Pro-forma(1) liquidity(2) of approximately $3.5 billion, including approximately $1.7 billion of consolidated cash on hand, $738 million of available revolver capacity at Transportation as of June 30, 2020, and up to $1.0 billion of new liquidity from recently announced senior secured credit facility.
Free cash flow usage(3) and cash flow usage from operating activities better than expected at $1.0 billion, including an estimated $700-$900 million of Coronavirus impact
Consolidated revenues were $2.7 billion, down 37% year-over-year due to pandemic related disruptions
Consolidated adjusted EBIT(3) loss of $427 million reflecting charge at Transportation related to legacy projects and COVID-19 impact at both Aviation and Transportation; Reported EBIT of $26 million reflecting an accounting gain on the CRJ divestiture
All 51 manufacturing sites and other operations successfully resumed, full-year production and delivery rates reset with current market conditions and customer requirements
European Commission regulatory approval of Bombardier Transportation sale to Alstom obtained in July; Sale of aerostructures business to Spirit AeroSystems is expected to close this fall
All amounts in this press release are in U.S. dollars unless otherwise indicated. Amounts in tables are in millions except per share amounts, unless otherwise indicated.
Bombardier (TSX: BBD.B) announced today its financial results for the second quarter of 2020 and provided an update on the actions the company is taking to manage the business through the COVID-19 pandemic. Bombardier also provided an update on the status of the previously announced divestitures undertaken to reshape the company's capital structure.
'Bombardier continues to take the right actions to manage the impact of the ongoing public health crisis while protecting the business for the long-term,' said Eric Martel, President and Chief Executive Officer, Bombardier Inc. 'We begin the second half of the year with our global operations safely and successfully resumed and our production rates and workforce realigned to current market conditions and customer requirements. We've also improved our liquidity position with solid cash management, cost reduction actions and a new secured credit facility, providing additional flexibility as we work to address our balance sheet challenges and close the sale of Bombardier Transportation and our aerostructure business.'
On July 31, 2020, the European Commission provided conditional approval of the sale of Bombardier Transportation to Alstom, a significant milestone in obtaining the necessary regulatory approvals to complete the transaction. Bombardier and Alstom continue to work together to obtain the remaining approvals and complete the Works Councils consultations required prior to executing the definitive sale and purchase agreement. Bombardier expects the sale of its aerostructure business to Spirit AeroSystems Holdings, Inc. to close this fall.(1)
Bombardier began the third quarter with pro-forma liquidity(2) of approximately $3.5 billion. This includes approximately $1.7 billion of cash on hand, access to the undrawn amount of $738 million on Transportation's revolving credit facility as of June 30, 2020, and the new $1.0 billion senior secured credit facility announced on July 22, 2020 and expected to close in the third quarter.(1)
Revenues of $2.7 billion during the second quarter reflect a lower level of production activity and deliveries in the quarter as operations at key Aviation and Transportation sites across North America and Europe were temporarily suspended for several weeks due to the global COVID-19 pandemic.
Adjusted EBITDA(3) loss and adjusted EBIT loss were $319 million and $427 million, respectively, for the quarter. These results reflect an additional charge of $435 million at Transportation, largely related to incremental engineering, certification and retrofit costs associated with a number of late-stage projects mainly in the U.K. and Germany. At Aviation, earnings were lower year-over-year primarily as a result of disruptions from the global COVID-19 pandemic. Reported EBIT was $26 million for the quarter and reflects the $496 million accounting gain on the disposal of the CRJ program to Mitsubishi Heavy Industries, Ltd. closed on June 1, 2020.
Free cash flow usage and cash usage from operating activities were $1.0 billion for the quarter. This was better than anticipated as the company resumed operations faster than expected and took additional actions to mitigate the full COVID-19 impact. These actions resulted in higher than expected customer deliveries both at Aviation and Transportation, lower inventory intake as production rates were realigned with market conditions and reduced discretionary spending across the business. The impact on free cash flows of the COVID-19 pandemic during the quarter is estimated at $700 to $900 million.
While we are seeing some early encouraging trends in our end markets, including new interest in private air travel and the enhanced safety it provides, the continuing uncertainty surrounding the duration of the pandemic and the shape of the recovery continues to preclude us from providing financial guidance at this time.(4) However, based on our backlogs and the near-term production and delivery outlook, we currently expect business activity to gradually recover in the second half of the year with improving cash usage in the third quarter and with the seasonal release of working capital in the fourth quarter.(1)
Bombardier also announced that Mrs. Beatrice Weder di Mauro expressed her intention to resign from the Company's Board of Directors for personal reasons. The Board accepted Mrs. Weder di Mauro's resignation and thanks her for her four years of dedicated service and the insight and wisdom she brought to Bombardier during her tenure.
Revenues reached $1.2 billion during the second quarter, reflecting a lower level of production activity and deliveries as the Corporation suspended business aircraft operations in Canada and key aerostructures operations in Mexico and Belfast due to the COVID-19 pandemic.
Starting in the last weeks of April and through the month of May, operations gradually resumed with new safety measures in place, allowing Aviation to deliver 20 business aircraft during the quarter, including five Global 7500.
Bombardier's worldwide customer service operations have continued to operate largely uninterrupted throughout the pandemic. Service centres have shown resilience maintaining a high level of activity at maintenance facilities, partially offset by lower revenues related to the decrease in customer flight utilization.
Adjusted EBITDA and adjusted EBIT margins of 4.5% and (1.6)%, respectively, reflect lower volumes during the quarter as result of disruptions from the global COVID-19 pandemic, combined with low contribution of early Global 7500 units. Reported EBIT of $442 million during the quarter reflects the $496 million accounting gain on the disposal of the CRJ Series aircraft program to Mitsubishi Heavy Industries, Ltd.
On June 5, 2020, Aviation announced the reduction of its workforce by approximately 2,500 employees to align production with current market conditions, forecasted to be down approximately 30% year-over-year.(1) The reduction resulted in a special charge of $41 million in the second quarter.
A significant share of the Corporation's free cash flow usage during the first two quarters of 2020 is related to the impact of the COVID-19 pandemic on Aviation, mainly driven by a shortfall in deliveries and lower than anticipated advances associated with the low order intake environment.
As operations recover in the second half of the year, aircraft deliveries are set to accelerate relative to the first half of the year, towards a seasonal peak in the fourth quarter supported by Aviation's $12.9 billion backlog.(1)
Transportation
Results (PDF)
Revenues for the quarter of $1.5 billion reflect a lower level of production activity as operations at key sites across Europe and the Americas were temporarily suspended due to the global COVID-19 pandemic and the impact of revised estimates on a number of late-stage projects mainly in the U.K. and Germany.
Starting in the last weeks of April and through the month of May, operations gradually resumed with new safety measures in place. With operations returning to normal, production is expected to accelerate in the second half, peaking seasonally in the fourth quarter generally in line with 2019 levels. The engineering and production delays tied to the COVID-19 pandemic is expected to be recovered in 2021 and beyond, supporting future free cash flow generation.(1)
Adjusted EBIT loss for the second quarter of $383 million was significantly below expectations, reflecting an additional charge of $435 million at Transportation, largely related to incremental engineering, certification and retrofit costs associated with a number of late-stage projects mainly in the U.K. and Germany. Over two thirds of this charge is expected to impact 2020 free cash flows as Transportation reaches key engineering and entry-into-service milestones. Reported EBIT loss for the quarter was $377 million.
During the quarter, a new, dedicated project team was mandated to conduct deep dives into challenging legacy projects, evaluating both project management processes and talent resources with a goal to fully understand the causes of excessive costs, and take the right corrective actions.
The outlook for transportation remains positive and is supported by its $33.7 billion backlog and strong industry fundamentals.(1)
Order intake of $1.6 billion for the quarter reflects project wins across geographies, with notable contract awards with SNCF's repeat order in France and India's flagship Delhi-Meerut regional rapid transit system project in Asia.
About Bombardier
With nearly 60,000 employees across two business segments, Bombardier is a global leader in the transportation industry, creating innovative and game-changing planes and trains. Our products and services provide world-class transportation experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.
Headquartered in Montreal, Canada, Bombardier has production and engineering sites in over 25 countries across the segments of Aviation and Transportation. Bombardier shares are traded on the Toronto Stock Exchange (BBD). In the fiscal year ended December 31, 2019, Bombardier posted revenues of $15.8 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.
Bombardier and Global 7500 are trademarks of Bombardier Inc. or its subsidiaries.
Contact:
Tel: 514 861 9481
The Management's Discussion and Analysis and the Interim Consolidated Financial Statements are available at ir.bombardier.com.
ALSTOM 
