C Series jet cost Bombardier 'a decade worth of profits' in Belfast
Bombardier in Belfast could be “over the worst” if C Series orders pick up after the ambitious jet programme cost the company nearly $340m, it’s been claimed.
A decade of profits at Short Brothers plc were wiped out in 2015, the company’s annual accounts said — summing up the year as one of its “worst ever periods” .
The Belfast company, which makes the wings of the C Series narrow-bodied passenger jet, had a pre-tax loss of $339m, which it said had wiped out any profits made over the last 10 years.
The company, which employs nearly 5,000 people in Belfast, said it was struggling with tough economic conditions around the world and a lack of new aircraft programmes.
It launched the C Series last year, around $2bn over-budget and following a two-year delay.
Its operating loss of $280m included an impairment of $357m, mainly relating to a write down on the C Series.
Orders have been disappointing though the outlook improved in April when US airline Delta put in an order for 75 jets, with options on another 50.
But economist John Simpson said the results held “little surprise”.
“Bombardier in Northern Ireland, which trades as Short Brothers plc, was expected to reveal trading losses when the results for 2015 were released. “Whilst still working to get commercial orders for the C Series but with no revenue yet from significant sales, the published accounts could not sensibly disguise the negative cash flow or cover the trading position by making realistic provision for the recovery of funds when aircraft are sold.”
And he summed up the $340m loss as “huge — probably larger than the total annual wages and salaries bill”.
But he said the losses of $340m are a product of normal trading results adjusted to allow for exceptional costs of $361m.
“The losses incurred in 2015 do not necessarily mean that results could still be worrying in 2016 and beyond. If Bombardier can soon sign up for further orders for the now proven C Series and Global 7000 business jet, the losses in 2015 could be the worst before a recovery takes place.”
The accounts record a workforce of 4,862 permanent staff. A spokeswoman confirmed no additional job losses were expected following 2015’s performance, apart from those announced so far.
She added: “Despite ongoing challenges, we continue to explore all opportunities to improve profitability and competitiveness throughout the business.”
The annual report and financial statements said that the certification of the C Series in December — the wings of which are made in Belfast — had been the one bright spot in a very bad year.
Dr Esmond Birnie, chief economist at PwC NI, said: “Even with high levels of assistance from government in Canada, UK and Northern Ireland, the investment in developing the C Series has told on Bombardier’s bottom line — including their operation here in Northern Ireland.”