Interim Q4 2011 BOMBARDIER INC Earnings Conference Call
Mar 01, 2012 AM EST
Thomson Reuters StreetEvents Event Transcript
E D I T E D V E R S I O N
BBD.B.TO - Bombardier Inc
Interim Q4 2011 BOMBARDIER INC Earnings Conference Call
Mar 01, 2012 / 03:00PM GMT
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Corporate Participants
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* Shirley Chenier
Bombardier, Inc. - IR - Sr. Director
* Pierre Beaudoin
Bombardier, Inc. - Pres and CEO
* Pierre Alary
Bombardier, Inc. - SVP and CFO
* Guy Hachey
BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace
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Conference Call Participants
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* Chris Parkinson
Credit Suisse - Analyst
* Cameron Doerksen
National Bank Financial - Analyst
* Joe Nadol
JPMorgan Chase & Co. - Analyst
* Walter Spracklin
RBC Capital Markets - Analyst
* Turan Quettawala
Scotia Capital - Analyst
* Noah Poponak
Goldman Sachs - Analyst
* Benoit Poirier
Desjardins Securities - Analyst
* David Newman
Cormark Securities - Analyst
* David Tyerman
Canaccord Genuity - Analyst
* Ron Epstein
BofA Merrill Lynch - Analyst
* Michael Willemse
CIBC World Markets - Analyst
* Scott Rattee
Stonecap Securities Inc. - Analyst
* Marie T. Zaun
The Press - Media
* Scott Deveau
National Post - Media
* Sylvain Larocque
Canadian Press - Media
* Charles Charbedder
Aviation International - Media
* Francois Poliette
- Media
* Francois Shalom
Montreal Gazette - Media
* Damien Dardeleau
Radio Canada - Media
*
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Presentation
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Operator [1]
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Good morning, ladies and gentlemen, and welcome to the Bombardier conference call. Please be advised that this call is being recorded. (Speaking in foreign language). I would now like to turn the meeting over to Ms. Shirley Chenier, Senior Director of Investor Relations. Please go ahead, Ms. Chenier.
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Shirley Chenier, Bombardier, Inc. - IR - Sr. Director [2]
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Thank you, operator. Good morning and welcome to Bombardier's conference call intended for investors and financial analysts. (technical difficulty)
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Unidentified Company Representative [3]
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(Interpreted). I also welcome the media representatives who are with us today. You will have an opportunity to ask questions later during this call when we open the media question period.
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Shirley Chenier, Bombardier, Inc. - IR - Sr. Director [4]
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Shortly, Mr. Pierre Beaudoin, President and Chief Executive Officer, and Mr. Pierre Alary, Senior Vice President and Chief Financial Officer, will discuss Bombardier's financial results for the fourth quarter and fiscal year ended December 31, 2011.
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Unidentified Company Representative [5]
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(Interpreted). This conference call is broadcast live on the Internet and is also interpreted in French and in English.
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Shirley Chenier, Bombardier, Inc. - IR - Sr. Director [6]
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-- can access the broadcast on our website at www.Bombardier.com and the webcast archive of the integral version of this call should be available within the next 24 hours. Slides for this presentation in English and French are equally available on our website, although values expressed during this conference call are in US dollars unless stated otherwise.
I also wish to remind you that during the course of this conference call we may make projections or other forward-looking statements regarding future events or the future financial performance of the Corporation. Several assumptions were made by Bombardier in preparing these statements and we wish to emphasize that there are risks that actual events or results may differ materially from these statements. For additional information on such assumptions please refer to the MD&A released today.
Please also note that I am making this cautionary statement on behalf of each speaker whose remarks today will contain forward-looking statements. Pierre Beaudoin will now begin the presentation.
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [7]
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(Interpreted). Hello and welcome to the conference call. Before we answer your questions I'd like to make a few comments on our results. As you have noted we delivered good financial results. Revenues of $18.3 billion versus $[18.9] (see press release) billion, net income of $837 million versus $775 million and a great improvement in EPS of $0.47 versus $0.42 last year.
We have strong EBIT of $1.5 billion giving us a cash position of $3.4 billion and a total liquidity level of $4.1 billion. This is all supported by a strong backlog of $53.9 billion, giving us great visibility on our revenue.
Now if we look more specifically at Aerospace we had 249 orders last year versus 201 orders the year before and 245 total delivery, which gives us a book to bill of 1, in line with our guidance. And for the eighth consecutive year we have attained market leadership in business aircraft with -- in terms of revenue with 37% market share which is an increase again this year.
If we look at the CSeries we have now 300 orders, letters of intent and options with 138 firm orders giving us a skyline, a full skyline for deliveries for the first 2.5 years.
On the regional front we had low level of orders in 2011 but we are off to a good start in 2012 with 40 orders and options and many more campaigns in the pipeline.
From a Transportation perspective, revenues were at $9.8 billion versus $9.1 billion if we compare to the previous year and we had good profitability at 7.2%, which is a record level which we obtained now two years in a row. From a book to bill perspective we are at book to bill of 1, strong in the Eurozone particularly in Western Europe, with a backlog of $31.9 billion which gives us 3.3 years of revenue.
Now I'd like to let Pierre Alary review the results more in detail.
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Pierre Alary, Bombardier, Inc. - SVP and CFO [8]
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Thank you, Pierre. Good morning. Q4 Aerospace revenues totaled $2 billion compared to $3.1 billion last year, mainly due to a lower volume as our fourth quarter is comprising only two months. Q4 EBIT margin is at 6.3% compared to 7.2% last year. The decrease is mostly attributable to a lower absorption of SG&A expenses due to a lower volume. For the 11 months ended December 31, 2011, revenues total $8.6 billion compared to $8.8 billion for 12 months last year. EBIT margin is 5.8% compared to 6.3% last year.
Q4 for Transportation shows revenue totaling $2.3 billion compared to $2.5 billion last year and a slower level of revenue is mainly due to the phasing out of major projects ahead of ramping up production of new contracts. EBIT margin is at 7.2% compared to 8.2% last year as a result of higher SG&A and a lower gross margin due to execution issues and certain projects.
For the full year, BT revenues totaled $9.8 billion and excluding for an exchange impact of $500 million, this represents an increase of $200 million over last year. EBIT margin is at 7.2%, the same as last year.
On a consolidated basis, Q4 revenues totaled $4.3 billion while EBIT reached $293 million. Net financing expenses amount to $33 million and with an effective income tax rate of 17.7%, net income for the quarter totaled $214 million or $0.12 per share. For the full year net income totaled $837 million or $0.47 per share compared to $775 million or $0.42 per share last year.
Now looking at free cash flow, the consolidated free cash flow for Q4 amounted to some $600 million and as a result, we end up the year with a cash balance of $3.4 billion. For the full year, Aerospace generated close to $900 million of cash flow from operating activity and invested $1.3 billion in our significant investment program.
Transportation free cash flow for Q4 was $564 million while free cash flow usage for the year totaled $424 million. We have previously discussed the issue with some contracts where we have experienced delays in previous quarters. We have taken corrective measures and progression towards resolution has been made. As a result, we expect inventories to decrease gradually over the next few quarters.
Having completed the year with a solid cash balance of $3.4 billion, our available short-term capital resources reached $4.1 billion. Our long-term debt maturity profile is such that we have no major debt repayment scheduled before 2016.
As a result, our significant cash flow generated from operations together with our solid liquidity are answering our financial flexibility to support our major investment program in Aerospace where we expect to invest approximately $2 billion in 2012.
Now, let me give you an update on our net retirement liability which amounted to just below $2 billion at the beginning of the year, and as you can see on the chart, it would've reduced to $[1.8] (technical difficulty) billion if it wasn't for the change in discount rates. The value of discount rates used to determine the benefit cost and obligation came down on average by about 100 basis points. Rates at the end of the year are at their lowest level over the past five years.
This variation in discount rates caused the net retirement liability to increase to $3.2 billion. Nevertheless the volatility of the net retirement liability has little impact on our cash contribution which is essentially -- which will essentially be the same as last year.
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [9]
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Now to conclude, 2012 will be an exciting year and we're off to a good start. We look first at Aerospace product development. We will assemble the two first flight test vehicles, the Lear 85 and the CSeries. One Lear 85 and one CSeries. And we will accomplish the first flight for both products.
Also, in 2012 we will start to take advantage of our re-focus of our commercial aircraft sales force in emerging markets and we have good examples already with Garuda buying the CRJ1000 in Indonesia, China Express with the CRJ900 and Ethiopian Airlines with the Q400. So this increased focus in emerging markets will give us better diversification.
In 2012, we will deliver approximately 180 business jets and 55 commercial aircraft. Our margin -- EBIT margin will be 5% and it will be better in the second half of the year than it is in the first half of the year. This is essentially the same guidance as we gave last year and we expect significant cash flow from operations in order to fund our $2 billion in new programs development.
Now if we look at Transport we continue to drive towards our margin of 8% in 2013 and we anticipate free cash flow generally in line with profitability and a book to bill of 1. As you can see at Bombardier, we're putting the pieces together to be a very different company in five years with exciting new products and service and increase revenues from emerging markets. All of this is supported by solid execution every step of the way. Shirley?
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Shirley Chenier, Bombardier, Inc. - IR - Sr. Director [10]
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Thank you, Pierre. We will now start the questions period for analysts and investors. In order to keep the duration of this call reasonable, I would ask you to limit yourself to one question to give everyone a chance to participate.
If you have any remaining questions at the end and if time permits, you can get back in queue, and if not, you can contact me after this conference call and it will be my pleasure to answer all your questions.
We can now start the first question. Operator?
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Questions and Answers
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Operator [1]
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(Operator Instructions). Hamzah Mazari, Credit Suisse.
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Chris Parkinson, Credit Suisse - Analyst [2]
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This is Chris Parkinson on behalf of Hamzah. Just a quick question. Can you give us a quick update on what the order pipeline looks like going forward in the commercial market and how your efforts in emerging markets are evolving and how competitively you are finding you need to price your aircraft?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [3]
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This is Pierre. I think the examples of that I just gave give you a good sense of how it's evolving. Our win in Indonesia, our win in Ethiopia, our win in China and in China has been a long time since we have played some CRJs in China so that's a good example of increased focus for us.
I think we are very competitive and there is a good pipeline for both CRJ and Q400 in emerging markets. It's a competitive market, but I think we know our competitor very well and we can be competitive in these bids.
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Operator [4]
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Cameron Doerksen, National Bank Financial.
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Cameron Doerksen, National Bank Financial - Analyst [5]
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My question is on the Aerospace margin guidance. You know it's a little bit lower than what I was expecting and I think where others were probably forecasting as well. I just may be asking you to talk about what the headwinds are for this year.
Obviously we have lower regional aircraft production rates and it looks like maybe pension expense is a headwind. Is there anything else in there that's -- not leading to -- somewhat to lower margins than expected?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [6]
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Yes. I think there's a couple of things you should consider. First of all, it's going to be a more difficult beginning of the year, first half of the year, than second half of the year, given that we are introducing the Global with the Vision cockpit. We have some ramping up to do. As we spoke before we are increasing the global but introducing a new cockpit or a new aircraft on the market. There is some ramping up with the global with the completion center.
Second, we had some readjustment in the production of the regional aircraft, both the Q400 and the CRJ. And of course as you adjust this will affect again the deliveries at the beginning of the year rather than at the second half.
And, third, if you look at the margins, the biggest difference with last year, of course you pointed out the mix but also you have to consider the Canadian dollar. This is a headwind of about [$100 million]. A little bit more than $100 million and you have some pension expense of the exact number of this year is, Pierre --?
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Pierre Alary, Bombardier, Inc. - SVP and CFO [7]
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It's just about $100 million.
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [8]
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Another -- $100 million for the Company which if you look in terms of sales, maybe you can use sales as a proxy but, you've got to think that Aerospace has got more employees in Canada and this is pension which has a large deficit.
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Operator [9]
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Joe Nadol, JPMorgan.
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Joe Nadol, JPMorgan Chase & Co. - Analyst [10]
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My question is on the investments in Aerospace for 2012. The $2 billion is a little higher than I would ask I had expected and I'm wondering if it's higher than you had previously expected? Is that the peak level, as we think about how the profile of all these programs pencils out over the next several years? And, you expect $2 billion of cash from operations in Aerospace to pay for it -- that's more than double 2011. How do you get there?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [11]
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I'll let Pierre give you more specific on the numbers but, it is the year where if you look at the airplane program it is the year when we spend the most because we are assembling first flight test vehicles for two products. They tend to be very expensive; and of course that means we are assembling others because these flight test programs would not be only with one aircraft as you know. And then we put the airplane into flight.
That also means that we're doing all of the components testing and integrated testing this year so it's a large expense. I do expect it to be a peak.
But maybe Pierre will want to give more colors on the numbers.
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Pierre Alary, Bombardier, Inc. - SVP and CFO [12]
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Effectively this year, our 2012 is expected to be the peak year. So 2012 and then carrying on to 2013. More so in relation to the two programs that Pierre referred to. In terms of the generation of cash flow from operations, in addition obviously to the profitability for the EBITDA level what we are expecting is we're expecting a book to bill above 1 for both business aircraft and commercial aircraft. So, therefore we expect generation of cash coming from the increase in the level of advances from customers year over year.
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [13]
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And just a comment on the level of expense. As you have noticed, we've been very prudent with our investment in the past year, particularly with the CSeries. For example in fixed assets, trying to delay that as much as possible. Of course now that we're getting close to production, we've got to start building buildings. We've got to start investing in fixed assets more than I guess -- we had planned that earlier and now it just has to happen. So there's one reason why this number is big this year.
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Operator [14]
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Walter Spracklin, RBC Capital Markets.
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Walter Spracklin, RBC Capital Markets - Analyst [15]
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My question is on the free cash flow guidance that you provided for transportation and I guess it's for Pierre Alary. You mentioned, as you had mentioned the first part that 2011 saw some challenges with certain programs that were or certain deliveries would be pushed into 2012. Now your guidance to be in-line with EBIT, however, is consistent with what you have said every year.
It was kind of our expectation that some of that push forward would lead to a bigger free cash flow year for 2012 in your Transportation division. Can you give us some color on that?
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Pierre Alary, Bombardier, Inc. - SVP and CFO [16]
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Sure. We effectively had said very similar guidance from year to year and we are saying generally in line that means four to six quarters, it's not specifically a year. And we effectively expect a reversal of the issue we had last year so therefore, our cash flow generation and those contracts which have been delayed.
On the other side, we are ramping up on contracts for which we have signed orders this year and last year, remember that in calendar 2010 we had a book to bill of 1.6. So, therefore, that we are going to ramp up in terms of building those trains.
So, there's a ramp up coming up which you know will offset a portion of the realization of the inventory of last year. And we expect level of advances on a lot of the new orders that we're expecting this year are also also option where the level of advances are not necessarily as significant.
So, we do expect good free cash flow in Transportation. Again, generally in line with profitability.
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Operator [17]
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Turan Quettawala, Scotia Capital.
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Turan Quettawala, Scotia Capital - Analyst [18]
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I have a quick follow-up to that. Pierre, should we also assume that the cash flow seasonality will be a little bit less weighted towards Q4 this year just because of the fact that you've had some of these delays? And then just really quickly, can you give us some guidance on ex-currency revenues for Transportation for 2012?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [19]
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Sorry, on the -- your second part of the question?
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Turan Quettawala, Scotia Capital - Analyst [20]
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Sorry, revenue guidance ex-currency I guess for transportation. What should we be looking at?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [21]
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So on the first one, the seasonality, we do have our usual seasonality, you know, and it is toward the end of the year. The recovery on the contract where we had seen delay will be gradual over the year and it's going to be a number of quarters. So you can expect effectively to have seasonality in the free cash flow for Transportation.
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Turan Quettawala, Scotia Capital - Analyst [22]
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So it will be the same as every year?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [23]
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Similar to every year. It may vary a lot from depending on the contract that we sign and so on. But typically it is more generation towards the end of the year.
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Operator [24]
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Noah Poponak, Goldman Sachs.
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Noah Poponak, Goldman Sachs - Analyst [25]
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I wanted to ask for some more color on CSeries development. Can you first just speak broadly to how you feel, I guess the comments from some leaders three to six months ago were fairly cautious. Now it sounds more like you feel in line. Can you just say how you feel in terms of whether or not you closed the gap? How you feel versus three to six months ago and then any color you can give on milestones we should be looking for. When do you have to actually have the first test vehicle hardware completed to be on track and what's done between now and then and then between that and the actual first flight?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [26]
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Well, first of all, I'll answer your question to how we feel. We feel quite enthusiastic about 2012 because we are seeing components now. Last week I was in Ville Saint-Laurent, our plant. I saw several cockpits that were advanced. I saw rear fuse. We go to Mirabelle. We are starting to see components come into this to the Siesta. Our team was in Belfast and we see the wing being advanced in the centrifuge.
So it's exciting because we see the components coming together and that gives us confidence that we are making the right progress.
Now, I'm going to caveat this with the fact that what we have to do this year is very complex because all these parts have to come together. They have to work together and we're doing the flight -- the fly-by-wire for the first time for a full aircraft at Bombardier. I don't want you to read into this that I'm questioning whether we are able to do all of this this year.
We have a good plan. I'm excited about it. I'm starting to see components but I want to say what we are doing is a very complex and we're going to need to follow it like Guy says day by day.
At the same time, we haven't -- what we're giving you as a target for us is to fly at the end of the year. We haven't decided as a team to give additional guidance and I think we're going to leave it at that for now. As we build confidence in the program we'll aim to communicate to give you more view on how we're making progress and really to try to give you some substantial news when we try to give it to you because it's one thing to show components. It's another thing to have an aircraft. So, good progress. 2012 will be exciting.
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Noah Poponak, Goldman Sachs - Analyst [27]
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Can you say when you need to have a structural aircraft essentially complete before filling in systems and software in order to be on track?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [28]
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We don't want to give additional guidance at this point.
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Operator [29]
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Benoit Poirier, Desjardins Capital.
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Benoit Poirier, Desjardins Securities - Analyst [30]
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My question is related to Transportation. I was wondering whether you could provide an update on the Transportation issues in France, Germany, Switzerland and also with the one with CTA? If you could give an update that would be great.
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [31]
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That's quite a broad question but let me answer it step by step. On -- let's start with Ile-de-France. We had made good progress toward the end of the year at delivering another 20 trains that give us a total of 40 trains. In mutual agreement with the customer, in January, we decided to stop delivery again to really focus on making sure that the trains we were sending to [Assensier] were -- had all the modifications in them rather than trying to do the modification in service and also to stabilize the reliability of the train.
So, we felt with the customer that we could do that in a more efficient way while having them in our full possession, if I can say it this way.
So that being done right now we're monitoring this week for week. We've at least put a very large team on this. We've taken experts from transport from across the world, some people at the group level, even some consultants in specific areas. We have the necessary focus to make progress but there is still some work to do before we start delivery again on Ile-de-France.
On TALENT 2, we are delivering. We're up to 39 trains in service, are delivered to Deutschen Bahn. We need to deliver about 120 this year and the team is very focused on that. There is still some certification to obtain and some different configurations than the four train configuration. But I think we have a good plan and we need to execute on it.
On the Sweden Regina I think you were referring to, these trains are being delivered and we expect to deliver in the first and second quarter the trains in accordance with the agreement with the customer.
And you asked about Chicago. I think you are referring to the fact that we had stopped delivering the Metro because of an issue with the porosity in the casting. We have done -- that's a fact. We have now new castings in place and we've begun a retrofit program that is planned with the customer. And we would expect to start delivery again early, I would say, second quarter.
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Operator [32]
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David Newman, Cormark Securities.
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David Newman, Cormark Securities - Analyst [33]
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Just on the attribution behind your CapEx spend you got $2 billion so far for [BA] this year. Where are you on the total CapEx spend with this on the various programs that you got -- the Lear 85, Global 7000, Global 8000, and the CSeries and are you at all concerned at all down the road with any solvency deficit issues that might lead to higher contributions post-2012?
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Shirley Chenier, Bombardier, Inc. - IR - Sr. Director [34]
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That's two questions.
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David Newman, Cormark Securities - Analyst [35]
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Okay, well, lets go with the first one then. Basically, a status update on where you are on the total spend in the program I guess is kind of where I'm getting at.
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Pierre Alary, Bombardier, Inc. - SVP and CFO [36]
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The color we can give is that 2012 is kind of the peak year. Next year will also be an important year in terms of spending and as we anticipate entering into service in 2013, that's the color we can give around the Lear 85 and the CSeries.
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [37]
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The challenge we have to give specific numbers of nonrecurring constantly is that during an airplane program we make a choice between nonrecurring and recurring. Sometimes we will invest more in nonrecurring to get a better recurring cost and sometimes the other way around. So, it would be very hard to keep track.
So what I can tell you in terms of business case, we have two good business cases for the CSeries and the Lear 85.
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David Newman, Cormark Securities - Analyst [38]
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And are you -- just one little squeeze, one little one in there. Are you in line with your initial budgets of what you -- the total CapEx spend you might have on these various programs or anything any sort of inflation in the total amount?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [39]
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What I would answer to this is what I just answered to you. We have two good business cases in place and, because these things vary much during a program so I don't want to refer to the number at the beginning and a number now. We look at the business case constantly.
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Operator [40]
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David Tyerman, Canaccord Genuity.
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David Tyerman, Canaccord Genuity - Analyst [41]
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My question is on Bombardier Aerospace and the margins in 2011. They came in at 5.8%. As late as December I think you were saying 5%. So I'm wondering what happened? You were ahead all the way through the year and kind related to that is whatever happened in 2011, can that recur in 2012 with respect to your margin guidance?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [42]
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We are giving you the same guidance as we gave you last year. I think in 2011, we had to be prudent because there was a lot of movement in the skyline of regional, particularly you know that we had to slow down production.
I think if you look at 2012, we had some headwinds that the team needs to address which we just spoke about it, the Canadian dollar, the pension -- the Canadian dollar alone is $100 million. Now as you know we'll aim to meet further guidance and if we can we'll try to do better but there is some headwinds that pension and Canadian dollars are two headwinds that we have to deal with.
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David Tyerman, Canaccord Genuity - Analyst [43]
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So why did you beat in 2011?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [44]
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Because there's a few areas we did better and probably there was a mix that was a little bit different and maybe some pricings came in a little bit different. You know, it's just sometimes you replace one aircraft by the other and it makes a huge difference.
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Pierre Alary, Bombardier, Inc. - SVP and CFO [45]
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Better execution in general. There's not anything specific. It's just focus and improvement all the time.
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [46]
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But if we can improve our unit costs we do keep ourselves some maneuvering space in our unit costs and Guys' team has been executing very well. So there are probably some gains there as an example.
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Operator [47]
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Ron Epstein, Bank of America Merrill Lynch.
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Ron Epstein, BofA Merrill Lynch - Analyst [48]
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A quick question, I guess on commercial Aerospace. So you've planned to do 55 commercial [debts] in 2012 right? If I understood that right.
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [49]
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Exactly.
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Ron Epstein, BofA Merrill Lynch - Analyst [50]
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But currently you've got what, 64 RJs in backlog and 30-8's and 5 amphibious. Won't that money go through a lot of your backlog this year? How are you thinking about that?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [51]
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I didn't hear your question. I'm sorry. The last one.
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Ron Epstein, BofA Merrill Lynch - Analyst [52]
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Sure. Let me repeat it. So, if I got the numbers right, right now you have about what, 64 regional jets in backlog -- 30-8's, 30 Turbo props and and five amphibious planes. So if you deliver 55 commercial jets it's going to -- if you just look at the regional jet backlog, you're going to burn through most of your backlog this year and how do we think about that? Are you planning to have a book to bill on that business of at least 1 to replace those that you're going to have to deliver and if so, where is that order activity coming from?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [53]
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That's a good question and I think you answered yourself. We're planning to have a book to bill of above 1 and we're off to a very good start. We already have 40 orders and options. They are coming from emerging markets and I think one of the things that was mentioned many times last year is, we needed to increase our sales force in new markets where, in the past, we didn't need to go there for our regional airplanes.
But today, that's the reality and we are being very aggressive at making sure we don't miss any opportunities. So that's one thing.
The other one is, I do think there is key opportunities in North America and Europe. But, particularly in North America, there is some programs that have been announced that we think could come through this year.
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Ron Epstein, BofA Merrill Lynch - Analyst [54]
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Can you elaborate on that? What in North America?
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [55]
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It's hard for me to elaborate because that's decided by the customer a lot. But I'll just give you one example. West jet has announced that they are looking for turboprop and we think we have the absolutely the right aircraft for them. We'll need to win the campaign.
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Operator [56]
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Michael Willemse from CIBC.
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Michael Willemse, CIBC World Markets - Analyst [57]
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Just another follow-up question on margins in Aerospace. Sorry but even if we look at second half of 2011 if you look at the average Aerospace margin you are out about almost 6%. So just wondering what's happening in the first quarter 2012 versus the fourth quarter. Is it a lot of the Global Vision introduction? Just some color there. Because Canadian dollar wouldn't be much of an issue there either.
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Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [58]
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Yes. You answered it also partly. The transition to the Global Vision you remember we now move from green aircraft to completed aircraft and the transition has to do with how fast we can complete these new aircraft as we transition from plastic if you want to the Vision and that's happening in the first quarter.
So definitely Globals will be affected in the first quarter now ramping up after that. And also, the remix we did in regional last year by reducing production, we were able to implement the new customers into our skyline but later on in the year so sometimes the aircraft would be already built but by the time we could put it in the configuration of the new customers, it comes later on. So some of the orders came later than anticipated last year and early this year, giving us some challenge in configurations. So, it does give us some headwind for Q1 and Q2.
------------------------------
Operator [59]
------------------------------
Scott Rattee, Stonecap Securities.
------------------------------
Scott Rattee, Stonecap Securities Inc. - Analyst [60]
------------------------------
Just a question with the backlog and in Learjet. I see that it's -- I think it's sort of standing at about two months right now. With the target of 6 to 9, I guess what I was wondering here is, is that program sort of on order activity, sort of on a spot basis where we may not actually sort of see it moving too, too much, sort of implying that you could kind of keep production rates where they are? Or should we be expecting some more sort of cuts there in that program? Thanks very much.
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [61]
------------------------------
I don't anticipate that we need to cut Learjet. We put it at a level that we think is adequate. Given the demand today the light segment has not really come back as strong as what we would see in the upper end as you know.
So yes, we have some challenge in this industry; but we think we have enough prospects to deliver the aircrafts that are planned and as you know, as the Lear 85 will come into production I think then it will give momentum to the Lear brand.
------------------------------
Operator [62]
------------------------------
Noah Poponak, Goldman Sachs.
------------------------------
Noah Poponak, Goldman Sachs - Analyst [63]
------------------------------
Just a couple of follow-ups. What is the new 2013 Aerospace margin target?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [64]
------------------------------
Given the current economic condition, given that business aircraft and regional and particularly regional has not come back in volumes that we had expected, we decided that it was prudent to stay with our guidance only for 2012. And, when the market comes back, when the economy comes back, then we will decide if we should give longer term target guidance.
------------------------------
Noah Poponak, Goldman Sachs - Analyst [65]
------------------------------
Okay and then one other one. Your net interest expense was down in the fourth quarter versus the run rate of the year. I'm assuming that was the 11-month effect. Is that true? And then what is the net interest expense number to look for in 2012?
------------------------------
Pierre Alary, Bombardier, Inc. - SVP and CFO [66]
------------------------------
Yesterday -- obviously, yes, the fact that we had two months definitely had an effect, and mostly explain the variation. And looking forward, next year you can expect the net interest expense to be at a similar level than what we have experienced for the full year this year.
------------------------------
Operator [67]
------------------------------
David Newman, Cormark Securities.
------------------------------
David Newman, Cormark Securities - Analyst [68]
------------------------------
Yes, just a quick follow-up on the CSeries. We haven't really talked about the campaigns in a while and how you are doing there and, obviously, in China you're getting closer and closer to them. But, at what point does this convert? I think you had mentioned like 2013. Where, overall globally, where do you stand and in particular, China, how is it going there?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [69]
------------------------------
First of all, with 138 firm orders we already cover our skyline like I mentioned for the first 2.5 years. Now we have some good opportunities and there is some customers that tend to order more as closer to production. So we have I think 45 LOI that we're looking at converting and we're working hard on that and then we have new customers that we are working on. China typically orders closer to production. So I think we are getting into that window.
------------------------------
David Newman, Cormark Securities - Analyst [70]
------------------------------
Okay. And is it still sort of the same numbers that Guy gave in the past where it was a handful that were very hot and then behind that I think it is 70 or 80 in the past was kind of the number. Was it sort of the same metrics?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [71]
------------------------------
Yes, I would say so. There is a very -- there's a lot of active discussion on the CSeries right now.
------------------------------
Operator [72]
------------------------------
David Tyerman, Canaccord Genuity.
------------------------------
David Tyerman, Canaccord Genuity - Analyst [73]
------------------------------
Two other follow-ups. The tax rate for 2012, any thoughts you have on that, Pierre, and also pension financing expenses. Is it likely to change much from 2011?
------------------------------
Pierre Alary, Bombardier, Inc. - SVP and CFO [74]
------------------------------
Well, in terms of the tax rate, our tax rate guidance is something -- it could be between 20% and 25%. The past two or three years, overall, we were closer to the 20% than the 25%. But that can vary from quarter to quarter also.
------------------------------
Operator [75]
------------------------------
Joe Nadol from JPMorgan.
------------------------------
Joe Nadol, JPMorgan Chase & Co. - Analyst [76]
------------------------------
Thanks. Pierre, could you update us on the MOU with COMAC and how things are progressing there and for the other Pierre, can you tell us about liquidated damages and I know you don't want to quantify those probably the impact that on margin in 2011 but you didn't indicate that as a headwind for 2012. And I'm wondering if you could give us a little more color there. Thank you.
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [77]
------------------------------
To update you on COMAC, we have active discussion with COMAC. We are discussing the framework that we explained a year ago. We'd like to convert this into a firm agreement as soon as possible.
But, I know that one year seems like a long time but this is the kind of agreement that will be with us for 20 years because we have airplanes that will be in production on both sides for that long. So we need to make sure that it's a win-win on both sides and I think this is why it's taking time. We're really getting into the details, looking at how it can benefit the C919 and the CSeries.
So a little bit of patience there. But I think our teams are in active discussion and hopefully we can come to conclusion shortly.
------------------------------
Operator [78]
------------------------------
Michael Willemse, CIBC.
------------------------------
Michael Willemse, CIBC World Markets - Analyst [79]
------------------------------
Pierre, I just wanted to follow up on the comment about LOIs. I think you said you had 45 LOIs. Can you talk about how that would compare to say six months ago or a year ago?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [80]
------------------------------
I don't remember how many LOI we had six months ago. Today we have an LOI I think with -- I can give you precision on which customer. But that's a normal evolution, you know; we go from discussions to signing a letter of intent. Some customers want to do that. Others want to go to PA directly and then from the letter of intent for some customers, it opens the authority to put all of their staff on to get to a purchase agreement.
But we can give you precision on that; I would have to look back at the numbers.
------------------------------
Michael Willemse, CIBC World Markets - Analyst [81]
------------------------------
And the 40 LOIs, that includes the customers that have signed purchase agreements already as well?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [82]
------------------------------
No. An LOI is a customer that has gone from being in discussion to signing a letter of intent, if you want. And then once it goes firm, it's a purchase agreement. So, we've announced a few. I'm just going to give you precision on that on which one are the ones we have announced.
------------------------------
Shirley Chenier, Bombardier, Inc. - IR - Sr. Director [83]
------------------------------
I'll give you a call off-line, okay, Mike?
------------------------------
Michael Willemse, CIBC World Markets - Analyst [84]
------------------------------
That would be great, thank you.
------------------------------
Operator [85]
------------------------------
There are no further questions at this time.
------------------------------
Shirley Chenier, Bombardier, Inc. - IR - Sr. Director [86]
------------------------------
Thank you, operator. We will now begin the question period for media representatives.
------------------------------
Operator [87]
------------------------------
(Spoken in foreign language). (Operator Instructions). Marie T. Zaun.
------------------------------
Unidentified Participant [88]
------------------------------
Marie T. Zaun, from [The Press].
------------------------------
Marie T. Zaun, The Press - Media [89]
------------------------------
(Interpreted). Yes I would like to talk about the line rates at Mirabelle and Toronto as well. I think that you talked about a reduction in the line rates. I'd like to know if that is in fact the case and if there might be other reductions in the months to come.
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [90]
------------------------------
(Interpreted). Yes, the changes were put in place last year and we're not expecting any other changes.
------------------------------
Operator [91]
------------------------------
Scott Deveau, National Post.
------------------------------
Scott Deveau, National Post - Media [92]
------------------------------
Thanks. Actually that was my question.
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [93]
------------------------------
Can you repeat it in English? Do you want me to repeat it in English? (laughter).
------------------------------
Scott Deveau, National Post - Media [94]
------------------------------
No, it's all right. I have the translation. Thanks.
------------------------------
Operator [95]
------------------------------
(Speaking in foreign language). Sylvain LaRocque.
------------------------------
Unidentified Participant [96]
------------------------------
Sylvain Larocque of the Canadian Press.
------------------------------
Sylvain Larocque, Canadian Press - Media [97]
------------------------------
(Interpreted). Hello. I'd like to just go back to the CSeries and the Learjet. Mr. Beaudoin, you were a little bit vague when the question was asked whether this was according to your agreement in terms of the level of investment. I'd like to know if there is a cost overrun in this particular program with regard to investments.
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [98]
------------------------------
(Interpreted). What I explained was that these investments -- this is always a decision that's made in a nonrecurring investment and also with regard to equipment. We also tried to make adjustments and that's why we don't give any specific information during the development phase. But what I can say about the two programs is that the business case is very solid for the Series and for the Learjet 85.
------------------------------
Sylvain Larocque, Canadian Press - Media [99]
------------------------------
(Interpreted). Did you invest more than you intended to at the beginning?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [100]
------------------------------
(Interpreted). To repeat I can't compare things because the decisions were made based on business case. If we change our business case by investing more in retooling, that of course will depend on our understanding of the specific program. I can't give a very specific answer to your question unfortunately.
------------------------------
Sylvain Larocque, Canadian Press - Media [101]
------------------------------
(Interpreted). The comments of two leaders of Korean Republic it seems to put into doubt the realistic nature regarding the CSeries. Do you think that you have managed to convince them --? I don't know whether Mr. Hachey has spoken with them on the phone but have you managed to convince them about the CSeries?
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [102]
------------------------------
(Interpreted). When a client buys a product for its airline they buy a relationship with us. So we are constantly in discussion whether it's Korean or Republic or Lufthansa and what these clients say is that they are very excited with the developments and they are impressed with the performance, they understand the progress that we're making in the programs and that they are committed because they have a firm agreement with us.
I can't really react to these comments that are made by other people but I can tell you that these clients, the leaders but the whole team are very often here in Montreal, are very committed and they support the development of the CSeries.
------------------------------
Sylvain Larocque, Canadian Press - Media [103]
------------------------------
(Interpreted). A final question regarding Bombardier Transportation. There were calls for a tender that were pushed back and in 2012, is there a possibility that there will be some very significant contracts?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [104]
------------------------------
(Interpreted). We can't obviously say when the contracts will be signed but we are hopeful that it will be soon. If there was a call for bids, with the -- there are some good opportunities coming our way in 2012.
------------------------------
Sylvain Larocque, Canadian Press - Media [105]
------------------------------
(Interpreted). With crossrail do you have any possibilities?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [106]
------------------------------
(Interpreted). Yes, we can be very competitive. We have a team in the UK. We have participated in a lot of calls for bids. And we are very well positioned but, of course, it's always a competition and we have to make sure that we have the best bid.
------------------------------
Operator [107]
------------------------------
[Charles Charbedder] from Aviation International.
------------------------------
Charles Charbedder, Aviation International - Media [108]
------------------------------
Can you guys go over the backlogs in terms of months for the Learjet Challenger and Global lines as well as their targets?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [109]
------------------------------
Yes and it's in our MD&A and I'll just get to the page to make sure that I -- so in Learjet it's -- we have two months of backlog and our target is 6 to 9. In challengers we have 12 months of backlog and our target is 15 to 18. And in Global we have 34 months of backlog and our target is 24 to 30.
------------------------------
Charles Charbedder, Aviation International - Media [110]
------------------------------
And how much of the Global backlog is international, specifically China or Asia?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [111]
------------------------------
I can't answer exactly for the Global why we tell you that business aircraft in general is 60% international. And I presume that you're asking outside of the US.
------------------------------
Charles Charbedder, Aviation International - Media [112]
------------------------------
Yes.
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [113]
------------------------------
Yes, okay.
------------------------------
Charles Charbedder, Aviation International - Media [114]
------------------------------
And one more question. When will the first completed Global be delivered to NetJet?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [115]
------------------------------
We'd have to get back to you on that.
------------------------------
Pierre Alary, Bombardier, Inc. - SVP and CFO [116]
------------------------------
The first Green has been delivered just recently.
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [117]
------------------------------
The first Green, yes but completed so let's say a year after that. We can give you -- we can get back to you if we release this data if or if NetJet wants us to release it's okay with us releasing these data.
------------------------------
Operator [118]
------------------------------
(Speaking in foreign language). [Francois Poliette], (inaudible).
------------------------------
Francois Poliette, - Media [119]
------------------------------
(Interpreted). I'd like to understand a little bit better the business relationship that you have with COMAC in China. I was wondering if there have been any echoes in the media whether there might be a type of amalgamation between the business plane divisions. I'd like to know a little more about that.
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [120]
------------------------------
(Interpreted). We can talk to you about our framework. We did have a press release on this that gives you some detail; but we've never spoke about an amalgamation or a merger. These were rumors in the media that we corrected. It was a misinterpretation in the German media or perhaps a poor translation. But I can assure you that there has been no talk of any sort of merger.
This is work that we are doing together to figure out how our two businesses might have things in common with regard to planes with after sales service. So we can send you a copy of the press release that was distributed last year.
------------------------------
Francois Poliette, - Media [121]
------------------------------
(Interpreted). This business relationship, if it goes ahead, will this help you with your market penetration in China? And if it doesn't go ahead could that be harmful?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [122]
------------------------------
(Interpreted). I think it's very positive to have a plane. They have 150 seaters in the CSeries, is between 100 and 149. If we work together when we approach a client obviously this is very good for our entry into the Chinese market and also for our planes in China and for COMAC planes outside of China.
This obviously doesn't affect the --. If things don't go forward it doesn't affect the 6 series in China.
------------------------------
Francois Poliette, - Media [123]
------------------------------
(Interpreted). So do you think you could provide combine your sales approach?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [124]
------------------------------
(Interpreted). We didn't talk about our sales force. But we were talking about after sales, about technical publications, for example. We were talking about working together for the purchase of certain components. If we both buy the same components, perhaps we can have a better price by joining forces in that way. We were talking about common systems that there might be in the planes but we do sketch this out in the framework agreement and press release.
------------------------------
Francois Poliette, - Media [125]
------------------------------
(Interpreted). I've perhaps misunderstood but before the assembly of the CSeries in Montreal, I thought I understood that you were not certain that all of this could be done. And did I perhaps misunderstand?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [126]
------------------------------
(Interpreted). No. I think you have misunderstood. What we said was that it is complicated. It is complicated assembling a plane. Things are going well. We are starting to receive components. And we are very excited about what's going to happen in 2012.
But putting all of these components together to have a plane that flies at the end of the year, there's a lot of work involved.
------------------------------
Operator [127]
------------------------------
Francois Shalom from the Montreal Gazette.
------------------------------
Francois Shalom, Montreal Gazette - Media [128]
------------------------------
Yes, thanks. You mentioned campaign opportunities in North America. I think you said this year. I'm wondering if you are in the bidding or if you are in the running for the United Airlines -- United Continental order. And related to that, I'm wondering what you make of the US administration's comments, pretty strong comments last week by President Obama about unfair subsidies coming from and I'm quoting here, give American companies a fair shot by matching the unfair export financing that Boeing's competitors receive from other countries.
Do you feel targeted there because Boeing is not -- or United Airlines is not looking to order from India and China and Russia or anywhere else. It's Bombardier and Airbus and Boeing. So do you feel targeted by that comment?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [129]
------------------------------
Maybe I'll get to that part of the question. As you know, the aircraft industry came to an understanding at the -- which is called the ASU -- the Aircraft Sector Understanding, which essentially did away with home country rule. We were never in favor of that. This was a rule where US aircraft companies would not finance -- US governments would not finance airplanes in Europe and Europe would not finance airplanes in North America.
Bombardier, we always promoted a level playing field meaning that we have an understanding as how aircraft would be financed under what terms and that's really the agreement that happened last year. And in that agreement, it permits export credit agency agencies in competitive settings to support their local airline. And I think that's what those comments were all about. The XM [bags] in some case may participate at financing a US airline like we would expect the same thing in Canada VDC in a competitive setting.
We thought this outcome of these discussions at the country level for the Aircraft Sector Understanding, we thought those were a good agreement that gave access to a level playing field. And we think that's what we were looking for from the beginning.
------------------------------
Francois Shalom, Montreal Gazette - Media [130]
------------------------------
Are you in the running for that United Airlines contract?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [131]
------------------------------
Well, I don't know about the specific campaign. You'd have to give me more detail about the specific campaign for me to answer it.
------------------------------
Francois Shalom, Montreal Gazette - Media [132]
------------------------------
I think it's a fairly large order that they talked about and it was unclear at one point whether or not they were going ahead with a second slice of that order but I'm wondering if you guys are bidding for it?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [133]
------------------------------
Yes, at one point they were talking about a narrowbody of 160 passengers plus. And then they needed to look at smaller airplanes also. But I'm not aware that they've got an add with an RFP, a request for proposal.
------------------------------
Operator [134]
------------------------------
(Interpreted). [Damien Dardeleau, Radio] Canada.
------------------------------
Damien Dardeleau, Radio Canada - Media [135]
------------------------------
(Interpreted). I'm sorry I'm asking a question that you've may be answered already. But I just joined the teleconference. I'd like you to talk to me a little bit about sales of the CRJs and Q400 Embraer, ATR had good years. Why is it that your results were so poor?
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [136]
------------------------------
(Interpreted). Sometimes you have to look at who the clients are that have bought planes. Did Bombardier have an opportunity? In certain cases the opportunity wasn't there because it was an option but for our competitors, we also said that we didn't necessarily have the sales team to sell products outside of North America.
We spoke about the importance of doubling our sales team outside of North America and Europe. We also have a product that is very -- very competitive against the Embraer 190. We started production last year and now we can compete with the 190. This is the plane that Embraer sold the most of last year.
The CRJ1000 is competing with the Embraer 190 and we won out with Garuda.
Unfortunately, last year it was a difficult year for us. But we think that if we look at the opportunities that are in front of us, we think that 2012 should be better.
------------------------------
Damien Dardeleau, Radio Canada - Media [137]
------------------------------
(Interpreted). Do you think that you're going to be able to maintain production of the CRJs and the Q400 at the level that you've announced?
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [138]
------------------------------
(Interpreted). Yes, we had to reduce it in both cases last year but we think we're going to be able to maintain our objective by having an increase in sales in the future.
------------------------------
Damien Dardeleau, Radio Canada - Media [139]
------------------------------
(Interpreted). You mentioned earlier the investment of $2 billion in 2012 but can you give us any details?
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [140]
------------------------------
(Interpreted). These are our aircraft programs that are advanced like the CSeries or the Learjet 85. These will require a great deal of investment because we are going to have the first test flight at the end of the year. This requires a significant investment.
We're also working on the Global family -- the 7000 and 8000. This program is beginning to require increased investment as we look at 2016. So we have a number of aircraft programs that do require investment.
------------------------------
Damien Dardeleau, Radio Canada - Media [141]
------------------------------
(Interpreted). So, you are sticking to your guidance for 2012, 2013 and for the delivery?
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [142]
------------------------------
(Interpreted). Absolutely.
------------------------------
Operator [143]
------------------------------
(Interpreted). Martin (inaudible).
------------------------------
Unidentified Participant [144]
------------------------------
(Interpreted). You just said or perhaps repeated that the line rate for the CRJs and the Q400s should stay what it is currently. Have I understood?
------------------------------
Unidentified Company Representative [145]
------------------------------
(Interpreted). Yes.
------------------------------
Unidentified Participant [146]
------------------------------
(Interpreted). Will there be a point at which you'll need to revisit that line rate given the backlog?
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [147]
------------------------------
(Interpreted). We think we are going to -- we hope we have the opportunity to increase it. We don't think we're going to have to reduce.
------------------------------
Unidentified Participant [148]
------------------------------
(Interpreted). In 2012?
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [149]
------------------------------
(Interpreted). Yes, for 2012 we have a good plan.
------------------------------
Unidentified Participant [150]
------------------------------
(Interpreted). For the CSeries if I have understood correctly, you are not unveiling anything new with regard to timelines.
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [151]
------------------------------
(Interpreted). No. We have the goal of a flight at the end of 2012 and we hope that things will fall into place so that we are able to meet that objective.
------------------------------
Unidentified Participant [152]
------------------------------
(Interpreted). A flight at the end of 2012 and then a first delivery in
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [153]
------------------------------
(Interpreted). Yes, that's it.
------------------------------
Unidentified Participant [154]
------------------------------
(Interpreted). You have really developed your after sales of service recently in many places in the world. Is that leading to new sales for you?
------------------------------
Guy Hachey, BomThe Pressbardier, Inc. - President and COO, Bombardier Aerospace [155]
------------------------------
(Interpreted). I think it's to support the clients who have already ordered our aircraft. We're trying to put in place a Global network and it's easier to convince clients to come over to Bombardier. We have a very good reputation at the international level. We're going to continue our growth because our planes are increasingly international.
------------------------------
Damien Dardeleau, Radio Canada - Media [156]
------------------------------
(Interpreted). This is my last one. There was talk about the Montreal subway. Where are things at?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [157]
------------------------------
(Interpreted). We are according to schedule and we're making progress with a client.
------------------------------
Damien Dardeleau, Radio Canada - Media [158]
------------------------------
(Interpreted). What does that mean exactly with the schedule?
------------------------------
Pierre Beaudoin, Bombardier, Inc. - Pres and CEO [159]
------------------------------
(Interpreted). We don't have any specific information. But we have spoken about our first delivery. What we can give you is what we have already said in public with regard to the Montreal subway but nothing has changed.
------------------------------
Operator [160]
------------------------------
At this time we have no further questions.
------------------------------
Shirley Chenier, Bombardier, Inc. - IR - Sr. Director [161]
------------------------------
Thank you all for being with us today. Have a good day.
------------------------------
Operator [162]
------------------------------
Thank you. The conference has now ended. Please disconnect your line at this time and we thank you for your participation.
------------------------------
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