Bombardier boss says impact of Russian sanctions is 'manageable'

Bombardier president and CEO Eric Martel introduces the new Challenger 3500 in Montreal on Tuesday, September 14, 2021. THE CANADIAN PRESS/Paul Chiasson

Bombardier has canceled orders for Russian customers, but the effect of Western sanctions against Russia is manageable for the Montreal-based business jet maker, its president and CEO Eric Martel said.

The demand for business jets continues to be "extremely strong," the Bombardier boss said in a speech to the Montreal Council on Foreign Relations (MCFR) on Wednesday.

"We don't foresee any impact on our operations in the short term. The market is going to ensure that the cancellations we have from our person customers or Russian entities are going to be easily replaced or compensated. We don't see this as an economic risk for us."

Bombardier believes it will be able to meet its medium-term goals, despite the geopolitical crisis arising from the Russian invasion of Ukraine. In late February, the company reiterated its intention to reach annual revenues of US$7.5 billion by 2025 in a presentation to investors.

When it was forced to cut ties with Russia, Bombardier cancelled orders for "people you can't sell aircraft to" without necessarily knowing the full financial impact of that action, Martel said at a press briefing on the sidelines of his speech.

"It was a pleasant surprise for us to see that it was manageable. We found that we could manage the situation and not affect our short-term results."

He noted that demand remains strong in Europe and North America, despite the crisis, and that the market is showing signs of recovery in Asia.

Martel would not say how many orders had been cancelled due to the Russian invasion of Ukraine.

A COMPLEX OPERATION

"The sanctions do not only affect the sale of aircraft, but also after-sales services. We cannot even give technical advice to our customers," Martel said.

Cutting the bridges with Russia is not so simple; Martel said he has a "dozen" lawyers working full time on the case to ensure Bombardier complies with Western sanctions. "The most difficult aspect is the sale of spare parts. We have to make sure we know who the end user is."

Out of nearly 5,000 aircraft in circulation, there are about 250 for which Bombardier has "some restriction." That's 5 percent of the aircraft.

These steps take time, because the company has to make sure it knows who the customer is.

"If there is any doubt, we don't deliver the part. We will dig, we will take time. Maybe more than the customer would like, but we'll make sure we know where the part is going to be used."

This report by The Canadian Press was first published in French on March 23, 2022.