Bombardier Inc. was the one that fell the most in the registry after warning about the results of the fourth quarter and saying that it could retire from the joint venture with Airbus SE that manufactures the A220 aircraft.
Bombardier, which sold control of the A220 to Airbus in 2018 as part of a long-term campaign to raise cash and put it in a solid position, said the company needed more investment and could be subject to a reduction in fourth-quarter results next month. .
He also indicated that he could withdraw from the joint venture with Airbus SE that manufactures the A220 aircraft as program costs increase.
The shares fell 32 percent to $ 1.22 at 9:34 a.m. in Toronto after falling up to 36 percent for the biggest drop recorded.
Bombardier now expects 2019 adjusted earnings before interest and taxes (EBIT) to be approximately US $ 400 million, compared to a previously planned range of between US $ 700 million and US $ 800 million.
The free cash flow for 2019 is expected to be negative at US $ 1.2 billion, much lower than the previous negative forecast of US $ 500 million.
Bombardier is in the midst of a wider restructuring, focusing on its most profitable commercial and railway units.
He said that the delivery of four of his Global 7500 jets had now slipped into the first quarter of 2020 and that he now expected to deliver 11 Global 7500 in 2019 compared to an earlier forecast range of between 15 and 20.
Investors and analysts see deliveries of the commercial aircraft, which is on the list for US $ 73 million, as an important revenue generator for Bombardier.
The company said it also expects the timing of milestone payments and new orders in its Transportation unit to influence the results of 2019.
The company added that it expects to incur a charge of approximately US $ 350 million in the fourth quarter related to certain projects in the United Kingdom, negotiations with the Swiss Federal Railways (SBB) and higher production costs in Germany.
Reassessment of the Airbus A220 association
Bombardier said an increase in production at the Airbus Canada Ltd. Association says that aircraft manufacturers will require an additional investment in cash, which will delay the breakeven point and generate lower returns throughout the life of the project.
As a result, and after its departure from other commercial aerospace activities, Bombardier is “reassessing its continued participation” in the A220, the Montreal-based business said in a profit update. The value of the joint venture is also likely to decrease and Bombardier will disclose the amount of any amortization when reporting the final results of 2019.
Airbus said in response to questions that it will continue to fund the A220 program “on its way to the breakeven point.” The European aircraft manufacturer took control of the Bombardier C Series model in 2018, renaming the A220 in line with other models. It owns a 50.01 percent stake in the regional aircraft, with the Canadian company with 31 percent, and the Quebec-backed Investissement by the state, with 19 percent.
Bombardier spent more than US $ 6 billion on developing the C Series, equipping it with low fuel engines, composite fins and larger than usual windows. The program was delayed more than two years and its budget exceeded 2,000 million dollars.
The plane added 63 orders in 2019, with 105 currently in service and a portfolio of orders close to 500 planes. Airbus will begin producing the A220 in a second assembly line at its plant in Mobile, Alabama, this year.
With files from Reuters and Bloomberg