Q1 2013 BOMBARDIER INC Earnings Conference Call - English
May 09, 2013 AM EDT
BBD.B.TO - Bombardier Inc
Q1 2013 BOMBARDIER INC Earnings Conference Call - English
May 09, 2013 / 07:00PM GMT
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Corporate Participants
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* Shirley Chenier
Bombardier Inc. - Senior Director, IR
* Pierre Beaudoin
Bombardier Inc. - President and CEO
* Pierre Alary
Bombardier Inc. - SVP and CFO
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Conference Call Participants
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* Walter Spracklin
RBC Capital Markets - Analyst
* Fadi Chamoun
BMO Capital Markets - Analyst
* Joe Nadol
JPMorgan - Analyst
* Turan Quettawala
Scotiabank - Analyst
* Cameron Doerksen
National Bank Financial - Analyst
* Robert Spingarn
Credit Suisse - North America - Analyst
* David Newman
Cormark Securities Inc. - Analyst
* Noah Poponak
Goldman Sachs & Co. - Analyst
* Peter Arment
Sterne, Agee & Leach - Analyst
* Doug Carson
BofA Merrill Lynch - Analyst
* Stephen Trent
Citi - Analyst
* Anthony Scilipoti
Veritas Investment Research - Analyst
* Chris Murray
PI Financial Corp. - Analyst
* Benoit Poirier
Desjardins Securities - Analyst
* Graham Warwick
Aviation Week - Media
* Vanessa Lu
Toronto Star - Media
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Presentation
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Operator [1]
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(Spoken in French). Good afternoon, ladies and gentlemen, and welcome to the Bombardier conference call. Please be advised that this call is being recorded. (Spoken in French). I would now like to turn the meeting over to Ms. Shirley Chenier, Senior Director, Investor Relations. (Spoken in French). Please go ahead, Ms. Chenier.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [2]
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Thank you, operator. (Spoken in French). Good afternoon, and welcome to Bombardier's conference call intended call for investors and financial analysts.
(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.
Officer, and Mr. Pierre Alary, Senior Vice President and Chief Financial Officer, will discuss Bombardier's financial results for the first quarter ended March 31, 2013.
(Interpreted). This conference call is broadcast live on the Internet, and is also interpreted in French and in English.
You can access the broadcast on our website at ir.bomardier.com, and the webcast archive of the integral version of this call will be available within 24 hours. Slides for this presentation, in English and French, are equally available on our website.
All dollar 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.
Mr. Pierre Beaudoin will now begin the presentation.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [3]
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(Interpreted). Good morning and welcome to this conference call.
Before Pierre quickly walks you through the financial results, I would like to make a few points. Our results for the first quarter 2013 are in line with our guidance and expectation. We had a good quarter with an overall increase of 25% in revenue and an improvement in our free cash flow usage in the context of increased investments in Aerospace.
Aerospace had a good performance with increased delivery, revenue, and EBIT. All development programs are progressing well and the CSeries is getting ready for its first flight next month.
Transportation also saw an increase in revenue and EBIT, and received a good level of new orders across all division and key markets.
And, as per our guidance, we expect an increase in revenue over the course of the year, while making good progress towards the Group's EBIT target of 8% by 2014.
And now, I will let Pierre Alary go through the results.
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Pierre Alary, Bombardier Inc. - SVP and CFO [4]
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Thank you, Pierre. Good afternoon.
Aerospace revenue for the first quarter totaled $2.3 billion, compared to $1.5 billion last year. The increase is mainly due to higher deliveries of business aircraft in the large business jet category, because of the low level of deliveries for the same quarter last year as we were transitioning to the Global 5000/6000 aircraft.
Commercial aircraft also had higher deliveries, mainly in turboprop.
Q1 EBIT margin was at 4.5%, in line with our guidance. Furthermore, it is comparable to last year, where the EBIT before special items margin was at 4.4%.
Bombardier Transportation revenues for the first quarter totaled $2.1 billion, a 5% increase over last year. It is worth noting that the impact from the variation in foreign exchange rates was minimal.
EBIT margin was at 6.7%, compared to 6.2% last year. The increase is explained by lower SG&A and R&D expenses, and higher share of income from (inaudible), which were partially offset by lower gross margin in rolling stock, due to their currently mix of contracts.
On a consolidated basis, Q1 revenues totaled $4.3 billion, while EBIT reached $240 million. The net financing expense is $35 million, compared to $37 million last year The higher interest expense on our long-term debt resulting from the issuance of $2 billion of unsecured notes in January 2013, was mostly offset by a higher level of capitalized borrowing costs.
Our effective income tax rate was 27.8%, which is higher than what we have experienced in previous quarters, essentially due to the change in mix of countries where profitability has been earned.
Overall, our adjusted net income totaled $156 million or $0.08 per share, which compares to $150 million and $0.08 per share last year.
Now, looking at the free cash flow, as is typically the case in the first quarter, we had a free cash flow usage, which amounted to $590 million. This compares to $695 million the previous year. This usage reflects an investment of some $500 million into our Aerospace programs, which is $131 million more than last year.
Now, looking at our liquidity position, we took the opportunity of favorable capital market conditions last January to issue $2 billion of senior notes. As a result, our available short-term capital resources totaled $5.1 billion, as of March 31st, 2013, which includes cash and cash equivalents of $3.7 billion. This solid liquidity position is ensuring us the financial flexibility to support our development program.
Looking forward, we are reaffirming our guidance provided with our Q4 results, and during the Investor Day of last March. Guidance for 2013 is listed on page seven of the presentation, and, as for 2014, as stated before, we expect Aerospace to achieve an EBIT margin of 8% before an anticipated 2% dilutive impact from the entry into service of the CSeries aircraft, and as a result of the entries into service of aircraft we expect the level of net investment in our Aerospace program to decrease by $500 million in 2014, and another $500 in 2015, bringing back the Aerospace free cash flow to positive territory. For Transportation, through improved volume and execution, and cost reductions we expect to achieve an EBIT margin of 8% by 2014.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [5]
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So, to conclude, 2013 will be an inflection point for Bombardier. I invite you that both Groups have a very strong backlog, representing well over three years of revenue, which demonstrates the strength of our diversified portfolio of products and services, and afford us the confidence -- and affords us great confidence in the future. Thank you.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [6]
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Thank you, Pierre. We will now start the question 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. If not, you can contact me right after this conference call.
We can now start with the first question. Operator?
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Questions and Answers
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Operator [1]
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(Spoken in French). (Operator Instructions). Our first question is from Walter Spracklin from RBC. Please go ahead.
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Walter Spracklin, RBC Capital Markets - Analyst [2]
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Thank you very much. Good afternoon, everyone.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [3]
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Good afternoon, Walter.
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Walter Spracklin, RBC Capital Markets - Analyst [4]
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So, my first question is, I guess a surprise to you, will be on the CSeries here. I know when Guy Hachey was talking about the program development at your Investor Day, he'd indicated that April was kind of a make-or-break or highest-risk month during the coming months at that time, due to the testing, the type of testing, that was going to be happening in April.
We're now in May, so, presumably, does that mean that we have passed that April -- key April month? And would you consider the development risk profile on this to be substantially lower than it was when you made the statement at your Investor Day?
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Pierre Beaudoin, Bombardier Inc. - President and CEO [5]
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The general answer to this is yes, because we've made substantial progress. We're just getting ready to move the aircraft in a few -- very shortly to the test center. So, that means the aircraft is essentially completed.
We're very advanced in the structural tests. As Guy said this morning, there's eight of the nine tests that are done, and we're very advanced in the aircraft zero testing. So, the risk of development as preparing the aircraft for first flight, are very -- are advanced. Now what we need to do is once we pass the aircraft to flight test, there's quite a few processes to go through, and we're expecting those to go well.
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Walter Spracklin, RBC Capital Markets - Analyst [6]
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Okay. I do have other questions, but I'll queue up, but before I do, I just want to say you're in the final stretch for the CSeries. It must be a very exciting time. I just want to wish you the best of luck. Thank you very much.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [7]
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I just want to correct what you said. We're at the beginning of -- we're about to start flight tests.
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Walter Spracklin, RBC Capital Markets - Analyst [8]
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Okay.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [9]
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It's a little bit different.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [10]
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Thank you, Walter.
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Walter Spracklin, RBC Capital Markets - Analyst [11]
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Good correct. Thanks.
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Operator [12]
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Thank you. Our next question is from Fadi Chamoun from BMO Capital Markets. Please go ahead.
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Fadi Chamoun, BMO Capital Markets - Analyst [13]
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Hi. So, I wanted to go into the Aerospace margins a little bit. So, you had a pretty substantial increase in manufacturing revenues, and with a bit of a positive mix, too, on the delivery side with the Global that you delivered this quarter. And yet your gross margins were weak. I mean, we anticipated that it will be sort of a slow start, but just given the strength in revenue, I'm surprised that the margins weren't a little bit better.
Can you walk us through the items that are keeping -- are holding back the margin at this point?
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Pierre Alary, Bombardier Inc. - SVP and CFO [14]
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Yes. Well, first of all, our results are in line with our guidance and our expectations. So, there's -- from our perspective, there's no surprise.
But one could expect that given the increase in volume the percentage could have increased. There's two or three elements that makes a difference at the margin level and at the EBIT level.
One of them is that we've sold more used aircraft, close to $100 million more, quarter over quarter, and, as you know, margin on used aircraft is fairly low, and, in fact, it's one of the explanations that we had lower margin in this particular quarter. And if you look at the inventory note where we disclosed, for example, the provision we're taking on -- for inventory, it includes an amount of $30 million where it was $14 million last year.
So, a high level of volume in the used aircraft, and on the inventory, the provision was higher. So, a double impact on that side.
We also had less liquidated damages on cancellations. So, that has an impact. And -- but on the other side, we've got -- we had better or higher absorption of lower SG&A, as could have expected, and it was also a negative variance when you look at the provision on the credit individual value guarantee. We had a benefit last year, and this year we have a -- it's a small cost on this side.
So, that ought to be the elements that explains most of the variation. But, again, it was -- the result that we have is according to our expectations and our guidance.
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Fadi Chamoun, BMO Capital Markets - Analyst [15]
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Okay. What was the delta on the individual value guarantees this year compared to last?
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Pierre Alary, Bombardier Inc. - SVP and CFO [16]
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Well, if we look at the variance on the financial instruments, it's mostly under the other expense or income. So, we have an expense of 6 this quarter, and last year was the -- sorry, an expense of 6 this quarter, and it was a revenue of 21 last year.
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Fadi Chamoun, BMO Capital Markets - Analyst [17]
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Okay, thank you.
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Operator [18]
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Thank you. Our next question is from Joe Nadol from JPMorgan. Please go ahead.
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Joe Nadol, JPMorgan - Analyst [19]
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Thank you. Good afternoon. I was wondering if you could characterize what you're seeing most recently in the business jet market. You had a slower book-to-bill in Q1, and -- but your deliveries were fairly solid. Just any color on what you're seeing there over the last number of weeks since your analysts meeting?
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Pierre Beaudoin, Bombardier Inc. - President and CEO [20]
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Yes, and I think Guy made some comments this morning regarding to this. We're still seeing basically the same pattern, strong, large aircraft, and as we get into the smaller aircraft, it's much weaker. We are seeing some recovery, especially with the strength of the pipeline, but deals are taking time to close. So, we're cautiously optimistic, if I can put it this way.
We expect a level of orders similar to last year, but the first quarter was a little bit slower. So, overall, Europe is difficult, but overall, the rest of the market is behaving similar to last year, with some recovery in the US, especially with the quality of the pipeline.
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Joe Nadol, JPMorgan - Analyst [21]
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And so, specifically, to pricing, Pierre, I know that plays a big role in your gross margin, and you're below where you were a year ago, but you're above where you were in the last half of last year. As you think through the rest of this year and what pricing's going to look like in your backlog and the other orders you have to get to close out your production, how are you feeling about how that's going to impact your margin the rest of the year?
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Pierre Beaudoin, Bombardier Inc. - President and CEO [22]
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Well --
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Joe Nadol, JPMorgan - Analyst [23]
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With Q1 as a basis.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [24]
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Well, for the rest of the year, we've given guidance where we expect to end up in terms of profitability for Aerospace. For pricing for business aircraft, it is the pattern I gave you. It's quite good on the upper end, and it's more difficult as we go down the line, especially in the small business aircraft.
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Joe Nadol, JPMorgan - Analyst [25]
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Okay, thank you.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [26]
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Thank you.
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Operator [27]
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Thank you. Our next question is from Turan Quettawala from Scotiabank. Please go ahead.
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Turan Quettawala, Scotiabank - Analyst [28]
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Yes, thank you. Good afternoon.
I had a quick question on the CSeries, as well. I was just trying to understand in your MD&A this quarter you've said that major supplier safety-of-flight test rigs are all substantially complete. However, in Q4, in the same place, you had said that these rigs were already commissioned. So, I was wondering if you can give us a bit of clarity on that? What am I missing in terms to us that that's sort of a step back, isn't it?
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Pierre Beaudoin, Bombardier Inc. - President and CEO [29]
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Well, the rigs were commissioned, and there's been tests going on. If I understood your question, properly, there's been tests going on at suppliers for quite some time. Now what they're doing is safety-of-flight tests. So, each supplier has to replace their components for flight.
And what we do is the test of the integration of all the systems together. So, that's what's going on now. That's one of the steps that still needs to happen as they release the aircraft for flight.
I don't know if I'm being clear here.
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Turan Quettawala, Scotiabank - Analyst [30]
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Well, that's okay. I mean, I guess, Pierre, it seems to me, at least that it was the supplier -- the safety-of-flight test rigs, right, which were at the suppliers. It seems that they're substantially complete as of this MD&A, but they were already commissioned as of the last MD&A. So, anyway, maybe I'll take it offline.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [31]
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Yes, maybe, because I'm not sure that I'm following you. There's several generation of tests that happen. So, you may be focused on a particular type that happened last year, and now we're thinking more about a test to release the aircraft.
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Turan Quettawala, Scotiabank - Analyst [32]
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Maybe. That's great. And, Shirley, if I could just sneak in a quick one on JV income for Pierre, as well.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [33]
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Yes?
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Turan Quettawala, Scotiabank - Analyst [34]
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Just in terms of -- I know that the disclosure is new here, Pierre Alary, but just in -- the JV income at BT, do you expect this to stay at this level for the rest of the year? I know there's been some ramp-up in work in China, but if you could give us some clarity there, that would be great.
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Pierre Alary, Bombardier Inc. - SVP and CFO [35]
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Yes, so your question is on JV in relation to BT?
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Turan Quettawala, Scotiabank - Analyst [36]
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That's right, BT.
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Pierre Alary, Bombardier Inc. - SVP and CFO [37]
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So, when we look at it, is share of income of joint venture and associates. There's both. So, JV is now shown distinctly with the change in accounting principle, and the bulk of the variant that we see 44 versus 19, in terms of income, the variant comes from the investment in the associates, our share of income in associates. And that's where we have contracted with -- doing specific contracts, very often, in PPP situation, and there's where we have the variance. And we don't expect that variance to be -- that amount to be that significant every quarter.
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Turan Quettawala, Scotiabank - Analyst [38]
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I see. Thank you very much.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [39]
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That's when a PPP gets to a point where have completion of project.
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Pierre Alary, Bombardier Inc. - SVP and CFO [40]
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Right.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [41]
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Did you hear that?
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Turan Quettawala, Scotiabank - Analyst [42]
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No, I didn't, sorry.
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Pierre Alary, Bombardier Inc. - SVP and CFO [43]
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Well, I mean, it really depends -- there's a -- it's more lumpy, if you like, on the associates side than on the joint venture. Joint venture is much more regular in terms of income.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [44]
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Because the PPP is linked to a project. So, if the project gets to maturity, then you'll some numbers related to this project, but we don't always have PPP projects that come to an end at the end of a quarter.
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Pierre Alary, Bombardier Inc. - SVP and CFO [45]
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I see, okay. So, is it -- can you give us just a basic run rate here? Or maybe give a full-year number that we could work with on that line item?
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Pierre Alary, Bombardier Inc. - SVP and CFO [46]
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No, because then we're getting into a specific contract and, as you know, we don't provide specifics on contracts.
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Turan Quettawala, Scotiabank - Analyst [47]
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Okay, great. Thank you very much.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [48]
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Thank you.
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Operator [49]
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Thank you. Our next question is from Cameron Doerksen from NBF. Please go ahead.
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Cameron Doerksen, National Bank Financial - Analyst [50]
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Yes, good afternoon. A question on the -- I guess on the regional aircraft market. We've obviously had some continuing activity in the regional jet sector, but the turboprop sector tends to be pretty soft. I'm just wondering if you can maybe update us on how the campaigns are going for both the regional jets, and, particularly, on the turboprops, where it looks like you're going to need some orders fairly soon here?
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Pierre Beaudoin, Bombardier Inc. - President and CEO [51]
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Yes, we have -- on both we have opportunities, so in the jets, the regional jets, as we spoke quite a few times, there's some large campaigns out there, one of them that's well known is American that's not been decided yet.
So, there's some large opportunities, so that will come, I guess, in a binary way. You get 30, 40 units or you don't. And we're focused on that. We feel we have a very competitive product. That's what the airlines are telling us.
There's some airlines that operate more CRJ-200s. There's some airlines that operate more our competitors' aircraft. So, when we bid, we take all of these into consideration. But we expect that we'll get our fair share of that renewal of large regional jets in the US.
Turboprop it's more international opportunities, and it's going to be more a series of smaller orders. So, the good side is that it doesn't depend on one or two campaigns. It depends on a multitude, multiple campaigns. You saw orders of two units and orders of three units.
That's what you should expect, but there's quite a few in the works right now. So, I feel that we're in good shape in both.
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Cameron Doerksen, National Bank Financial - Analyst [52]
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Okay, thank you very much.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [53]
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Thank you, Cameron.
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Operator [54]
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Thank you. Our next question is from Robert Spingarn from Credit Suisse. Please go ahead.
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Robert Spingarn, Credit Suisse - North America - Analyst [55]
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Good afternoon.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [56]
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Good afternoon, Robert.
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Robert Spingarn, Credit Suisse - North America - Analyst [57]
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Hi, guys. I wanted to ask you about the cash flow from a segment perspective. You've talked about free cash flow generally in line with the EBIT at the Transportation business. So, it was negative in the first quarter. So, the cadence, how we should think about that for the rest of the year?
And then, essentially, the same question for Aerospace. It looks like you're on a fairly linear path with CapEx, $500 million per quarter, but the cash from operations, how do we get to the $1.4 billion throughout the year? So, same question, both segments.
Thank you.
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Pierre Alary, Bombardier Inc. - SVP and CFO [58]
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Well, generally, the first quarter is -- the first two quarters we have a high usage of cash. Typically, the third quarter is pretty neutral and there's a sign catch-up, if you like, or a significant cash generation in the fourth quarter. So, that's typically -- typically our pattern in both groups.
So, having used cash, when we look at Transportation to start, having used cash in the first quarter, again, that's quite typical. In fact, it's pretty much in line with what we had last year. And you can expect that we're going to use some more in the second quarter. And a solid fourth quarter.
And we're seeing -- that's why we're seeing -- when we're seeing the Transportation, the cash flow should be aligned with profitability, we're saying, over numbers of quarters. So, we cannot measure it quarter by quarter. That sentence is not in relation to a specific quarter, but it's over a number of quarters, typically four or five quarters.
And so, that's the situation in Transportation.
When we look at the Aerospace, we typically have the same pattern, usage in the first and second quarter, third quarter pretty neutral, and a solid fourth quarter in terms of cash generation, and if you look at the -- that's exactly what it is again this year, and when we compare to the usage in the first quarter, it's pretty much in line with last year, and, in fact, we're seeing improvement vis-a-vis last year when we look at the cash flow from operating activities before the investment in our various programs.
So, there's an improvement there that we see, year over year, as we have invested more in the property, plant, and equipment, and intangible assets, by $130 million or so in the first quarter.
So, that's why we're seeing a full year, the cash flow from operation is expected to generate $1.4 billion, and then we would spend around $2 billion on the CapEx side.
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Robert Spingarn, Credit Suisse - North America - Analyst [59]
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And just while we're here, do you expect any particular activity on the order side on CSeries in Paris, or maybe the naming of any unidentified previous orders?
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Pierre Beaudoin, Bombardier Inc. - President and CEO [60]
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Well, as you know, that depends on the customer, but there's quite a bit of activity on the CSeries and the customers will choose when those are announced. But, as you know, the interest is high. A lot of people are watching our first flight, and I think the interest will continue to accelerate as we accomplish major milestones.
But no, I don't want to predict when we can announce orders.
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Robert Spingarn, Credit Suisse - North America - Analyst [61]
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Thank you both.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [62]
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Thank you, Rob.
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Operator [63]
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Thank you. Our next question is from David Newman from Cormark Securities. Please go ahead.
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David Newman, Cormark Securities Inc. - Analyst [64]
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Good morning, folks.
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Shirley Chenier, Bombardier Inc. - Senior Director, IR [65]
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Good morning. Good afternoon.
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David Newman, Cormark Securities Inc. - Analyst [66]
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Yes, sorry, long day. I'm sure it's longer for you.
Switching gears on to the Transportation side, there was a commentary made in, I guess, the filings about the continued transition between the old and new, and yet you posted a 6.7% margin. So, I'm just trying to get a sense on when do you think this transition would happen over the next couple of quarters, and the margin. Because it looks like a pretty decent absorption in the quarter, and I think FX is going to be a bit of a tailwind for you guys this year, with the US dollar/euro.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [67]
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The transition between the old and the new, what do you mean by transition between --?
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David Newman, Cormark Securities Inc. - Analyst [68]
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Well, you have contracts or projects that are dropping off, and you're commencing the new ones.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [69]
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Okay, understood.
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David Newman, Cormark Securities Inc. - Analyst [70]
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Yes. Yes.
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Pierre Beaudoin, Bombardier Inc. - President and CEO [71]
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Well, we're going to make progress towards our 8% that we target in 2014, step by step. But -- and that also means we're transitioning from the contracts we spoke about that were more difficult to new contracts, but in the new contracts, there'll be a mix of good ones and more challenging ones.
So, I know we put a lot of focus on those three contracts in the last few years because they all came at the same time. I would say it a little bit differently. We expect to get back to a more regular mix.
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David Newman, Cormark Securities Inc. - Analyst [72]
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Was there anything in the quarter that led to the 6.7%, or can we kind of look at this as being kind of the new base that we can just gradually build on this margin, as you have that transition? Is that -- that's kind of my question?
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Pierre Beaudoin, Bombardier Inc. - President and CEO [73]
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Well, we're going to go step by step towards 8%. So, I guess you go from 6.7% and you see what we have to do to get to 8%.
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David Newman, Cormark Securities Inc. - Analyst [74]
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Okay, and --
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Pierre Alary, Bombardier Inc. - SVP and CFO [75]
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I guess we -- I gave a comment earlier about the share of income in joint venture and associates where associates is more lumpy.
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David Newman, Cormark Securities Inc. - Analyst [76]
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Right, right, right, right.
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Pierre Alary, Bombardier Inc. - SVP and CFO [77]
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This quarter we have -- but it's not that significant.
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David Newman, Cormark Securities Inc. - Analyst [78]
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Okay, and then just squeeze --
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Pierre Alary, Bombardier Inc. - SVP and CFO [79]
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I'm not quite sure on your comment on the FX, because the FX in this quarter --
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David Newman, Cormark Securities Inc. - Analyst [80]
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Was neutral.
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Pierre Alary, Bombardier Inc. - SVP and CFO [81]
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-- had basically on impact in terms of quarter over quarter.
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David Newman, Cormark Securities Inc. - Analyst [82]
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No, I understand. I'm just looking, Pierre, at your future quarters' potential.
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Pierre Alary, Bombardier Inc. - SVP and CFO [83]
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Yes.
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David Newman, Cormark Securities Inc. - Analyst [84]
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And if I can squeeze one last quick one in, the 70/75 on the Lear side, it seems like you have the (inaudible) now, so it was going to be Q4. Is that a little bit delayed, or is that kind of -- what's going on, on that side?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [85]
------------------------------
Yes, it's a little bit delayed -- avionics certification.
------------------------------
David Newman, Cormark Securities Inc. - Analyst [86]
------------------------------
Okay.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [87]
------------------------------
Lear 70/75?
------------------------------
David Newman, Cormark Securities Inc. - Analyst [88]
------------------------------
Yes.
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [89]
------------------------------
The 75 was already expected in the second half. So, we've been (inaudible), but it's --
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [90]
------------------------------
So, the 70 and the 75 have the same avionics, and they now come in Q4, but we feel good about that.
------------------------------
David Newman, Cormark Securities Inc. - Analyst [91]
------------------------------
And no change in your guidance on the back of that?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [92]
------------------------------
No.
------------------------------
David Newman, Cormark Securities Inc. - Analyst [93]
------------------------------
Okay, very good. Thanks, guys.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [94]
------------------------------
Thank you, David.
------------------------------
Operator [95]
------------------------------
Thank you. Our next question is from Noah Poponak from Goldman Sachs. Please go ahead.
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [96]
------------------------------
Hi, good afternoon, everybody.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [97]
------------------------------
Good afternoon.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [98]
------------------------------
Hi, Noah.
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [99]
------------------------------
I wanted to ask about the business jet delivery cadence for the remainder of the year. I guess the guidance for the full year is 10 more aircraft than last year, or 11, and you had 10 in the first quarter here, an increase of 10, year over year. Should be basically look for flat year over year deliveries each of the next three quarters? Or are there any obvious drivers of deviation from that, that you can call out? Most importantly focused on the Globals, and whether or not the 17 from this quarter is sort of the go-forward quarterly number?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [100]
------------------------------
Well, you kind of answered your question, because our guidance have remained -- is remaining the same. So, we reaffirm our guidance. So, the total deliveries expected -- as expected will not change.
So, what you can see, though, and I go back to the comment on the 70/75, is that this -- you're going to see more deliveries in the fourth quarter in relation to the Lear family.
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [101]
------------------------------
Okay. So, just to clarify on the Global specifically, we shouldn't see that step down going forward?
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [102]
------------------------------
No, it should be regular, more or less.
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [103]
------------------------------
Okay, thank you.
------------------------------
Operator [104]
------------------------------
Thank you. Our next question is from Peter Arment from Sterne Agee. Please go ahead.
------------------------------
Peter Arment, Sterne, Agee & Leach - Analyst [105]
------------------------------
Yes, good afternoon. Just to circle back and get a clarification on the first flight schedule for CSeries, so it sounds like things are progressing very well. What do we need to see for the other test vehicles for the second half of the year? Is there any sort of stated plan on when you'd see the second flight test vehicle, and so on, in terms of getting airborne?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [106]
------------------------------
Well, we haven't given a further schedule on the other test vehicles. We're focused right now on the first flight, as far as giving transparency. What we need to do, though, if we want to certify and delivery in one year is these flight test vehicles will have to follow shortly after the first flight. Don't expect the next day, but it's going to have to be fairly rapid, because you have one year of one flight tests.
So, that's as much transparency as we're going to give at this time. But all the flight vehicles are advancing now, but there's still a lot of work to do.
------------------------------
Peter Arment, Sterne, Agee & Leach - Analyst [107]
------------------------------
Okay. That's the clarification I needed. Thank you.
------------------------------
Operator [108]
------------------------------
Thank you. Our next question is from Doug Carson from Bank of America Merrill Lynch. Please go ahead.
------------------------------
Doug Carson, BofA Merrill Lynch - Analyst [109]
------------------------------
Thank you very much. I'm looking at slide eight of the slide deck, particularly in the Transportation section. There's been a lot of focus on the Aerospace side. And I see the margins going to 8% in 2014 is three bullet points there -- improve volume, improve execution, improve cost structure. Can you help, maybe, frame some of those or bucket them? How much of this improvement will be from cost structure, and how much would be improved from volume, if you could help kind of drill down on that at all?
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [110]
------------------------------
No, we haven't been specific on each of them, which portion is going to come from each of those. One thing I can refer to is that we have reached -- we had an EBIT margin of 7.2% in 2010-2011. It went down in 2012 to more around 6%, and, as you can see in the first quarter, it's getting back. But it's going to be a gradual improvement to reach the 8% in 2014. And this is, basically, the three components where we're going to get the improvement from.
------------------------------
Doug Carson, BofA Merrill Lynch - Analyst [111]
------------------------------
Okay. I'll jump out of the queue. Thank you.
------------------------------
Operator [112]
------------------------------
Thank you. Our next question is from Stephen Trent from Citigroup. Please go ahead.
------------------------------
Stephen Trent, Citi - Analyst [113]
------------------------------
Hi. Good afternoon, everybody, and thanks for taking my question.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [114]
------------------------------
You're welcome, Steve.
------------------------------
Stephen Trent, Citi - Analyst [115]
------------------------------
Thank you. Just one quick one for me, as per your rule. Sort of a follow-up on Cameron's question, to an extent. There's certainly been a great deal of focus on the sub-120-seat segment within the US market with United kind of telegraphing it would order in 2014, and it orders now. Outside of the US, what are you kind of seeing in terms of potential demand? I know you've had some success with carriers like Garuda Indonesia, and others. And what's the potential environment look like, either new aircraft or replacements outside of the US?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [116]
------------------------------
You're talking specifically a CRJ, or the whole line of Bombardier commercial aircraft?
------------------------------
Stephen Trent, Citi - Analyst [117]
------------------------------
Yes, sorry. I should have been specific. More the -- I'm focusing specifically on the CRJs.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [118]
------------------------------
Okay, the focus on the CRJ, I think we still have some great opportunity in Russia that we're working on, because we have the CRJ-200. We have just about 100 used aircraft in Russia operating with airlines. So, that's very good, I think, to develop demand for the 700 and 900, and even the 1000. As they know the product, they have the equipment to support that type of product or family of products.
We've started to see some success, again, in China, which, as you know, we've had success with China Express, and there's more to come, I believe, in China, as they develop their regional airline. Although we have a big tax issue from importing the aircraft there, still the efficiency of our aircraft is well liked by the customer, and given that the ARJ is not certified yet, I think that represents an opportunity.
You've seen some success for us in Africa, where we have the CRJ-200 operate in Africa, and just recently RwandAir bought two CRJ-900s.
So, outside of the two markets, Russia and China, I would say you can see orders of CRJs, but more in the two, three, four units at a time than the very large orders.
And, of course, the big opportunity I think you mentioned just now is Garuda going forward with their option. I thought that the CEO was very positive in the newspaper to say that he would exercise his option. I'm looking forward to this.
------------------------------
Stephen Trent, Citi - Analyst [119]
------------------------------
I don't blame you. That's great color. Let me leave it at that, and thanks, again, for the time.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [120]
------------------------------
Thank you, Stephen.
------------------------------
Operator [121]
------------------------------
Thank you. Our next question is from Anthony Scilipoti from Veritas Investment. Please go ahead.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [122]
------------------------------
Hi, thanks. Just following up from the question from earlier on the trade-in provisions or write-downs that have been taken, I have been noticing that that number has been increasing over time. I wondered, just from a business perspective, what you see happening there. Sort of what's leading to these write-downs. What's it mean for the market in general? Are these older jets? Maybe you could give us a little color on that?
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [123]
------------------------------
You refer to the provision on the inventory?
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [124]
------------------------------
Yes.
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [125]
------------------------------
Yes. Well, this provision is not strictly -- and that's why I'm talking about provision on inventory as opposed to provision on used aircraft, because a portion of that provision is just normal provision we're taking for a part that becomes obsolete through time, and that's just normal, and it's part of doing business.
So, when I look at the variations, the variation between the two amounts, that could be more so attributable to the used aircraft, but when you look at the overall portfolio, it's not necessarily that significant. So, no, we don't see any particular trend in terms of the value of the aircraft.
And, in fact, the inventory levels are coming down gradually, quarter to quarter. When I say inventory level, I'm talking about the industry level.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [126]
------------------------------
You mean the used aircraft value?
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [127]
------------------------------
Not the value, the industry aircraft -- the inventory of available used aircraft.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [128]
------------------------------
Right. That's coming down?
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [129]
------------------------------
Gradually coming down, yes, which is a good sign.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [130]
------------------------------
Okay. So, I shouldn't -- we shouldn't make -- and so, this, with the amounts of the used aircraft, are those more business jets, or are those regional jets?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [131]
------------------------------
You mean, that we have in our inventory?
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [132]
------------------------------
Yes.
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [133]
------------------------------
It's more on the business jet side.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [134]
------------------------------
Okay.
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [135]
------------------------------
My comments, when I referred to the industry was specifically business aircraft.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [136]
------------------------------
Yes. No, I understood. And so, that's -- and when we look at the disclosure on the trade-in commitments, that's tied to the business jets, as well, correct?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [137]
------------------------------
Yes. Well, mostly, and that should be looked at in relation to the backlog.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [138]
------------------------------
Yes. No, we talked about.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [139]
------------------------------
When we see that it's growing, it's normal it's growing, because the backlog is growing. And, in proportion of the backlog, it's not significant.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [140]
------------------------------
Okay. Just on the -- a last quick one on the cash flow and available cash. I noticed that you do the factoring on the Bombardier Transportation receivables, and it seems that they're being collected relatively quickly when they're transferred into the vehicle.
I wondered, given the available cash that Bombardier has, why are you selling so much of the receivables?
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [141]
------------------------------
Well, some of those, in fact, the bulk of those receivables, that's how it's being presented accounting-wise, because that's how it is being done, but it's -- in the vast majority it's some arrangement that we have to help customers finance their advances to Bombardier. And, as you know, in Transportation, there's advances, and that's normal trade.
Some customer has asked us to help them to get them financed, which we have a structure to do so, and, accounting-wise, we have to disclose those amounts as if it was a factor, just to be in the normal practice in the industry.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [142]
------------------------------
I see. So, whereas in the past, you would have shown that as a customer deposit on the liabilities, now --
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [143]
------------------------------
They're being shown as customer deposits, but they're being disclosed as being financed -- not financed, but as being factored, if you like.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [144]
------------------------------
Right. But they wouldn't be on the balance sheet as a liability under the customer advances?
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [145]
------------------------------
They are on the balance sheet, either as a reduction of the inventory, when we've -- On contract by contract where we've spent on the contract, if there's advances in relation to that contract, they're applied against the inventory, and that is detailed on the notes to the financial statements. And if the advances is higher than what we've spent on that specific contract, then it's being shown on the liabilities side.
But in any case, it's part of the balance sheet.
------------------------------
Anthony Scilipoti, Veritas Investment Research - Analyst [146]
------------------------------
Okay, that's interesting. Thanks a lot.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [147]
------------------------------
Thank you, Anthony.
------------------------------
Operator [148]
------------------------------
Thank you. Our next question is from Chris Murray from PI Financial. Please go ahead.
------------------------------
Chris Murray, PI Financial Corp. - Analyst [149]
------------------------------
Thank you. Good afternoon.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [150]
------------------------------
Good afternoon, Chris.
------------------------------
Chris Murray, PI Financial Corp. - Analyst [151]
------------------------------
Just looking at the -- returning to the CSeries and looking at the flight test program, I guess a couple of questions.
When you actually get into flight test, I guess, one of the questions will be, how do you mitigate whatever risk may be, either to the vehicle or the program, as you actually enter test?
And I guess the other piece of that question is, is there any buffer inside that sort of one-year window that you have available to you right now that if a somewhat-serious issue emerges that you're not going to actually have start moving EIS further out, or -- so, if you can just sort of give us a better idea about the next year, and kind of what kind of flexibility you may have?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [152]
------------------------------
Well, all of the aircraft have a mission to accomplish. So, they have specific tests for all of the aircraft. We have made a schedule based on one year that is realistic, that accounts for normal things going on in a flight test. So, it's called a flight test, so not everything is perfect, and the airplane -- there is down times on these airplanes.
But no, we don't account in those for something major that we didn't foresee. What I'm -- I guess I'm searching for the right term, but I think the CSeries flight tests will behave differently than what we've lived before, because of the amount of up-front tests we have done. We're far more advanced than any other aircraft that we've put in the air at Bombardier at understanding the systems and having tested the systems.
So, that's why we feel very good about a 12-month flight test schedule, but it's five aircraft. There's a lot of work to do, and that's something that we'll need to monitor, and, frankly, keep you up to date in telling you how we're progressing.
But to speculate today on which would be the problem or not, I can't do that, because if we knew, we would correct it.
------------------------------
Chris Murray, PI Financial Corp. - Analyst [153]
------------------------------
But, so, it's fair to think that there's some buffer kind of in the schedule to address some of these issues, then, as they may come up?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [154]
------------------------------
I don't like the word "buffer." The flight test is realistic, so -- meaning that if we have normal issues that go in testing the aircraft, the 12 months is realistic. If we have something major that shows up, that's another -- that will affect the schedule.
------------------------------
Chris Murray, PI Financial Corp. - Analyst [155]
------------------------------
Okay, great. Thank you very much.
------------------------------
Operator [156]
------------------------------
Thank you. Our next question is from Noah Poponak from Goldman Sachs. Please go ahead.
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [157]
------------------------------
Hi. I just had a quick follow-up to the used -- the used inventory of business jets discussion. We've seen pre-owned inventory for large jets moving higher for a few quarters consecutively. You have the chart in your quarterly report, actually. Can you maybe touch on what's driving that, the extent to which it's your aircraft or not, and are you worried about that?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [158]
------------------------------
The used aircraft in the market, that's what you're talking about, right?
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [159]
------------------------------
Yes.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [160]
------------------------------
Well, we're worried about it in the sense that the market is still taking time to really pick up. It's been good, but not great. It's better in the upper end.
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [161]
------------------------------
I'm talking about large jets, specifically. You actually -- whereas, that's been a fairly healthy market for a while, the percentage of the -- or the size of the pre-owned inventory as a percentage of the fleet has actually been increasing for a few quarters in a row.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [162]
------------------------------
And I understand what you said. I just --
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [163]
------------------------------
Okay.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [164]
------------------------------
For example, if a competitor is delivering in one shot, in one quarter quite a few of their brand-new aircraft, of course, then you'll have some used aircraft that shows up. We -- same thing when you deliver an upgrade of our aircraft. We delivered 17 Globals in this quarter.
So, there is some movement, but I don't think there's anything to worry about in the larger business aircraft.
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [165]
------------------------------
Okay.
------------------------------
Pierre Alary, Bombardier Inc. - SVP and CFO [166]
------------------------------
And just as an aside, it's no (inaudible) volume, it's more volume in the large aircraft.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [167]
------------------------------
Before, someone asked us about the mix. Our guidance is 190 business aircraft for the year. 17 is on the high side for the Global, because maybe the run rate is more around 15. So, it'll vary. Maybe it can go up to 17, but it can go under, also, during the year. So, don't take 17 as the run rate.
------------------------------
Noah Poponak, Goldman Sachs & Co. - Analyst [168]
------------------------------
Okay. That's helpful. Thank you.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [169]
------------------------------
Thank you, Noah.
------------------------------
Operator [170]
------------------------------
Thank you. Our next question, (spoken in French).
------------------------------
Benoit Poirier, Desjardins Securities - Analyst [171]
------------------------------
Yes. Good afternoon. I just wanted to come back on Noah's question about the high end. Obviously, as you ramp up the big orders with VistaJet and NetJets and take some trade-ins, should we expect the number to go between 11% and 14%, over time? And any pressure you see or we might see on the pricing side for the guy that would prefer to buy a used aircraft, as opposed to a new one?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [172]
------------------------------
No, but you assume a couple of things in your question. You said we're taking trade-ins, because we're doing fleet delivery. If there is trade-in and fleet deliveries, usually they would come much, much before. So, sometimes there may be some, but don't assume that fleets are linked, necessarily to trade-in, and especially not at the delivery of the actual aircraft.
------------------------------
Benoit Poirier, Desjardins Securities - Analyst [173]
------------------------------
Okay, so the recent increase we saw is probably more related to your competitor at this point?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [174]
------------------------------
Well, I'd have to look, specifically, but I can tell you, as far as we are concerned, we don't see any issues with used aircraft in the large category at this point.
------------------------------
Benoit Poirier, Desjardins Securities - Analyst [175]
------------------------------
Okay. Thanks for the color.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [176]
------------------------------
Thank you, Benoit. Operator, do we have another question.
------------------------------
Operator [177]
------------------------------
We have no further questions at this time.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [178]
------------------------------
Okay, then, so I think we will now begin the question period for media representatives. Operator?
------------------------------
Operator [179]
------------------------------
(Spoken in French). (Operator Instructions). The next question is from Graham Warwick from Aviation Weekly. Please go ahead.
------------------------------
Graham Warwick, Aviation Week - Media [180]
------------------------------
Hi. Could I just check on the status of two of your orders, conditional orders? One is I thought we'd expected IFC to have -- shareholders to have confirmed, but I still -- I see that's still not confirmed.
And secondly, is there a cutoff point in the Porter order? One of the reports said by the end of this year, if they don't get approval to extend the runway and operate jets, there's actual sort of -- the order doesn't go beyond a certain point, if that's not in place.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [181]
------------------------------
Well, maybe I start with Porter. The agreement we have with Porter is confidential. Of course, it's quite clear that they need to accomplish some steps at the airport to operate this aircraft at the airport, and I think the product is an exceptional product to do very well in this category, and especially the noise level is equivalent to the turboprop, so I'm very hopeful that this will get done quite -- will get accomplished by Porter.
But that's something that they are asking the city. So, we're monitoring it very closely.
On Ilyushin Finance, that's Ilyushin Finance you were referring to?
------------------------------
Graham Warwick, Aviation Week - Media [182]
------------------------------
Yes, IFC. Yes.
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [183]
------------------------------
Yes there's still a few steps to accomplish. Of course, we're in contact with the customer daily. We don't think there's any show-stopper, but, yes, there's still a few steps to accomplish before it's confirmed.
------------------------------
Graham Warwick, Aviation Week - Media [184]
------------------------------
Can I just quickly on Porter, do you have to -- are you already going to do the steep approach certification that they will need, or will you need to add that to the test program for them to operate out of Toronto City?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [185]
------------------------------
Well, this airplane, the CS-100 we already operate in London City and other challenging airports. So, steep approach will not be a problem. There may be specific certifications for specific airports. That's usually the way it is done, but, as far as doing it, from a technical perspective, there's no issue. We already have some challenging airports that the aircraft is going to operate out of.
------------------------------
Graham Warwick, Aviation Week - Media [186]
------------------------------
Thank you.
------------------------------
Operator [187]
------------------------------
Thank you. Our next question is from Vanessa Lu from Toronto Star. Please go ahead.
------------------------------
Vanessa Lu, Toronto Star - Media [188]
------------------------------
Hi, there. I just wanted some clarification on how soon -- you say by the end of June you'll have first flight. Are you giving us any hints? Are we talking mid-June, or at the very end of June?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [189]
------------------------------
We're talking end of June. That's what we've announced, and we don't have a specific date. And it's not that we don't want to give a specific date, it's that there's a lot of different organizations involved, and we need to make sure we coordinate everybody to -- and agree when we can actually fly.
Like Guy said, even the weather plays into this. So, it -- we're targeting end of June.
------------------------------
Vanessa Lu, Toronto Star - Media [190]
------------------------------
Okay. And do you see that as sort of the critical point at which, maybe, orders will take off or conditional orders will become more firm? That is sort of a turning point?
------------------------------
Pierre Beaudoin, Bombardier Inc. - President and CEO [191]
------------------------------
No, not necessarily. It's an important step in continuing to demonstrate the exceptional quality of this product. There's a lot of people that would -- that challenged us on whether -- started by challenging us whether this airplane was real. That's not the case, any more. Whether the technology was possible with the engine, as an example. Of course, that's not the case any more. Now, there's customers that want to see us fly before they go any further. That will be another milestone.
But I don't expect this to be a triggering point, but more like a further confirmation that this is going to be an exceptional product for airlines in the world.
------------------------------
Vanessa Lu, Toronto Star - Media [192]
------------------------------
Okay, thank you.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [193]
------------------------------
Thank you.
------------------------------
Operator [194]
------------------------------
Thank you.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [195]
------------------------------
Operator, do we have any more questions?
------------------------------
Operator [196]
------------------------------
We have no further questions registered at this time.
------------------------------
Shirley Chenier, Bombardier Inc. - Senior Director, IR [197]
------------------------------
(Spoken in French). Thank you all for being with us today. Goodbye. (Spoken in French).
------------------------------
Editor [198]
------------------------------
Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.
------------------------------
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