Balance sheet appears very solid
BBD had $4.7 billion of cash and $6.0 billion of liquidity at the end of Q1/15, following its large equity and debt offerings. This is well above the $3 billion threshold for liquidity that the company has previously suggested was necessary to run the company.
We note that liquidity and cash will likely be reduced at the end of Q2/15 due to normal seasonality and the redemption of a $750 million debt issue. BBD should then see a strong seasonal improvement in cash and liquidity in H2/15.
BBD’s next major debt and credit facility maturities are in 2018 and beyond.
Investment still expected to decline
BBD had formerly indicated that its investment should decline from the $2.0 billion/year level in 2014 to a roughly and more sustainable $1.0 billion/year in 2016, with the reduction to come in roughly equal amounts between 2014 and 2016.
Management reconfirmed that a reduction is still expected but the amounts and timing seemed somewhat vague. We think it is likely that the reduction will still be roughly on the old magnitude and timeline, given the largest investment program, the CSeries, appears on track from a flight test and certification standpoint.