‘Heartfelt gratitude’: Bombardier’s Bart Demosky lauds team for rating upgrade
Bombardier’s executive vice president and chief financial officer Bart Demosky said he is “proud” of the team and their efforts to achieve credit rating upgrade to BB- from B+, with a stable outlook from the global credit ratings agency S&P Global.
“This upgrade underscores Bombardier’s robust financial performance and strategic management, reflecting our solid execution across business segments, effective deleveraging efforts and increase in liquidity,” he said in a statement.
S&P Global announced upgraded Canadian aerospace manufacturer Bombardier’s rating on Tuesday citing the company’s strengthening competitive position in recent years as it ramped up production and deliveries of its aircraft while growing its backlog.
The ratings agency particularly highlighted Bombardier’s growth in business jet deliveries which are on track to hit 150 this year despite supply chain challenges across the industry.
“This, combined with growth in its aftermarket services, has contributed to Bombardier’s increased scale and EBITDA margins that we assume will continue to grow, supported by a solid order backlog and product offering. Bombardier is the second-largest business jet manufacturer by revenue (behind Gulfstream) with an estimated market share of about 20% based on units delivered,” said the ratings agency in the announcement.
In addition, the S&P said the aftermarket services segment has more than doubled since 2020, having generated just over $2bn of revenue in 2024 or about 23% of consolidated revenue. This growth stemmed from market share gains amid favourable aircraft usage and the company’s life-cycle management approach.
“In our view, Bombardier will generate about one-quarter of revenue from aftermarket services, which is a steadier earnings stream for the company to balance its relatively more cyclical and volatile business jet deliveries. We also estimate its aftermarket services will generate EBITDA margins of at least 20%, which should contribute to improved profitability over the next few years,” said S&P.
The S&P also highlighted Bombardier’s ability to maintain cash balance above the $1bn mark for several years and expect them to continue to maintain them above that level which contributes to a reduction in leverage of about 1x when netted against debt.
However, the agency also pointed out that the company remains performance remains sensitive to lack of diversification of offerings.
“With a product offering almost exclusively focused on the Challenger and Global series, we believe Bombardier lacks diversification, making it sensitive to changes in business jet market conditions,” read the S&P statement.
The agency finally noted that the outlook reflects its expectation that Bombardier will continue to execute on its over $14bn backlog while growing its aftermarket services.
