More than a year and a half after his appointment as CEO of Bombardier, Éric Martel now heads a company that is completely refocused on the construction and development of business jets. Less indebted, with two families of aircraft that are recognized internationally, Bombardier has benefited since the start of the year from an extremely favorable market. Is this a temporary boom, propelled by the coronavirus pandemic, or a longer-term trend? The new CEO explains how far we’ve come and how far to come for Bombardier.
Q. You were appointed in March 2020, in quite a troubled time, thank you. How did you experience this return to Bombardier?
R. The announcement of my appointment was made on March 13, the same day the confinement was announced and it didn’t make the headlines for long. I came back on April 6 and there was a lot of work to do. Many transactions to be finalized for commercial aircraft and Bombardier Transport.
Q. These transactions had nevertheless been announced before your arrival, right?
R. Yes, but COVID risked threatening the conclusion of the deals. Finally, we were able to close the sale of the CRJ commercial aircraft to Mitsubishi in June 2020 and then that of the Belfast plant to Spirit Aerospace in October before finalizing the sale of Bombardier Transport to Alstom in January 2021. These transactions made it possible to put clarity with the markets on the direction we were going to take.
This is where I announced in March 2021 our new game plan. We stopped manufacturing the Learjets and concentrated our activities on three product lines: the Global, the Challenger and our network of service and support centers.
Q. These transactions have also and above all enabled you to reduce your debt. Are you satisfied with the still significant burden that you must continue to bear?
R. Yes, absolutely. We reduced our debt by 3 billion to bring it down to 7 billion and we took advantage of a very advantageous market to renegotiate it and postpone the first repayment schedule to December 2024. With the excess liquidity that we are freeing, we will be largely able to cope with it.
Our financial objectives are to improve our operating profit, which should reach 1.5 billion by 2025. We have also succeeded in diversifying our order book by more than 11 billion with more orders for Challenger.
Q. In this regard, do you agree that COVID-19 has worked in your favor by relaunching the business jet market?
R. COVID has had an accelerating effect, that’s for sure. At the start of the pandemic, many fleet operators were worried and thought they had to cancel their orders for new devices.
From the summer, when the airlines had abandoned several routes, the demand for charter flights increased sharply and the demand from fleet operators has since been increasing sharply and has allowed us to diversify our order book.
Only 19% of wealthy people who can easily afford to use private jets do so and it is for this reason that operators like NetJets, VistaJet or Flexjet have discovered many new users who prefer the safety of a private jet. family rather than doing it on a plane with 200 passengers.
Before the pandemic, we had a rate of 16% of new high net worth customers. This rate has risen to 24% today.
Q. You recently delivered your 1000e Global aircraft that was the bulk of your order book and now you are back to delivering Challengers. How do you explain the surge in popularity of these devices?
R. The Challenger is an aircraft bought and used more by large companies and it is more exposed to volatility because when there is a recession they use them less. Right now, it’s euphoria in business jets.
Q. Is this a temporary phenomenon due to the pandemic or a more serious trend that could continue?
R. The trend is quite heavy and will continue next year, but after that, we do not know and that is the reason why we are not increasing the production rate and that we will continue to build 120 or 130 planes per year.
This allows us to have better prices and to strengthen our order book, but if we are not able to deliver a Challenger within 12 to 15 months following the order or 16 to 18 months for a Global, it is is sure we will have to review the pace. We have already manufactured up to 200 devices per year.
Q. You place a lot of emphasis on service and user support activities, they have even become a fully-fledged third division. Do you see great potential there?
R. We have been clear in our forecasts; we expect our service activities, which today generate 1.2 billion in revenue, to reach 2 billion over the next few years. We have five centers in the United States, two in Europe, two in Asia, and we will soon be opening one in Australia and probably in the Middle East.
These activities generate attractive margins and are resistant to recessions. We have 5000 planes flying, 1000 Global, 2000 Challenger and 2000 Learjet that need to be maintained and overhauled regularly. We have just tripled the size of our maintenance site in Singapore and quadruple that of Miami.
Q. There is a lot of criticism of the environmental footprint of business jets and the risks that their proliferation can entail. How are you going to reduce this footprint?
R. We have made a commitment to reduce our emissions by 50% and we are working on that. Almost 90% of our research and development budgets are invested for this purpose. It is not just the business of engine manufacturers, we are working on the shape of planes, on the use of electrical systems to reduce weight.
All of our business jets can use sustainable fuels, biofuels. Just that can reduce our CO emissions by 30%2. This is why we are pushing airports to make them available to our customers. Here in Montreal, we only use biofuels.
Q. After a year and a half at the helm of Bombardier, what accomplishment are you most proud of?
R. We stabilized the operation, we are moving towards 14,000 employees and the quality of our products allows Montreal’s know-how to shine internationally. The Global 7500 is the flagship of the entire business jet industry, not just Bombardier. It is the plane that flies the highest, the furthest and the fastest in the world and it is done here.
By refocusing our activities, we have become a more manageable business. When I have $ 1 to invest, I don’t have to choose between 12 activities, I do it in business jets.