RBC: Comment on the Defence newsBombardier Defense announces special missions work out of Wichita, Kansas as part of PEGASUS program
Sentiment: Positive
Our view:
We view Bombardier’s announcement of continued special missions work now out of its Bombardier Defense headquarters in Wichita, Kansas, as a positive for the company as it further advances its defense segment. The Global series of aircraft are particularly well suited for intelligence, surveillance, and reconnaissance (ISR) missions due to their ability to operate at high altitudes and speeds while maintaining low operating costs in comparison to similar aircraft. The company manufactures three to six specialized aircraft annually, and has plans to grow the segment into a U$1B business (2022E revenues of U$6.1B). With the added pressure of the Ukraine war, we see defense spending as an opportunity for the company. NATO countries have committed to spending 2% of their GDP on defense. Canada has commitments to spend $51B, or 1.59% of GDP in 2026-27, and would need to commit $75B to catch up, according to a June report by the Parliamentary Budget Office. BBD is tracking well to achieving its full year and 2025 targets, and we see risk to the upside once updated guidance is released as early as next quarter. We flag Bombardier as a top idea under our coverage.
What happened:
Bombardier Defense has begun work on a Global 6000 aircraft to support Lufthansa Technik's participation in the HENSOLDT-led PEGASUS program of the German armed forces. Bombardier will utilize its expertise to perform major structural modifications to accommodate the "Kalaetron Integral" signal intelligence (SIGINT) system. The company has previously delivered three Global 6000 jets to Lufthansa Technik since the aircraft was selected in 2020