Whassup in Montreal


NOTE: The below originally appeared as the editorial in our July 31 One Minute Week newsletter. To find out more, and sign up for free, please click here.

Every now and then, a word or phrase comes into fashion. Most of us can probably remember people answering the phone or greeting friends with a ‘Whassup?’ thanks to a certain beer’s advert. Fortunately, it soon died a death.

One of the phrases in business aviation that comes and goes is book-to-bill ratio, which is used by manufacturers to measure the ratio of deliveries to orders over the same period. Companies look to have a ratio of 1.0 or higher, as that means when they deliver an aircraft, another needs to be built to fulfil an order.

But these words were conspicuous by their absence from Bombardier’s Investor Relation’s call this week. The company sold just eight aircraft during the second quarter, and they delivered 47, giving a book-to-bill ratio of just 0.2. In contrast Gulfstream, who don’t report order numbers, delivered 41 aircraft and said they had the best second quarter for orders since 2008.

Although the orders are net of cancellations, eight sales over a three month period only adds to Bombardier’s headaches. Cancellations in the period included 11 LearJet 85s. The company also announced a two year delay to the entry into service of the Global 7000.

Inside the industry we all understand that working with new technologies is often challenging, and the market is not performing well. But outside, investors will be looking at headlines and stock prices. And with yesterday’s two headlines joined by an eight percent stock price drop, things must be tough in Montreal right now.

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