Bombardier Inc (B) (BBD.B.TO)

They raised enough cash to support their free cash flow burn for the next couple of years, to build up their C series development program. Management is now focused on improving margins and there is likely some low hanging fruit there. Thinks they could spin out the BT and they could do that in an intelligent way and still retain partial, and that would be accretive for them. Expects revenues to fall and margins stay flat over the next couple of years. A very big ship to move and you do need structural changes to improve margins. Not the best place to be deploying capital right now.

The Paris air show starts today. He is intrigued by the new CEO with decades of industry experience. It has been reset at a lower level. By the end of 2016/17 their ‘C’ series should be up and running. There should be 75% upside, but it is a speculative buy.

A speculative stock. Have a great business in trains, subways and railcars, and have done well and are known throughout the world. The big problem is their airplane. They seem to be working through the C series. If they can get that plane certified and start selling it, this is a great time to be selling that particular type of plane. If it works, it will be fantastic. If it doesn’t, there is some talk they may have to sell off the active part of the business. He would be too risk adverse to recommend this.

He is not a fan. It does not make the grade. They have some significant problems. They are trying everything to deal with it. You may want to pare up selling it with some gains for tax reasons.

In a bit of a transition. They have been trying to market their C series more efficient jets. It is a better mouse trap, but they are up against stiff competition and are still struggling to get the C series going. Thinks the company will be okay, but will depend on the success of the C series.

They are talking about selling off some of their rail, but they have to watch that they don’t sell off the jewels in order to have the money to finance the possibles. That would be a major danger. He would be very wary as there has been a certain amount of dilution. They were smart in eliminating the dividend, but had waited a long time.

Just bought this recently, and feels that what triggered the purchase was a management change. It has been a family business for years and years, and sometimes it is better for a family to get out of the way, and leave it for professional management. It now could be quite interesting. A good speculation.

Has never been a big fan of this company. The issue has largely been with their accounting, which he doesn’t think is the most robust. Also, the transport division for him, for the last 15 years, has been run for cash flow as opposed to profitability. Not a fan.

He would stay away from this. It is too tough to figure out. Unfortunately it has consistently disappointed on its earnings. Has a lot of debt.

(Owns the preferreds.) The C series, the aeronautical side, has been the bullet that can’t seem to bite. It seems they are going to get off the ground and then something goes wrong. If they can get the C series up and actually deliver some planes, there is tremendous upside and he might be willing to step into the stock at that time. In the meantime, the rail side is the bread-and-butter, but not big enough or generating enough cash flow to keep the company afloat if they don’t get the airline side up and running.

A really, really interesting situation. There has been a lot of coverage in the media in the last 6 months. They have to raise about $1 billion of equity and $1.5 billion of debt to shore up their balance sheets. The aircraft industry is an oligopoly. Once you are in a stable situation, these companies produce a lot of free cash flow. The issue is when you are launching new airplane platforms. That is what is hitting this company. They have developed what is a world-class beating plane in the C series in the 100-175 seat category. Boeing and Airbus have inferior products in that category and they are doing everything in their power to sabotage this company by undercutting them. The market is very concerned about them losing money in the short term. The question is what is going to happen in 2015-2016 when they get into the actual production launch. He likes the company longer-term and sees a huge upside, but in the short term you have to wait and see how orders and development goes on this year.

A tough call. It is about the ‘C’ series catalyst. They are 80% of the way through the testing. If they finish by end of year they can get a few more orders. It is a cheap stock but very much a show-me story. The Paris air show is coming up and they might get some orders out of that also.

They had difficulties 10 years ago. Then recently they took on extra debt and the ‘C’ series was delayed. He had been pessimistic all this time and felt they would do an equity raise. In this case he was right. They took on more debt and the balance sheet is ugly. He recommends waiting for more risk to come off even though the upside will remain the same. They are, however, a leader in the field.

You could argue that you get the aerospace business for free, but they lost enough time on delivering the ‘C’ series that they allowed competitors to eat into what would have been an appealing market for them.

There is a new CEO in place. This is a company where you stay at arms length. The civil aviation business is a really, really rough game. The C100 is late and is over budget. When you are a relatively smaller player, it becomes a lot more serious.