Timing is everythingI wish I hadn't bought Bombardier until now. Instead, I started buying about six months ago thinking that would be the time of ultimate pessimism because Bombardier was in the final year of testing. What I didn't realize is how much cash they would burn through during final testing and in how much difficulty they were in the Business Jet market.
For what it's worth, I think now is the time. People question management, and I think Pierre Beaudoin should have been questioned because he was in over his head. But he stepped back and I think they now have a very strong management team and are poised for orders. Here's why:
- The Paris Air Show put the C Series back on the map - they're now being considered by many of the world's largest airlines
- They got Airbus to blink - the fact that Airbus was talking to Bombardier about investing in the C Series legitimized the fact that it's a better Airplane
- Quebec's investment takes away the financial risk for airlines in whether the program is financially sustainable - whether or not the Canadian public supports this investment is moot because they simply don't understand what a big risk an airplane investment is and why it's so important that the government is involved
- No airline has canceled their orders despite the fact that the media said they would
- Certification on the C Series will be completed within the next 60 days
- There are a few large airlines that are about to make a decision on new planes and the new management team well connected and expects to win a couple orders
- The write-down on the C Series program will make it profitable sooner
- The spin-off for the Rail division will allow Bombardier to reduce debt and monetize the value of the division, which is currently not reflected in the value of their shares
With so much accomplished by the new management team in just 9 months, and so much more expected to happen in the next 60 days, now is the best time to hold Bombardier shares.