Bombardier lifts 2026 cash target as backlog expands

By Tom Whitfield

Bombardier raised its 2026 free cash flow forecast to more than $1.3 billion, up from a prior threshold of more than $1 billion. It was the second increase this year, reflecting year-to-date performance, record services revenue, strong orders and confidence in completing a busy fourth-quarter delivery schedule.

Nine-month free cash flow reached $771 million, compared with $316 million of cash usage a year earlier. That swing supports the higher target, but aircraft deliveries, inventory conversion and customer advances must still land as planned.

Third-quarter revenue at the business-jet manufacturer rose 3% year over year to $2.4 billion, while free cash flow increased 20% to $183 million. Bombardier delivered 33 aircraft, one fewer than a year earlier; higher pricing and services growth offset the lower unit count.

What drove the third quarter?

• Services revenue climbed 19% to a record $701 million, passing $700 million for the first time. CFO Bart Demosky attributed the gain to high aircraft utilization, fleet growth and the ramp-up of the expanded service network.
• Adjusted earnings before interest, taxes, depreciation and amortization rose 7% to $382 million. The margin widened 70 basis points to 16.1%, helped by services and lower research and development spending, but constrained by higher selling, general and administrative expenses and supply-chain costs.
• Adjusted net income reached $182 million, or $1.72 per share. Reported net income was $81 million, with diluted earnings per share of $0.73.

The order book supplied the clearest evidence of demand. Backlog reached $22.2 billion, up 27% from December 2025 and 34% from a year earlier. The unit book-to-bill ratio was 1.7 times in the quarter and 2.1 times for the first nine months, meaning orders exceeded deliveries.

CEO Éric Martel said demand was strong across most regions, although the Middle East had slowed in recent months. He also cited low inventories of pre-owned aircraft as a source of confidence in the market. That reassurance has limits: the backlog measures demand, not the supplier capacity needed to turn it into deliveries.

Takeaway: Services and orders carried the quarter, while the lower delivery count shows that demand has not yet translated into more output.

Can the backlog support higher output?

Martel said Bombardier is “considering higher production rates in response to its backlog and demand.” Any decision awaits an assessment of supplier capacity. Management may need to give suppliers more time to increase output, potentially delaying production increases.

For the fourth quarter, Demosky expects a significant number of Global deliveries, particularly Global 8000 aircraft, and expects strong margins. Aircraft mix, including higher defense content, plus continued services growth should support revenue and earnings. Inventory conversion and customer advances are also expected to support cash flow.

Bombardier reiterated full-year adjusted EBITDA margin guidance of more than 16.25%, 15 basis points above the third-quarter margin. The cash target has been raised twice this year, but the fourth-quarter margin promise still rests on mix, deliveries and cost control.

Where is capital going?

• Construction of a new Montreal-area facility remains on track to open by the end of 2027. It will support Challenger 3500 production growth, with incremental deliveries beginning in 2028.
• Capital expenditures should total approximately $300 million in 2026 and rise over time as Bombardier expands capacity.
• Another $270 million in infrastructure investment over time will expand U.S. manufacturing and service capabilities; Demosky said this spending fits within existing capital plans.

Bombardier also expects to close its acquisition of MHI Canada Aerospace, which produces wings for the Challenger 3500, Global 5500 and Global 6500. Martel said ownership of wing production across the portfolio could improve costs and delivery performance over the longer term. Integration will require short-term spending, primarily next year, so the near-term cash benefit remains unproven.

Takeaway: Capital is moving toward capacity and vertical control, but spending will rise before the promised delivery and cost gains appear.

What could break the forecast?

NATO has selected Saab’s GlobalEye solution, and Canada has selected the same platform for its defense needs. Bombardier and Saab are discussing potential aircraft modifications in Canada, with a decision on the location targeted for the first quarter.

Geopolitical developments and supply-chain constraints are Martel’s principal concerns. Demosky said supply-chain costs remain a drag on margins and that recovering “a material portion of those costs” could take several years. That timeline casts a longer shadow than the fourth-quarter delivery schedule.

Bombardier ended the quarter with approximately $2.4 billion of available liquidity, including $1.6 billion in cash, and net leverage of 1.5 times. Management plans to provide more detail on investment and production plans at Investor Day on February 18.

Takeaway: Liquidity is ample, but investors will need the production plan and cost-recovery timetable to confirm that the raised cash forecast is durable.