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Bombardier Aerospace faces long road to recovery of business jet market: analyst

Bombardier Inc. (TSX:BBD.B) faces a long road to recovery in the business jet market with no material rebound until 2012, an aerospace analyst said Tuesday.

Cameron Doerksen of Versant Partners said the aerospace segment earnings of the Montreal-based company will remain depressed for the next year or so, eliminating any need to rush out to purchase its stock.

"New business jet orders will likely stay depressed through at least this year and deliveries of new jets will probably decline again in calendar 2010," he wrote in a report.

Without any new orders, Doerksen also believes Bombardier will have to reduce its production rate for the CRJ regional jet. However, rates for the Q400 turboprop are more secure because of recent orders.

Doerksen is forecasting Bombardier will report Sept. 2 that its earnings per share for the second quarter will decrease to nine cents U.S. from 14 cents a year ago, with US$4.8 billion of revenues.

While industry data suggests Bombardier’s delivery of business jets in the April-to-June period fell by 25 per cent to 52 units, they were skewed more to higher margin high-end planes with the delivery of 21 Global series aircraft.

The General Aviation Manufacturers Association said industry-wide business jet deliveries decreased by 40 per cent in the quarter, suggesting this year’s deliveries will be the lowest since 2005.

Like all aircraft manufacturers, Bombardier has sought cost reductions from suppliers to help weather the storm, Doerksen said.

Company officials couldn’t be reached for comment.

Bombardier shares gained six cents to $4.13 in midday trading on the Toronto Stock Exchange.