Bombardier warned of reduced demand for business jets
Due to the coronavirus pandemic, Bombardier began to receive fewer orders for private jets. The manufacturer is preparing to reduce demand by at least 30%
In 2020, the demand for business jets may fall by 30-35%. This is stated in the Bombardier report for the first quarter.
Due to the coronavirus pandemic, the company faced a significant decrease in the number of orders in March. The report said private jet production would decline in line with the expected drop in demand. Despite the fact that the current situation had practically no effect on the orders of the Global 7500 model aircraft, Bombardier will cut costs and postpone some investments in order to increase profit at lower production volumes.
Given that the company has ceased operations in the production of commercial aircraft and railway equipment, the forecast of weak demand increases pressure on the new head of Bombardier, Eric Martel, Bloomberg notes. According to the report, in the first quarter Bombardier exhausted free cash flow of $ 1.6 billion. Half of these funds were spent due to reduced orders for airplanes and trains, as well as temporary downtime at the factory and the inability to deliver planes under the current restrictions.
Bombardier expects business activity to hit a low this quarter, which will continue until a gradual recovery in the second half of the year. The company also said it will prepare updated financial forecasts when it receives more information about the impact of the pandemic.