Post by
BBDB859 on Jun 03, 2021 10:10pm
Cashburn??
This is the only issue I have with this company.
When they had BT, they could make excuses about the Legacy projects. But now they only have BA, so it's not easy to hide behind excuses.
For the cashburn to continue in Q1, only tells me that the G7500 is still nowhere near as profitable as it should be by now. So some of the cashburn is attributed to that subsidy. Mind you this is only Q1. Let's just see what, that's about in Q2. I had the feeling that some of that cashburn could have been related to remnants of BT still. But selling the G7500 close to manufacturing price to get sales is not a good thing, if you can't get your costs down quickly.
They manufacture everything for the their business jets. For Pete's sake, get your costs down. The Revenue is there. Now they just have to get the margins up.
The debt to me is not a problem anymore. But if they keep burning cash right now the way they're doing it?? They'll go through the reserves, and balance of cash on hand before they can apply it to reducing debt even further.
The only good part of this is situation is, that in Q1 and Q2 they will have only delivered about 52 to 55 planes. The higher balance of the planes should be in Q3 and Q4. If they go to the top end of their guidence, of 120 planes for 2021 instead of 110? Then they still will have 65 planes to deliver for Q3 and Q4. If they deliver close to 65 for Q3&Q4 then the margins could get higher, and we may be ok on the cashburn side.
The only other problem I foresee is the EBITDA for the year. If they can get their FCF to positive quickly by higher margins? Then they could mitigate the cashburn somewhat. Because to service the LTD, we gotta pay $600M minimum, and then another $400M in costs for PP&E for the next 3 years, (this year being the heaviest), already we're at $900M. They gotta get the EBITDA up to at least cover these expenses, and leave a little +FCF for this year. They really have to be cash vigilant, and start increasing margins on the G7500, that's all I can say.
Burning cash is easy. But then all it does is keep you in the LTD hole longer.
Bombardier!!! EM and BD, get your acts together. Don't give Bay Street more excuses to keep this SP down. Clean up your act ASAP even as quickly as in Q2.