Bombardier plans to list rail business

Canada's Bombardier says it will seek a public listing of a minority stake in its train making business in the latest stage of its efforts to raise badly needed cash.

The world's third-largest civil aircraft manufacturer announced the move on Thursday as it reported first-quarter net income down 13 per cent to $100m on revenue up 1 per cent to $4.4bn.

The company has been struggling to deal with the projected $5.4bn cost of developing its C Series jet, intended as a competitor to Boeing's 737 and Airbus's A320 family. The aircraft has won 243 firm orders, well short of the 300 it was targeting by the time of the aircraft's entry into service.

News of the planned initial public offering for the transportation business, which builds passenger trains mainly in Europe, follows weeks of speculation that the company might sell the business to one of China's big, state-controlled trainmakers.

Bombardier raised $868m through an equity offering in the quarter as part of its refinancing efforts and issued $2.25bn in unsecured notes, of which it redeemed $750m early on April 29.

The company had been "reviewing its strategic options" for the rail business, the world's largest by revenues, and planned the IPO for this year's fourth quarter.

"When completed, the IPO is expected to crystallise the full value of Bombardier Transportation and further strengthen the corporation's financial position, while preserving flexibility should it wish to participate in future rail equipment industry consolidation," it said.

The primary listing for the division - much of which Bombardier acquired in 2001 through its acquisition of Daimler's AdTranz trainmaking business, focused on Germany - was likely to be in Germany, the company said. The division recorded earnings before interest and tax for the first quarter down 8 per cent to $118m, on revenues down 10 per cent to $2.04bn.

The commercial aircraft division, which makes Canadair regional jets and other commuter aircraft, as well as developing the C Series, recorded an ebit loss of $9m, against $5m earnings in last year's first quarter, on revenue up 41 per cent to $673m.

The company announced alongside the results that Swiss, part of Germany's Lufthansa, would be the launch operator of the C Series. The company announced in late March that the aircraft's entry into service was being postponed from this year to the first half of next year.

The company said the C Series programme was "progressing well".

Bombardier's business aircraft division, generally the most profitable, reported first-quarter ebit up 7 per cent to $96m, on revenues up 4 per cent to $1.54bn.

The smallest division - aerostructures and engineering services - announced ebit up from $16m to $42m on revenues up by $1m to $471m.

The company said it was changing its practice of providing guidance for the expected liquidity of each business and would replace it with guidance for the group as a whole but only "at a future date".

Alain Bellemare, who took over as chief executive in February in the wake of a profit warning, said that, after three months in the job, he recognised the company had challenges and "a lot of work to do".

"As you can see, we are moving fast and taking significant actions to improve performance."

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation