Scrapping luxury tax to fuel demand for Bombardier private jets: CEO

A Bombardier employee works on an aircraft in Dorval, Quebec on Monday, April 14, 2025. THE CANADIAN PRESS/Christinne Muschi

MONTREAL — The federal government's proposal to scrap a luxury tax will fan sales and job growth at Bombardier Inc., says the business jet maker's chief executive Éric Martel.

The 10 per cent tax on its multimillion-dollar planes was stifling more than a half-dozen sales per year, he told analysts on a conference call Thursday.

"It was a major setback for us in the Canadian market," Martel said, stating that domestic deliveries were down to two to three a year since the levy took effect in September 2022.

"I have a lot of customers that I've been talking to that say, 'I'm not going to place an order and buy a plane until this tax (isn't) there.'

"We're already having phone calls coming in so that we can discuss the next purchase of a Canadian customer," he added, laughing.

The list price for Bombardier jets ranges from US$26 million to US$78 million. That means the tax could cost buyers an extra US$2.6 million to US$7.8 million, based on the list price.

The company projects the move to end the tax on pricey planes and boats — laid out in the federal budget this week — will create 600 new jobs at its Canadian facilities "in the coming years" to meet heightened demand.

Globally, demand for business jets continues to take flight, despite concerns around trade barriers, consumer confidence and an employment slowdown in the U.S.

On the back of 34 plane deliveries and higher services earnings, Bombardier revenues rose 11 per cent year-over-year in the latest quarter to US$2.31 billion — more than twice what the company earned from aviation five years ago, before it completed its pivot to a pure-play private plane manufacturer.

Its backlog remained at a five-year high level of US$16.6 billion. Its book-to-bill ratio — a measure of orders received to sales completed, a key indicator of near-term demand for a company’s services — notched 1.3 at the end of the quarter.

The high demand "positions Bombardier very well into 2026," said RBC Dominion Securities analyst James McGarragle.

"That said, supply chain challenges continue to impact margin," he said in a research note. "The timing of improvement remains uncertain in our view."

Martel has said the Montreal-based company's planes comply with the United States-Mexico-Canada Agreement, exempting them for now from 25 per cent tariffs.

In the face of the cross-border trade war, Bombardier launched an American expansion last quarter, completing a new plant west of Los Angeles to churn out components for its two largest jets, the Global 7500 and Global 8000 — freshly certified by Transport Canada this week, with the first delivery expected this year.

Last month it announced a new service centre in Indiana to maintain and repair planes in the Midwest, with completion expected next summer. Services now comprise a big chunk of Bombardier's income, amounting to 26 per cent of revenue last quarter.

"Every morning we take the picture — how many airplanes are we working on?" Martel said, adding that the number is double that of 2020.

A few weeks ago, Bombardier signed a deal with Japan's Sojitz Corp., which sells and charters jets, for two Global series planes, including the 8000, billed by Bombardier as the "fastest civilian aircraft since the Concorde," with a top speed just shy of the sound barrier at Mach 0.95.

On the defence front, Bombardier delivered its ninth Global jet to the U.S. air force for a program that provides high-altitude communications for air and ground forces, nicknamed "Wi-Fi in the sky."

On Thursday, the company reported that net income for the three months ended Sept. 30 fell 55 per cent to US$53 million from the same period last year, a drop due partly to costs tied to its discontinued transportation segment.

On an adjusted basis, third-quarter earnings per share rose to US$1.21 from 74 cents a year earlier, below analysts' expectations of US$1.40 per share, according to financial markets firm LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 6, 2025.

Companies in this story: (TSX:BBD.B)

Christopher Reynolds, The Canadian Press