* First flight of C-Series pushed back to June 2013
* Company will cut about 1,200 jobs in train unit
* Will take 4th quarter charge of up to $150 million
* Third quarter earnings $0.12 a share vs $0.10 estimate
* Shares drop 4.4 pct to close at C$3.45 on TSX
(Adds Moody's outlook change paragraph 19, closing stock price
By Susan Taylor
TORONTO, Nov 7 Bombardier Inc has
delayed by six months the inaugural flight of its C-Series
jetliner, its first attempt to muscle into a market dominated by
The news raised fresh concerns about future orders for the
new plane on a day when Bombardier reported weaker-than-expected
quarterly revenue and 1,200 job cuts in its rail unit.
Bombardier shares tumbled 4.4 percent.
The Canadian plane and train maker blamed unspecified
supplier delays for postponement of the first flight of the
C-Series plane, which will compete with smaller aircraft from
giants Airbus and Boeing Co.
The 100- to 149-seat aircraft will be Bombardier's biggest
plane to date.
"We expect the market to remain highly skeptical until the
plane actually flies," said National Bank Financial analyst
"New orders for the C-Series may also be elusive until there
is more certainty on the entry-into-service date."
Executives at Bombardier, the world's No. 3 plane maker and
largest passenger train maker, had already hinted at delays to
the $3.4 billion project. But their latest announcement sparked
concerns about the reliability of future forecasts.
Bombardier shares, the most heavily traded stock on the
Toronto Stock Exchange, fell 4.4 percent to end at C$3.45, as a
strong backlog and new orders partly offset the weak results.
Bombardier said in August it would consider itself on
schedule if it was within three to five months of its
first-flight target. Many analysts said a six-month extension
would not be worrisome, but a longer delay would cause concern.
"What happens through time is you get a supplier that
delays, then you get another one that delays and then in the
end, you're getting components in the wrong sequence," Chief
Executive Pierre Beaudoin said on a conference call.
"At one point it serves no purpose to get the parts in the
wrong sequence, so then we re-harmonized the schedule."
The delay will mean penalties for some suppliers and from
some customers, Beaudoin said, without providing financial
details. But he said it will not push the program over budget.
Bombardier did not say which suppliers caused the delays.
It now targets the first flight of its 110-seat CS100 for
June 2013, pushed back from the end of this year, with
deliveries expected in mid-2014. The entry into service for
Bombardier's 130-seat CS300 is still seen at the end of 2014.
NOT IN THE "OH NO" ZONE
"We've been waiting for the shoe to fall. It now has," said
Scott Rattee, analyst at Stonecap Securities Inc.
"The C-Series remains a going concern. They've bought
themselves a little bit of time ... It certainly has not slipped
into the 'Oh no' zone yet."
Bombardier said its cash flow will not cover its planned $2
billion in aerospace spending this year as it invests heavily on
its costly C-Series and LearJet85 development programs.
It now expects to use $500 million in free cash flow in
2012, against a previous neutral outlook.
"Capex is at peak level and should decline considerably
starting in 2014," said BMO Capital Markets Fadi Chamoun, adding
that $3.5 billion in liquidity should be adequate.
The news caught the attention of rating agencies. Moody's
affirmed the company's main rating, but lowered its outlook to
negative from stable, citing concerns about cash consumption.
Bombardier said it will cut more than 3 percent of its rail
unit workforce of about 36,000 and close a freight car plant in
Aachen, Germany, which employs about 400 workers. Rattee
described the move as prudent.
Bombardier expects a restructuring charge of up to $150
million in the fourth quarter for the rail cuts.
Slightly offsetting the negative news was a strong order
book for both planes and trains, said Chamoun, as the company
maintained its aircraft delivery guidance of 235 planes in 2012.
The total order backlog was $58.6 billion at quarter-end, up
from $53.9 billion at the end of 2011.
The aerospace unit booked 83 orders and delivered 57
aircraft in the quarter, for a 1.5 book-to-bill ratio, said
Sterne Agee analysts Peter Arment and John Sullivan.
The rail unit got $2.3 billion in new orders.
Bombardier said weak rail results and a stronger dollar
contributed to a 6 percent drop in revenue in the quarter to
Revenue fell to $4.3 billion from $4.6 billion in the same
period last year, lagging the average analyst forecast of $4.66
billion, according to Thomson Reuters I/B/E/S.
Net profit rose to $212 million, or 12 cents per share, from
$192 million, or 11 cents per share, a year earlier, lifted by
gains on financing costs. Analysts had expected 10 cents per
Rail unit revenue fell 9 percent to $2.1 billion as
contracts in Europe and other regions wrapped up, while orders
remained in a start-up phase.
Revenue in the aerospace division was flat at $2.3 billion.
($1 = 0.99 Canadian dollar)
(Additional reporting by Bhaswati Mukhopadhyay in Bangalore;
Editing by Ted Kerr, Matthew Lewis, Janet Guttsman and