Mark Collins – Bombardier’s (200ish) Penny Stock: Québec Inc. to the Rescue? And Feds?

1) July 9:

Bombardier Plunges to Lowest Since 1993 Amid Business-Jet Review

Bombardier Inc. tumbled to its lowest level in almost 22 years as the company said it’s re-evaluating the timeline for its largest, longest-range business jets [see “Bombardier Bizjet Beatdown“].

Management is “conducting a full review of all aspects” of the Global 7000 and 8000 program, “including its schedule,” Anna Cristofaro, a spokeswoman for the company, said in an e-mail Thursday [July 9].

The Global family’s biggest models have been bright spots for Bombardier amid sales struggles for the CSeries airliner and the suspension of the Learjet 85 [see “Bombardier Learjet Bombs“]. Bombardier is building the first prototype of the 7000, which will be able to fly nonstop from London to Singapore and retail for $72.8 million. As recently as last year, the Montreal-based company promised a 2016 debut for the 7000, with the 8000 following in 2017.

Bombardier’s widely traded Class B shares dropped 7.8 percent to C$2.01 at the close in Toronto, their lowest level since October 1993. That pushed Bombardier’s slump for the year to almost 52 percent [emphasis added]…

2) July 10:

Bombardier shares hit 22-year low

Selloff follows Bloomberg report [see 1) above] that cited a company official who said Bombardier’s new leadership team is conducting “a full review of all aspects of the program, including its schedule” for its new Global aircraft.

Bombardier’s stock hit a new 22-year low Friday amid reports that its new Global 7000-8000 business jet may be delayed and erroneous concerns that a major Chinese airline has turned to Boeing instead of the Montreal company’s CSeries.

The shares hit a low of $1.84 in early trading, but closed down 5 cents at $1.96 a share on the Toronto Stock Exchange.

That followed a more than 10 per cent dip on Thursday…

David Tyerman of Canaccord Genuity said such a delay should not come as a surprise given that Bombardier hasn’t provided an update on the development of the Global 7000 and 8000, including the date for first flight.

The analyst said he’s assuming the plane will be two years late and be delivered in 2018 and 2019…

The company’s shares could also be taking a hit from the lack of CSeries orders.

China Eastern Airlines announced it is buying 50 Boeing 737 aircraft for its budget subsidiary, China United Airlines.

Boeing said the order is for planes with 160 to 189 seats. However, a report in Seattle said the order from China’s third-largest airline will also include upgraded Max variants.

Walter Spracklin of RBC Capital Markets initially issued a report suggesting the order could include smaller planes that would be a direct competitor to the CSeries. He later amended it to reflect the larger plane size.

“While the 737-800 is not a direct competitor to the CSeries, the order from China Eastern…does likely reduce the probability of a CSeries order from China Eastern in the near term,” he wrote in a report…

 Tyerman said it’s a hyper-sensitive time for the CSeries [NO KIDDING: “Bombardier leaves Paris ‘satisfied’ but without CSeries orders“]…

Should things go, er, off the rails before the October federal election can the current federal government–lusting for a few more seats in La Belle Province–be porcing far behind Québec?  A shipyard angle on that:

RCN Joint Support Ship Stopgap: Feds Talking with Davie, Québec

Conservative Canada Inc. anyone?  And China Inc. in play too?  Lots of possible politics:

Running Off the Rails, or, Bust Up Bombardier? Dragon’s Embrace Section

Canadian hope springs…

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds


5 thoughts on “Mark Collins – Bombardier’s (200ish) Penny Stock: Québec Inc. to the Rescue? And Feds?”

  1. Norman spectates sharply:

    Mark Collins

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