Intanto Fitch conferma il rating di Bombardier ma riduce l'outlook sull'attesa debolezza del sottocomparto dei business jet che lo scorso anno ha generato il 25% del fatturato ma una quota percentualmetne superiore degli utili.
Già riportate più volte le considerazioni sul deleverage attuato di recente, sul cash disponibile e sugli outflows attesi prossimamente, torna ìno però utili in quanto aggiornate agli ultimi dati utili ....
Fitch Affirms Bombardier IDR at 'BB+'; Outlook to Negative
2009-04-28 16:01:05
Fitch Ratings has affirmed the Issuer Default Rating (IDR) and senior unsecured debt rating for Bombardier Inc. (BBD) at 'BB+'. The Rating Outlook is revised to Negative from Stable.
Fitch affirms the following.
-- IDR at 'BB+';
-- Senior unsecured debt at 'BB+'
-- Preferred stock at 'BB-'.
The ratings affect outstanding debt and preferred stock of approximately $4.3 billion of as of Jan. 31, 2009.
The Negative Outlook reflects concerns about the impact of a sharp decline in demand for business jets on BBD's aerospace business and free cash flow.
Although BBD has the capacity to weather a temporary downturn, a sustained downturn could hurt the company's financial performance beyond fiscal year (FY) 2010. BBD currently plans to reduce business jet deliveries by 25% in FY2010 compared to FY2009.
Fitch calculates that business jet production at BBD will decline by a larger amount than deliveries, due to the carryover of business jets completed but not sold in FY2009 as a result of cancellations. Business jets accounted for slightly more than one-quarter of BBD's revenues in FY2009, but Fitch estimates that they accounted for a higher percentage of profits.
The Negative Outlook recognizes the uncertainty surrounding conditions in the business jet market including future orders, cancellations and deferrals, and the impact on services revenues. It also takes into account global economic weakness that could have a negative impact on BBD's overall business.
In addition, orders for regional jets have slowed due to lower passenger traffic and financial difficulties at the airlines, and BBD plans to reduce production of regional jets late in FY2010 to a sustainable rate until demand improves. Concerns about the business jet market are partly offset by an increase in planned deliveries of commercial aircraft in FY2010, particularly the fuel-efficient Q400, which has experienced solid demand.
Free cash flow after dividends in FY2009 declined to $141 million compared to $1.9 billion in FY2008. The change was driven by higher inventories, lower advances, and higher capital expenditures.
Free cash flow in FY2010 is likely to be pressured by lower business jet deliveries, growing inventories of used aircraft, ongoing pension contributions estimated at $400 million in FY2010, and higher capital expenditures to support new product development for key programs, especially the CSeries, NextGen and Learjet 85 aircraft.
Expenditures for other programs will be closely controlled, however, given the difficulties that face BBD's aerospace business. Furthermore, BBD has taken steps to reduce the number of employees by 14% at an estimated cost of $30 million.
By comparison, BBD's transportation business, Bombardier Transportation (BT), has generated steady results, including positive free cash flow.
Its high backlog could support favorable results in FY2010. However, budget pressures at BT's major customers, or challenges faced by customers in obtaining financing, could potentially limit the amount of support provided by BT to BBD's total free cash flow.
Other rating concerns include inherent risks pertaining to new aircraft launches, project risk on Transportation contracts, the effect of currency exchange rate volatility on financial results and planning, and large pension contributions. Contingent liabilities related to past aircraft financing represents another concern.
However, these contingencies are spread out over time. Furthermore, BBD's direct customer financing has declined significantly and the company expects to provide little, if any, such financing in the foreseeable future.
The ratings could be downgraded if demand for business jets remains depressed for a sustained period, if BBD's transportation markets are affected significantly by market conditions, or if cash deployment for capital expenditures or other uses contributes to higher leverage or a reduction in BBD's liquidity.
On the other hand, the Rating Outlook could return to Stable if conditions in BBD's aerospace markets stabilize and begin to improve or if BBD is able to reduce its cost structure sufficiently to rebuild its free cash flow.
BBD is better positioned than in the past to adjust to the difficult operating environment due to previous debt reduction and high cash balances (BBD does not have a bank credit facility).
The ratings are further supported by a large backlog, business diversification, leading market positions and a gradual improvement in operating performance through most of FY2009.
Despite a gradual increase in profit margins at both the Aerospace and Transportation segments, margins are still lower than those of some of BBD's peers. The company remains focused on building a stronger capital structure and further reducing leverage, which would help reduce its cost of funds and improve the company's financial and strategic flexibility. Economic challenges are likely to prevent much improvement in the short term, however. Total debt has declined by over $1 billion during the past two years.
At Jan. 31, 2009, BBD maintained approximately $3.5 billion of unrestricted cash balances, not including $777 million of restricted cash related to its letter of credit (LOC) facilities. Restricted cash balances are not available for liquidity purposes or for the benefit of unsecured bondholders. Bombardier's unrestricted cash balances are the company's sole source of liquidity as it does not have a bank facility available. Credit facilities are restricted to the issuance of LOCs.
BBD's liquidity benefits from a debt structure in which there are few maturities until 2012. BBD's credit protection measures at Jan. 31, 2009 included Debt/EBITDA of 2.0 times (x) and FFO Interest Coverage of 5.5x.
Cash deployment is primarily directed toward capital expenditures that are concentrated on new aircraft. One of BBD's most important programs is the CSeries which is scheduled to enter service in 2013 and is targeted at the low end of the 100-149-seat range.
Expenditures estimated at $3.2 billion will be shared among BBD, suppliers and various governments. BBD should be able to fund its portion using internally generated cash or cash balances. In March 2009 BBD announced firm purchase orders valued at $3 billion from two customers, Deutsche Lufthansa AG and Lease Corporation International.
Risks related to the program include normal challenges surrounding execution of the development and certification plan, potential financing of deliveries by Bombardier Aerospace, market demand and potential competitor responses
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