst: Going back to the Bombardier Aerospace margin question again. I guess, Guy, what is it that you think could bring the margins back? Do you -- are you implicitly thinking mix is going to be different or that you're giving yourself some room because you think there may be production slowdown, or is there something in the cost structure that would get you back to [where] the 5% level? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: David Tyerman - Canaccord Genuity - Analyst: So are you saying that the mix in the first quarter was unusually good, and a lot more presumably Globals than would be typical for the quarters through the year?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: David Tyerman - Canaccord Genuity - Analyst: Okay, fair enough. Your average delivery rate wouldn't really change according to your guidance through the year. But it sounds like (multiple speakers).
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: David Tyerman - Canaccord Genuity - Analyst: That's right. And the average per quarter would be exactly actually what you did in Q1. So you're not actually calling for a slowdown in deliveries for the rest of the year. So it must be the mix that sounds like you're saying. Anyway, I will leave that. The other question I had is the news seems to be getting worse these days -- geopolitical headwinds. The US market is down a couple of hundred points. We are concerned about the economy again. I am wondering if you're seeing -- and this is not just aerospace, it is also rail -- if the Company is seeing any pulling back by the customers as these factors start to weigh on the customers? I guess, I think on the business jet side it seemed last year when Europe blew up on the Greek crisis, etc., it seemed that there was a real hiatus on business jet orders through the summer. So I am wondering if you're seeing any indications of that on either the aerospace side or the rail side? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: David Tyerman - Canaccord Genuity - Analyst: Okay, thank you.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: David Tyerman - Canaccord Genuity - Analyst: Okay, great. Thank you very much.
Question: Stephen Trent - Citigroup - Analyst: Just one or two questions for me. With respect to your ongoing conversations on -- I am sorry to sound like a broken record here -- but with respect to your ongoing conversations on potential CSeries orders, can you give us an update as to let's say how advanced some of those conversations are? And is it the case that in any of those conversations that you're also joined by China's COMAC, vis-a-vis the joint venture that you launched with that company? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Stephen Trent - Citigroup - Analyst: Marketing, forgive me.
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Stephen Trent - Citigroup - Analyst: Great, thanks for the color. And I admittedly did get tongue-tied using the word joint venture instead of framework agreement, forgive me for that. Could you elaborate, if you are able to, to what degree COMAC is at your side in any of these conversations or is it maybe a little early to --?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Stephen Trent - Citigroup - Analyst: Got it. So I was actually getting more at perhaps some kind of cross pollination on a joint marketing level. Maybe they are talking to those same customers about the C919, but it sounds like that would be a no.
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Stephen Trent - Citigroup - Analyst: Got it. That answered my question. Thank you.
Question: Anthony Scilipoti - Veritas - Analyst: Guys, good job on the disclosures here. I know that is a lot of work to put together. I had just some quick comments at the beginning here. Now that you are on IFRS, might you look to getting an SEC listing?
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Anthony Scilipoti - Veritas - Analyst: Okay, good. And this year if you get the approval to have the year-end December 31, just so I understand clear, Q4 will include three months of Bombardier Transportation, but only two months year-over-year for Bombardier Aerospace. Is that right?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Anthony Scilipoti - Veritas - Analyst: Okay. And I noticed on the global liquidity metrics you don't disclose that -- or come to a calculation of a debt to capital measure anymore. ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Anthony Scilipoti - Veritas - Analyst: We can calculate it, so that is fine. Okay, the other thing is I noticed that the number of used aircraft seems to have been risen pretty sharply over the last few quarters and year-over-year. Maybe you can comment on why this is occurring, what it means to pricing on new jets, market conditions, new orders, etc.?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Anthony Scilipoti - Veritas - Analyst: Quarter to quarter it is 74 from 68, not so much. But if you look at the rise over the last few quarters, it seems pretty significant, since I think since Q1 of last year there was 40 odd.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Anthony Scilipoti - Veritas - Analyst: I think you did tell us during the year, you told us the number. ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Anthony Scilipoti - Veritas - Analyst: So if I look -- so you are saying that it wasn't -- it hasn't gone up? My number including what I thought was off balance sheet is about 46 in like the beginning of last year. So that is including the ones that I thought were off balance sheet, but you are saying that is not the number? Is that what you are saying?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Anthony Scilipoti - Veritas - Analyst: I think there is 74 on the -- including the ones through the lease, right?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Anthony Scilipoti - Veritas - Analyst: 74 is in the note -- underneath note 9, sub note 1. That is where I get the 74. That is all.
Answer By: Shirley Chenier - Bombardier Inc. - Senior Director IR
Question: Anthony Scilipoti - Veritas - Analyst: Okay, that's fine. And then would you be disclosing ever the number of your estimated jets for the program tooling amortization assumption that you need? You know what I mean -- in order to assess per aircraft how much you're going to amortize there must be a number that says the total number of aircraft you expect to deliver.
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Anthony Scilipoti - Veritas - Analyst: Okay, that's fair. Thanks.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Anthony Scilipoti - Veritas - Analyst: I look at the number of units from 55 using your number to 74, it seems pretty significant.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Anthony Scilipoti - Veritas - Analyst: But that would include the used aircraft taken in exchange as well.
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Anthony Scilipoti - Veritas - Analyst: Okay, that is the key point. Thanks.
Question: Ben Elias - Sterne Agee - Analyst: I was wondering if you could spend a little time discussing the Transportation business, to what extent the orders were really affected by timing? And you did mention the book-to-bill is going to be 1. Where are you seeing more strength on the Transportation side? Is it an increase in signaling activity in Europe or is it more on the high-speed business or just the regular sort of commuter train?
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Ben Elias - Sterne Agee - Analyst: And that contract will go in the second quarter then?
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Ben Elias - Sterne Agee - Analyst: Okay, thank you.
Question: Tim James - TD Securities - Analyst: I just wanted to return to the Transportation business for a minute. I am wondering if you can talk specifically about the -- give us an update on the opportunities you are seeing in China, in particular order potential over the next year or two? You had a great year or two in terms of securing high-speed rail orders. I am just trying to get the lay of the land for the next two years.
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Question: Tim James - TD Securities - Analyst: Okay, thank you. My next question, just turning to Guy. I am just wondering if you can talk about the prospective orders you've got for the regional aircraft business and provide a little color on geographically where you are seeing the most interest?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Tim James - TD Securities - Analyst: Okay, thank you.
Question: Scott Rattee - Stonecap Securities - Analyst: I noticed that the trend in cancellations in the business jet unit has been coming down attractively over the last number of quarters. In this quarter it was about 8. I guess my question is, can you gave us maybe a little bit of color or just where those are coming from, either by way of the platform and/or geographic location? And then as a follow on just where we are right now as sort of basically 9% gross orders and cancellations. Is that something that we should consider as maybe a little bit of like a long-term sort of structural sort of type level that we might remain at over time?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Scott Rattee - Stonecap Securities - Analyst: Okay, so it is conceivable that it could trickle down a little bit more from there. But you are nearing what you always seem to refer to as something that is a little bit more structural?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Scott Rattee - Stonecap Securities - Analyst: And just one final question just on the Q400 program. You had noted that -- it sounds like there is a lot of activity that is just out beyond where the current production is. I guess my question there is, when you are referencing the fact that there is a lot out there to grab, do you need to expand the Q400 lineup at all to capture all of that activity, i.e., do you also -- does it bode well to launch a larger Q400 version to capture all of it, or with what you got right now are you able to do that?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Scott Rattee - Stonecap Securities - Analyst: Given that it is replacing some of the regional type jets it then fair to conclude that a lot of that activity is in North America?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Scott Rattee - Stonecap Securities - Analyst: Okay, great. Thanks very much.
Question: Tasneem Azim - UBS Securities - Analyst: So a quick question. When you look at the number of programs you have ongoing. So you have the CSeries, and then following that you will have the new Globals. And then there has been some talk about a stretched version of the Q400. The CapEx requirements will probably be significant over the course of the next three to five years. If I look at your historical free cash flow prior to the downturn, it was quite healthy. But during that time you also had minimal CapEx requirements. So as you look forward to the next three to five years, what kind of free cash flow trajectory can we be looking at? I know you have been looking at neutral to positive for this year. But is there scope to -- for it to be meaningfully positive, despite the fact that you have such high CapEx requirements? And just in-line with that, when do you guys think that you guys can achieve the global metric targets that you set for yourselves that are outlaid in the MD&A.
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Tasneem Azim - UBS Securities - Analyst: Sorry, just I am clear, so it is this year and then next year which would be at a high level, and then it should wind thereafter? Is that --?
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Answer By: Pierre Beaudoin - Bombardier Inc. - President, CEO
Answer By: Pierre Alary - Bombardier Inc. - SVP, CFO
Question: Tasneem Azim - UBS Securities - Analyst: Guy, if you could just provide a quick update on the outlook for the new Globals program, how has it been received and how are the negotiations going with customers so far on that program?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Tasneem Azim - UBS Securities - Analyst: (inaudible).
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Tasneem Azim - UBS Securities - Analyst: Does that mean that your slots for the first couple of years are pretty much filled up or how do I --?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Tasneem Azim - UBS Securities - Analyst: Okay. I got it. Just finally, on the Learjet side of your business, if you look at the trends in the market it seems that customers by and large are going towards preference of larger aircraft it seems. And as you mentioned before, the Learjet 85 had been reasonably successful. So over the long term do you think it would be better to focus on -- within the Learjet segment itself to focus on the larger side of that segment and perhaps move away from the Learjet 45 and focus on the larger variance?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Tasneem Azim - UBS Securities - Analyst: Okay, thanks very much.
Question: Steve Hansen - Raymond James - Analyst: Just two quick questions with respect to the CSeries. First, you referred to the 2010 list prices earlier in the call, which was certainly helpful. I am just curious whether you have made any material changes over the past six to twelve months with respect to the incentives that you're offering, really in order to solidify some customer orders? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Steve Hansen - Raymond James - Analyst: Okay, that helpful. My second question relates to the commonality issue that you mentioned earlier. Based upon the discussions you have had with customers to date how difficult of a hurdle is it for customers who are already operating a reasonably sized fleet of competing OEM Boeing, Airbus.
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Steve Hansen - Raymond James - Analyst: Okay, great. Very helpful. Just lastly, if I may, how optimistic are you about the prospects for Paris?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Steve Hansen - Raymond James - Analyst: Okay, fair enough. Thanks. ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Shirley Chenier - Bombardier Inc. - Senior Director IR
Answer By: Shirley Chenier - Bombardier Inc. - Senior Director IR
Question: Francois Shalom - The Gazette - Media: It is for Guy Hachey. One more question about the CSeries. I have listened to you -- to the several comments he had to make on the program over the last hour and a half, as well as this morning. I am wondering if you can -- if we can take it for granted then that there will not be another 15 month drought, given what you say are the two handfuls of advanced negotiations that you are in?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Francois Shalom - The Gazette - Media: Thank you.
Question: Susanna Ray - Bloomberg News - Media: My first question is just about the Q400. It wasn't clear to me from comments earlier what the magnitude of the production cut will be and whether those 100 employees will be laid off or absorbed by other airplane programs. ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Susanna Ray - Bloomberg News - Media: Okay, and thank you. Then my second question is just we (technical difficulty) six or seven months now what Airbus is doing in the narrow-body market. But Boeing continues to drag out their decision. And now I think that might be another nine months or so before they decide that they're going to reengine or come out with a whole new plane. And I'm wondering if that helps or hurts you in your sales campaigns? Then, also, I'm wondering what happens if Embraer jumps into the game at the end of the year, like they have been talking about doing?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Susanna Ray - Bloomberg News - Media: Is the uncertainty hurting you at all though?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Susanna Ray - Bloomberg News - Media: Okay, thank you.
Question: Caroline Van Hasselt - Dow Jones Newswires - Media: It is for Guy Hachey. Mr. Hachey, just to clarify your previous answer back on the commercial aircraft, just particularly with respect to the CRJs as opposed to the Q400s, but I am just wanted to clarify if -- are you saying that if you don't see a big CRJ order in this quarter, the one ended July 31, or this year, will you have to make production cuts or layoffs?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Caroline Van Hasselt - Dow Jones Newswires - Media: I see. Have you calculated yet how deep or extensive those production cuts might be?
Answer By: Guy Hachey - Bombardier Inc. - President and COO, Bombardier Aerospace
Question: Caroline Van Hasselt - Dow Jones Newswires - Media: Right, right. Okay. All right, thank you. The other questions are overlapping, so I will just leave it up to the next person.
Answer By: Shirley Chenier - Bombardier Inc. - Senior Director IR