Source: Bombardier.
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  • Bombardier (BBD.A) is a global leader in the designing, manufacturing and servicing of business jets
  • The company boasts a global fleet of approximately 5,000 aircraft in service
  • It is targeting more than US$9 billion in annual revenue and more than US$900 million in free cash flow by 2025

The TSX, TSXV, CSE and NEO exchanges list over 4,000 companies, a daunting number for any investor to sort through.

Parsing prospective opportunities from also-rans begins with narrowing down your investable universe, leaving only companies whose operations mark a clear path forward.

In the interest of expediting that task for TMH readers, our new series, Anatomy of a Flagship Asset, introduces you to the most promising projects and products creating value in the Canadian stock market.

Next up, Bombardier (BBD.A), a global leader in the designing, manufacturing and servicing of business jets.

A purveyor of world-class passenger experiences

Bombardier boasts a global fleet of approximately 5,000 aircraft in service across multinational corporations, governments, private individuals, and charter and fractional ownership providers.

Source: Bombardier.

Headquartered in Montreal, the company operates aerostructure, assembly and completion facilities in Canada, the U.S. and Mexico, as well as a robust customer support network with strategic locations in the U.S., Canada, the U.K., Germany, France, Switzerland, Italy, Austria, the UAE, Singapore, China and Australia.  

According to the General Aviation Manufacturers Association, Bombardier executed the highest number of deliveries among business jet manufacturers over the last two years.

The company’s fleet is headlined by its Challenger and Global aircraft families, which are sought after for their cutting-edge innovation, elegant and work-friendly cabin design, and unmatched performance and reliability.

Global family

Global is widely recognized as one of the industry’s leading business jet families, which counts the 5500, 6500, 7500 and 8000 models among its ranks.

Source: Bombardier.

Notable features among Global aircraft include:

  • Widest-in-class cabins
  • Zero-gravity seats
  • A range from 5,900 to an industry-leading 8,000 nautical miles
  • The world’s largest business jet with four true living spaces, including kitchen, dedicated crew suite, and principal suite with full-size bed (7500)
  • Top speed of Mach 0.94, the fastest in business aviation (8000)
  • Bombardier’s Soleil lighting system, aviation’s first circadian rhythm-based cabin lighting with dynamic daylight simulation to combat jet lag
  • Bombardier Vision flight deck featuring synthetic vision and the latest navigational equipment
  • Ka-band high-speed internet connectivity up to 35 times faster than other aviation internet systems
  • Bombardier Pũr Air’s advanced HEPA filter, which captures 99.99 per cent of allergens, bacteria and viruses, while replacing 100 per cent of cabin air in as little as 90 seconds
Challenger family

According to Bombardier, the Challenger aircraft are the best-selling business jets among top corporate flight departments and charter operators, making it the leader of the super mid-size market. The family is comprised of the 650, 350 and 3500 models.

Source: Bombardier.

Notable features among Challenger aircraft include:

  • Low direct operating costs due to low parts costs, long maintenance intervals and superior fuel efficiency
  • Zero-gravity seats
  • Sound-suppressing design for the quietest cabin in its class
  • The best-selling large business jet of all time with over 1,000 deliveries (650)
  • Over 5 million flight hours flown (650)
  • The highest sleeping capacity in its class
  • The industry’s first voice-controlled cabin (3500)
  • The most sustainably designed business jet in its class (3500)
  • Winner of the 2022 Red Dot ‘Best of the Best’ Award for product design (3500)
  • Industry-leading dispatch reliability of over 99.9 per cent

Future catalysts

Bombardier is targeting more than US$9 billion in annual revenue by 2025, with adjusted EBITDA over US$1.625 billion, and an adjusted EBITDA margin of 18 per cent.

The company expects to generate free cash flow of more than US$900 million per year by 2025, driven by a focus on deleveraging its business toward a net leverage ratio between 2x to 2.5x. It has reduced its total debt by US$4.5 billion to date, a 45-per-cent reduction compared to 2020.

Source: Bombardier.

This forecast follows 23-per-cent revenue growth between 2020 and 2022 to US$6.9 billion, driven by expansion in its aftermarket business, whose revenue increased by more than 50 per cent in the same period.

Bombardier has also more than quadrupled its profitability to US$930 million in adjusted EBITDA and generated US$835 million in free cash flow over the last two years.

Key drivers toward the company’s projections include Bombardier Defense, established in 2022 in Wichita, Kansas, through which it intends to strategically reinforce its specialized aircraft business by leveraging the Challenger and Global platforms, its technical and engineering capabilities, and its world-class flight test center to meet the sector’s rising demand for right-sized, flexible aircraft solutions. Bombardier anticipates tripling its revenue from defense sales and services to over US$1 billion in the second half of the decade.

Another important driver is the company’s aftermarket business, which it has invested significantly in since 2020 with an eye on revenue diversification. Additions during the period include close to 1 million square feet of new capacity worldwide and over 250 skilled technicians. It believes the segment is on track to reach US$2 billion in revenue by 2025.

With Polaris Market Research projecting the global business jets market to grow from US$29.18 billion in 2021 to US$41.82 billion by 2030, Bombardier is poised to build on its position of strength through a legacy of elite clientele, complemented by expansions across aviation seen as accretive to shareholder value. Its recent stock performance speaks favorably to the validity of this path.

Bombardier (BBD.A) is up by 86 per cent over the past year, driven by steadily increasing revenue, as well as positive net income over the last two quarters between US$27 million and US$241 million.

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