Business jet chief: Bombardier focusing on better profitability

David Coleal sees two years of slightly down to flat business jet deliveries followed by an upswing in business in 2018.

That’s what the president of Bombardier Business Aircraft told an audience of analysts Tuesday attending Bombardier Inc.’s Investor Day in New York.

Coleal reiterated that Bombardier Inc. – the Canadian parent of Learjet – plans to reduce production of its Global 5000 and Global 6000 large-cabin jets beginning in 2016. That will mean lower profit and revenue for Bombardier next year.

The reduced production rates, he said, were in anticipation of lower demand for large-cabin jets in the next couple of years. Numerous forecasts and analysts recently have predicted slowing demand for them in countries such as China and India and in regions including Africa and the Asia Pacific.

With that in mind, Coleal said during a webcast of his presentation, “we’re focused on improving profitability.”

“We clearly know where we have opportunities and what we’re going to be doing different from our business model to enhance profitability and cash generation going forward,” said Coleal, who earlier in his career oversaw Bombardier Learjet before joining Spirit AeroSystems in 2011 as executive vice president. He joined Bombardier Business Aircraft on June 15.

Coleal said one of the primary differences in the business model is looking at every aspect of his division’s business, including the pricing of aircraft, gross margin, its cost structure and head count.

“What we’re going to be doing over the next several years is continuing that model,” he said.

He also said there will be a renewed emphasis on customer service activities with a goal of increasing sales in that segment.

Coleal said little about Wichita and its Learjet manufacturing operations, other than to say that the Learjet 70/75 — currently the only aircraft it produces — “is one of the best Learjets we’ve ever produced.”

He also briefly commented on the Learjet 85 program, which the company officially canceled in October after announcing a pause in the development of the newest Learjet in January, resulting in the layoff of 620 workers in Wichita.

“The Learjet 85 cancellation (was) a difficult decision,” Coleal said. “But it was the right decision to make because we looked at the market forecast, spent a lot of time looking at potential order intake in that segment and realized it’s not going to support the business model and the business case.”

Instead, he mostly talked about the company’s larger business jets manufactured in its Canadian plants, including its Challenger series jets and its all-new Global 7000, which is under development.

He said the Global 7000, despite a move earlier this year to push back its entry-into-service date by two years — to the second half of 2018 — “had very few cancellations on our order books.”

Coleal said he expects the Global 7000 to be a strong-selling aircraft among large-cabin, long-range jets.

“I think we’re positioned very well to capture a large portion of that segment,” he said.

This story was originally published November 24, 2015 at 6:00 PM with the headline "Business jet chief: Bombardier focusing on better profitability."