Bombardier, Bitten By Bankruptcies?
It's way too soon to tell what, if any, long-term impact ongoing financial troubles at two major airlines may mean for Bombardier Inc., but if recent trends are any indication, the company may be in for a bumpy ride. Earlier this week, the airframe manufacturer's stock took a hit on news that a major customer -- US Airways -- once again sought protection from its creditors by filing for bankruptcy under Chapter 11 of U.S. law. According to published reports, the company may see its credit rating reduced to that of junk bonds by the financial industry. Those same reports state that some 40 percent of Bombardier's scheduled commercial aircraft deliveries are planned for the bankrupt airline and that another longtime Bombardier customer -- Delta Air Lines -- is considering bankruptcy protection. For its part, Bombardier maintained in a Sept. 12 press release that US Airways' difficulties "will not affect total aircraft deliveries for this fiscal year." According to Bombardier, 45 Bombardier CRJ aircraft are yet to be delivered to the bankrupt carrier from an original order of 85 aircraft signed in May 2003. "Of the 12 aircraft scheduled for delivery in the remainder of this fiscal year, eight will be taken by GE Capital Aviation Services (GECAS) in accordance with the original purchase agreement, leaving only four aircraft to be reconfigured for other airline customers," the manufacturer said.