Bombardier Executive Insights: Existing Campaigns, Transportation

On Thursday, Bombardier Inc (TO:BBD.B) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Existing Campaigns

Walter Spracklin – RBC Capital Markets: Just on, I guess, my question will revolve around your new order or your existing campaigns. New investors right now are looking for kind of indications that yes, we’re at the lower of the new order cycle and looking for any signs of comfort or optimism in those campaigns, and I was wondering Pierre, you mentioned that in the back half of the year, you do expect a significant increase in new orders. Perhaps if I can broaden my question to discussing any existing campaigns that might be meaningful or your optimistic particularly on the RJ front and perhaps as well if you could comment specifically on your Transportation campaigns that we have been – that we know about the Crossrail and some of the Indian contracts that look to be quite meaningful in the back half of the year?

Pierre Beaudoin – President and CEO: Let me start with Aerospace, first of all I think we are off to a very good start with 40 business aircraft and 28 commercial, because you must not forget last year in business aircraft in the first quarter there was a large order from one customer NetJets which may be skews the comparison but we consider 40 and 28 to be a very good quarter. Also said this morning that we have if you consider that this year not only do we have 28 orders but in all if you count the LOIs plus the options we are talking about 110 so far this year. So good momentum on commercial side. There’s many campaign – you know it’s not our policy to discuss specific campaign when you know WestJet that still needs to get closed so it would not be in our backlog. Its only an LOI at this point but the customer has announced they are going with us. So that’s one example. Another example as you know in the U.S. right now there is major reorganization going on because one airline is in Chapter 11 and there is a lot of discussion on how they’re going to grow not only this airline but how they are going to grow their RJ fleet to replace their 50 passenger grow in terms of size. And because we have a significant cost advantage on our competitor, whether it be a CRJ900, the CRJ700 when scopes are at limited 70 seats or the CRJ1000 I think we’re very well positioned to participate when this gets going in the U.S. and we feel it’s coming in the near future. I can’t tell you the timing because there is a lot play, but I think that’s an area where you have a lot of opportunities.

Walter Spracklin – RBC Capital Markets: Can you talk about rough size of that one or no?

Pierre Beaudoin – President and CEO: Well, it’s not that one; it’s many airlines looking to remove from 50 passenger jets to 70, 80 and depending where the scope will happen. I think what I would ask you to do on this is look at the 50 passenger airplanes that are getting at the end of their financing 12 years, 15 years and then you get an idea of how many will be replaced for larger regional. So, that’s for – and then the other aspect that Guy has spoken about quite a bit is how much we reinforced our team in emerging market and we’re seeing a lot of opportunities that – with ongoing discussions. So, I feel quite bullish about our commercial aircraft order for the year. For business aircraft, basically the momentum is continuing for us for large and starting at the challenger with some pickup on the Learjet at this point. So, we think we’re up for a good year of order and the first order represents that. On transport, you know there are two large potential orders in the U.S. where we’ve been chosen as the preferred bidder which would be New York and BART, BART the Board meeting is going on right now. We hope that they make the decision to award us the contract. As far as we’re concerned, they can make either the decision to award the contract delay but I don’t think they have the ability to delay much or restart the process, so we’re hoping that they will make a decision through go forward, this process has lasted long enough. And then I think we’ll continue to be very well positioned to win on this one like we are in New York. Besides that we have quite a few campaigns in Europe, because you know that we won some large contracts a few years ago and these customers have options. A good example is in the first quarter we announced Deutsche Bank taking more double deck in the first – exercising some options in their framework contracts. So, we expect more of that during the year. So, I think from an order perspective it will be a good position to be a book-to-bill of one in Transports and in Aerospace to build momentum, so that we can eventually increase volume.


Cameron Doerksen – National Bank Financial: Question on Transportation, the revenue was fairly weak in the quarter, I mean especially I guess in Asia Pacific markets I assume that bulk of that is China. I’m just wondering if you can maybe talk about what’s gone on there, specifically with regards to the ZEFIRO train. Where that’s ramping and when do you expect to rebound in Asia Pacific and in China market specifically?

Pierre Beaudoin – President and CEO: Well, first, yes, revenue was a lower in transport, a couple of things to monitor during the year. Of course the euro when we translate these revenues into U.S. dollars, something we can’t predict as you fully well understand is the euro, so that has influenced the total number of revenue. Like you pointed out Asia Pacific, it is in China, it’s not a slowdown, but we are ramping up the ZEFIRO 380, and as we have discussed before, there are discussions going on in China about how many – within the contract of the (high-speed) that we took a few years ago on the 380 they will actually take some 250 stainless steel cars and some aluminum 250 kilometers train and right now the order for additional 250 stainless steel which is a train we make already has come to an end. We are going to reaccelerate towards the latter part of the year, so there’s kind of a slowdown for a few months in China. Not permanent, but a slowdown, so that will affect our revenue, it’s a question of timing.