RE:RE:RE:RE:The turnaroundMany businesses are resilient market cycles. Unfortunately, Bombardier is not one of them. As a long term shareholder, I have to candidly admit that the company and sector is sensitive to economic swings. However, the rich are getting richer and ultimately, they are the end costumer of Bombardier's products. Furthermore, what is the average age of business jets in the sky, what is the distribution around that average? If it's normal, tight and with a mean of 10+ years, then the maintenance business will be good to go regardless of the aircraft production business.
Bombardier will be a two business company: the first a leading business jet design and manufacturing house and the second a stable aircraft maintenance operation. When this seperation occurs on paper (say full segment reporting), sum of the parts analysis will take the stock much higher, but also give the company stability int erms of cash flows.
We will get through 2022, have no doubt! Another 130 aircraft deliveries and ~$2Bn of service revenue. We will also start reducing the debt load, which despite being extended, still presents crosswinds to an otherwise smooth flight!
2023 and 2024, we should be delivering 130-150 jets per year, again with service revenue circa $2Bn and growing. We should be reaching a full year of free cash flow this year. I expect 2022 FCF to be $300MM, given the majority of CAPEX for the G7500 and the Mississauga/Pearson plant is behind us.
What does all this mean for the stock? Sure, $8 by the end of 2024 doesn't seem like an unreasonable bull case! Though my base case remains at $6 by 2025.