Bombardier

IThe business

Bombardier designs and builds business jets and looks after them for the rest of their lives. That is all of it. In 2025 it had revenue of US$9.55B, 10% more than in 2024, from 157 aircraft delivered and a record US$2.31B of services, and it employed about 18,900 people, 63% of them in Canada.³ Its customers fly more than 5,200 of its aircraft, and a network of 10 service centres in six countries keeps them airworthy.⁵ The head office is in Dorval, Québec.⁵

It has not always been this simple. In 2016 the company also made trains, regional jets, turboprops and aerostructures, and carried US$8.8B of debt. Then it sold them one by one. The Q Series turboprop programme went to De Havilland in May 2019. The remaining stake in the A220 partnership went to Airbus and the Government of Québec on 12 February 2020. The CRJ regional jet went to Mitsubishi Heavy Industries on 1 June 2020 for US$585M. The aerostructures plants in Belfast, Casablanca and Dallas went to Spirit AeroSystems on 30 October 2020 for US$275M in cash and the assumption of liabilities. And Transportation went to Alstom on 29 January 2021 for net proceeds of about US$3.6B, including about US$600M in Alstom shares.⁹⁶ Along the way it also sold its flight and technical training business for US$532M and the Downsview property for about US$600M.⁶⁹ What was left was the business jets, and the company has been paying down debt with the proceeds and the cash flow ever since.

All figures on this page are in US dollars, marked US$, because that is how Bombardier reports. The shares trade in Toronto in Canadian dollars, so the price and my values per share are in C$, converted at C$1.3978 per US$, the Bank of Canada’s average rate for the price date.² Bombardier’s year is the calendar year. Its second-quarter 2026 report, dated 30 July, is the latest quarter. The third-quarter report is due on 5 November 2026, so none of its figures are here.⁵¹⁰

Three ways it earns money

Building aircraft. The company calls this Manufacturing and Other, and it includes new aircraft, pre-owned aircraft and Defense. It was US$7.22B in 2025, which is US$46.0M for each of 157 deliveries.³ That figure has gone up from US$39.7M for 120 deliveries in 2021, partly from higher prices and partly because more of the aircraft are large Global jets: 86 of the 157 in 2025, against 66 of 120 in 2021 C (calculated).¹²³ Deliveries were 138 in 2023, 146 in 2024 and 157 in 2025.¹³³ In the first half of 2026 the company delivered 56 aircraft, 28 medium and 28 large, against 59 a year earlier, and says that the second half carries more of the year.⁵ Its guidance for 2026 is more than 157 deliveries, more than US$10.0B of revenue and more than US$1,625M of adjusted EBITDA.⁴

Servicing aircraft. Services means parts, maintenance, service centres, training and technical publications for aircraft in use.³ It was US$988M in 2020 and US$2,305M in 2025, about 18% a year, and in the second quarter of 2026 it was a record US$674M, up 14%, and 31% of revenue.⁶³⁵ The company expects mid to high single-digit growth a year to 2030.³ This is the part of the business I find easiest to like, because the aircraft are already built and flying, and they need parts and work in proportion to the hours they fly. Flight hours for the whole industry rose 4.6% in the first half of 2026, and for Bombardier aircraft 3.3%.⁵

Defense. The same aircraft, fitted for surveillance, signals intelligence and transport. The company says Defense revenue could reach US$1.0B to US$1.5B by 2030 and that Defense and Services together could be up to half of revenue.³ It sees demand for about 375 aircraft worth US$25B to US$40B over the next decade, which is its own estimate.³ This is a bet on a market that is not yet large for Bombardier, and I include it only in my bull case. On 28 October 2026 it signed a memorandum with BAE Systems to explore work on future combat air programmes; no financial terms were disclosed.¹⁵

The order book

Backlog is orders for aircraft and services not yet delivered. It was US$21.8B at 30 June 2026, up US$4.3B in six months, which is 25% more than at the end of 2025.⁵ In the first quarter, orders were 3.6 times deliveries by units, and in the second quarter 1.5 times, which the company ascribes to demand for the Global 8000.⁴⁵ One order matters by itself: in June 2025 BOND, a new customer, ordered 50 aircraft with a service agreement worth about US$1.7B, with 70 options that would take the total above US$4.0B, and deliveries start in 2027.³ At 2025’s delivery rate the backlog is a little over two years of revenue. That is long for an industrial company and short next to what an airliner maker carries.

The state of play now

The second quarter of 2026 was a good quarter, not a spectacular one. Revenue grew 6% to US$2.15B, adjusted EBITDA 9% to US$325M, a margin of 15.1%, and free cash flow was US$228M, against a usage of US$164M a year before.⁵ Reported net income from continuing operations was US$191M, little changed, because the year before had a larger tax and financing gain.⁵ For the half year, adjusted EBITDA was US$571M and free cash flow US$588M.⁵ Management said on 30 July that it was on track to meet its raised 2026 guidance, which is more than US$1.0B of free cash flow.⁵⁴ Three smaller events since then: Moody’s raised the rating to Ba2 on 17 August with a positive outlook, the company agreed on 1 September to buy the Mississauga aerostructures assets of Mitsubishi Heavy Industries (about 750 employees, price not disclosed), and in late October it announced a first phase of US$270M of investment in the United States, with 800 hires.¹⁸¹⁹²⁰ The price on 2 November is C$327.01.¹

IIThe moat

The honest test of a durable business is what it did when conditions were bad. For Bombardier there are two answers, and they don’t agree.

The first is the business jet itself. In 2020 industry deliveries fell about 20%, and Bombardier’s fell from 142 to 114 aircraft; in the same year it still made US$5.6B of business-aircraft revenue, 3% more than in 2019, because the Global 7500 was ramping.⁶⁹ Services fell 21%, to US$988M, when flying stopped, and then grew every year after.⁶ The product held up.

The second answer is the company. From 2016 to 2020, continuing operations burned US$5.5B of free cash flow in total, a figure that includes the commercial aircraft programmes since sold, and at the end of 2020 adjusted net debt stood at 41.5 times adjusted EBITDA.³ In those five years the shares went from C$45.50 to a low of C$7.00 on 30 October 2020 on the adjusted history, a fall of 85%, and the company had to dispose of nearly everything but the jets to survive.¹³ A business with a lasting edge does not usually get that close to the edge. What failed was not the demand for the product but the company’s choice of where to spend: a new airliner, a new regional jet and a rail business that all took cash. I give the current management credit for fixing that, and I treat it as a warning about what the capital can do when it is not watched.

What does protect it

• Certified aircraft that took years to build. The Global 7500 entered service in December 2018 and the Global 8000 in December 2025; the Challenger 3500 is the most delivered super-midsize jet since 2021, according to the company.¹¹³ A rival needs a decade and a large cheque to match a family like that.
• An installed base. More than 5,200 Bombardier aircraft fly, and they need parts and work for 30 years or more. Services grew from 20% of revenue in 2021 to 24% in 2025 and 31% in the second quarter of 2026 C (calculated).¹²³⁵ The company says its customer support ranked first in two industry surveys in 2025.³
• Pricing and mix. Revenue per delivered aircraft rose from US$39.7M in 2021 to US$46.0M in 2025, 3.8% a year, with large jets 55% of units in both years, so the rise is mostly price and content, with pre-owned and Defense revenue in the same line C (calculated).¹²³ In plain words, customers have been paying more.
• Customer money in advance. Contract liabilities, which are mostly deposits and progress payments from buyers, were US$6.58B at 30 June 2026, up from US$4.89B at the end of 2025.⁵ Customers fund part of the inventory. That is a strength while orders grow and a weight when they stop.

Where it is thin

Business jets are a cyclical product. Industry deliveries were an estimated 689 aircraft in 2025, up 12%, against an average of 569 over the previous ten years.³ The year 2025 was therefore well above the average, and the company’s own industry data show 297 deliveries in the first half of 2026, 13 more than a year before.⁵ I do not know where the cycle goes from here, and nobody does. In the last downturn, the 2020 one, Bombardier’s deliveries fell 20% in a year. In the 2016 to 2017 slowdown they fell from 199 in 2015 to 163 and then 140 C (calculated).¹⁶¹⁷

The company’s equity is also negative. At 30 June 2026 the balance sheet showed a deficit of US$651M attributable to shareholders, after years of losses, and the business carries a deferred tax asset of US$1.16B that depends on future profit.⁵ I do not read the deficit as a sign of weakness today, because it is shrinking, but it tells me the company has little cushion from retained earnings if the cycle turns, and the asset is a promise of lower cash tax that I count in my model and then watch to the last year.

IIIThe competitive advantage

The question here is what Bombardier can do that a rival cannot. The real competition is Gulfstream, which belongs to General Dynamics, with Dassault, Textron Aviation and Embraer behind. Gulfstream is the closest match for the large jets that now make up more than half of Bombardier’s deliveries, and its numbers are public every quarter.

Gulfstream delivers more aircraft in the large-cabin class, 101 in nine months against Bombardier’s 28 large aircraft in six, and it earns a higher margin: 14.5% in the third quarter of 2026 against Bombardier’s adjusted EBIT margin of 10.5% in the second.⁷⁵ The two are not the same measure, and General Dynamics’ figure includes a services arm, but the gap is large enough to read. Bombardier’s adjusted EBITDA margin of 15.1% looks close; EBIT is the fairer comparison, because Bombardier has about US$480M a year of amortization, most of it on aircraft tooling and development already paid for.⁵ I do not know how Gulfstream’s accounts compare.

So where is the edge? I can find three places, and none is certain.

The Global 8000. It is the fastest civil aircraft and flies the farthest, at 8,000 nautical miles, according to the company, and it competes at the top of the large-cabin class.³ Orders in the second quarter were driven by it.⁵ Its certificates came in on time: Transport Canada on 5 November 2025, the FAA on 19 December and the European regulator on 23 January 2026.³ What I cannot yet see is the margin on the first few hundred aircraft; a new jet is normally built at a loss for a while. The company has said retrofit packages are already being delivered, which is a sign of the product being in the field.⁵

Services reach. The company is adding service centres in Fort Wayne and Abu Dhabi, a paint facility at Biggin Hill and a Singapore centre due in the second half of 2028 that will nearly double its capacity there.³⁵²⁰ It spends about US$270M in the first phase of a US build-out that is also, I read, a political message, since its aircraft are built in Canada, the United States and Mexico and it faces the risk of tariffs.²⁰³ If services keep growing at the 14% of the second quarter, the revenue mix in a few years will look quite different from today’s.

Cost and capital. Bombardier has taken US$5.0B out of its debt since 2020 and cut cash interest paid from US$656M in 2021 to US$455M in 2025; interest on long-term debt was US$418M at the end of 2025 and US$403M over the 12 months to June 2026.¹²³⁵ That is not an advantage over a rival that is owned by General Dynamics. It is an advantage over the Bombardier of 2019.

Where rivals can catch up

General Dynamics Aerospace, which is mostly Gulfstream, had US$25.4B of backlog, and its orders in the third quarter were US$4.97B, which is 1.4 times revenue.⁷ Textron Aviation delivered 51 jets in the quarter, 21% more than a year before.²¹ In a good market everyone gets orders, and the question for Bombardier is whether its share of deliveries holds: 157 of an industry total of 689 in 2025 is 22.8% C (calculated).³ In the first half of 2026 the industry delivered 297 aircraft, and Bombardier’s 56 would be 18.9% on the company’s own industry count, though the two figures cover slightly different sets, so I do not lean on the comparison.⁵

IVManagement

Two people matter. Éric Martel has been President and Chief Executive Officer since 6 April 2020. Before that he ran Hydro-Québec from 2015, and before that he worked at Bombardier from 2002, including as head of the business aircraft division from 2014 to 2015.⁸ Pierre Beaudoin is the Chair of the Board. He has been on the board since 2004 and ran the aerospace business before that.⁸ The chief financial officer is Bart Demosky. It is a team that knows the business, and its first year was the year of the worst of the pandemic.

Who controls it

The company has two classes of common shares. Class A shares carry ten votes and Class B one. Four members of the Bombardier family own 82.39% of the Class A shares and 1.37% of the Class B, and together they have 48.28% of all votes. Close relatives own another 2.48%, and an agreement among the family groups says they vote the same way, so the family acts as a bloc, which with the relatives adds to about 50.8% of the votes C (calculated).⁸ Class B holders, who own most of the economics, have 42.10% of the votes.⁸ The circular argues that this structure lets management take a long view.⁸ I read it as it is: ordinary shareholders can vote but cannot overrule the family. If the family stopped holding more than half the Class A, or accepted an offer for them, the Class B shares become convertible into Class A, which gives minority holders some protection in a sale.⁸ I accept the structure with open eyes: it protects a long-term owner, and it also means no outside holder can change the company.

How they are paid, and what that pays them to do

Mr. Martel’s total pay for 2025 was US$7.83M, against US$7.53M in 2024 and US$6.51M in 2023. Of the 2025 figure, US$0.92M was salary, US$2.88M the annual bonus, US$3.02M share units and US$0.76M options.⁸ At 99.56%, the 2025 vote on pay was almost unanimous.⁸ I don’t think the size is the issue. What the pay rewards is.

The yearly bonus is based on two measures only: adjusted EBITDA and free cash flow. The compensation committee says that during deleveraging, return measures are less relevant.⁸ The long-term share units (PSUs) are paid on four financial measures over three years: cumulative free cash flow (25%), net leverage at the end of the period (25%), a three-year average return on invested capital (15%) and cumulative adjusted earnings a share (25%), plus 10% on safety and engagement, with payouts from 0% to 200%.⁸ That is a package that pays for cash, lower debt and profit. It does not pay for building the next aircraft. Free cash flow in this business also rises when customers pay deposits in advance and when the company holds back spending on tooling and new programmes, so a plan built on it could reward delay. Return on invested capital, at 15% of the units, is the only counterweight. The measures fit a turnaround. They are not the ones I would choose for the next ten years.

Ownership rules are firmer. Mr. Martel must own shares worth five times his salary, and the circular says he does, as do three of the other four named officers.⁸ He held 273,747 Class B shares at the end of 2025, 75,608 more than a year before, which at C$327.01 are worth about C$89.5M, around seventy times his annual salary C (calculated).⁸¹ The value is far above anything he is required to own. His own money is in. I note that the shares he holds have risen nearly fourfold since the 2025 units and options were priced at C$84.93 in May 2025, which also means that stock pay is getting more expensive for the company.⁸ Shares bought for the stock plans cost US$99M in the first half of 2026, against US$25M in the first half of 2025 and US$30M in all of 2025 R (reported).⁵³

What they did with the money

The record over a full cycle is the best evidence. From 2016 to 2020, continuing operations lost US$5.5B of free cash flow, and the company covered the gap by selling almost all of its other businesses, with Transportation alone bringing in about US$3.6B.⁶ I cannot give the current team the credit or the blame for most of that, since Mr. Martel arrived in April 2020, but he oversaw most of the sales. From 2021 to 2025, free cash flow was US$2.4B and owner cash US$2.0B, and in the same period the company paid US$2.5B of interest, which is more than the owner cash earned C (calculated).¹²¹³³ The company has since cut debt by US$5.0B on a notional basis, using the sale proceeds first and cash flow after that, and in 2026 so far it has repaid or refinanced the 2028, 2029 and Canadian 2026 debt, issuing US$500M of 5.875% notes due 2035.³⁵ That is the right use of money. The notes it retired paid 6.00% and 7.50%, and the coupons on what remains run from 5.875% to 8.75%.³⁵

Buybacks are close to nothing. The board approved a normal course issuer bid from 15 April 2026 to 14 April 2027 for up to 5% of each class, but the cash flow statement shows repurchases of US$14M in 2025 and US$3M in the first half of 2026.⁵³ The shares it buys for its own stock plans are a different thing: they offset dilution and cost US$99M in the first half of 2026. The company pays no dividend on its common shares. It pays the dividends on three series of preferred shares, which are about 21 million shares at C$25 and cost about US$21M a year.³⁵ I count the preferred as debt in my values.

One decision I can’t yet judge is the purchase of the Mississauga aerostructures assets from Mitsubishi Heavy Industries, announced on 1 September 2026, with about 750 employees and no price disclosed.¹⁹ Bombardier sold its aerostructures plants in 2020 and is now buying some back, to secure supply. That may be sound, since supplier disruption cost it money in 2025.³ It also reverses a part of the strategy that saved the company, and I will want to see the price in the third-quarter report and the return it is expected to earn.

VFinancials

Four things in Bombardier’s statements don’t mean what they first seem to. Years to 2020 include programmes that have since been sold, so they are not the business of today. The shares were consolidated 25 for 1 on 13 June 2022, so any per-share figure before then has to be adjusted, and I show prices on the adjusted history.¹² The 2025 net income of US$975M is lifted by a tax recovery and by a non-cash change in the fair value of call options on the company’s own notes.³ And free cash flow depends partly on customer deposits, which can swing by a billion dollars in six months.⁵

With those cautions, the picture is of a business that has turned. Revenue was US$8.77B in 2016 and US$9.55B in 2025, which is not much growth in a decade, but adjusted EBITDA went from US$141M to US$1,559M, a margin of 1.6% to 16.3% C (calculated).⁶³ Net income from continuing operations was a loss in each of the seven years from 2016 to 2022, US$3.9B in total, and positive in each of the last three: US$490M, US$370M and US$975M.⁶¹⁴¹²³

Business aircraft revenue, the like-for-like line, went from US$5.74B on 163 aircraft in 2016 to US$9.53B on 157 in 2025. That is 66% more revenue from fewer aircraft, so most of the gain is price, mix and services rather than volume.¹⁶³ Deliveries in 2015 were 199.¹⁶ The company does not need to get back to that number to earn more than it does today, which is a point in its favour, but if it does the margin should rise, which is the bull case.

What an owner can really take out

Free cash flow is not the same as what an owner can take. The company defines it as cash from operations, which is after interest and tax, less net capital spending. Three more things leave: the principal on leases, the dividends on the preferred shares, and the cash spent on shares for the stock plans and on repurchases. After those, owner cash was US$977M in 2025 and US$1.96B in the five years 2021 to 2025 C (calculated).¹²¹³³

Compared with earnings, 2025 owner cash of US$977M is 21% above adjusted net income of US$805M and about equal to reported net income of US$975M C (calculated). But net income that year had a tax recovery and a fair-value gain in it, and the cash had help from working capital. The next table strips working capital out. It starts with adjusted EBITDA, subtracts net interest paid, tax and capital spending, and compares the result with reported free cash flow.

Over the five years the two come out within 19% of each other, US$2.0B before working capital and US$2.4B reported, so the cumulative picture is not distorted. The yearly picture is. In 2022 reported free cash flow was US$735M against US$85M before working capital, as customer deposits poured in. In 2024 it was US$232M against US$773M, as the company paid for the inventory ahead of the deliveries.¹²¹³ The same is happening now. In the first half of 2026, contract liabilities rose US$1,695M and inventories US$1,016M, and free cash flow was US$588M.⁵ If deliveries are as strong as the company says in the second half, the deposits turn into revenue and the cash does not repeat. This is why I build my model on cash before working capital and treat the rest as a swing.

The tax line is the other thing to know. Bombardier paid US$18M in income taxes in 2025 on pre-tax income of US$835M, and US$10M in the first half of 2026.³⁵ It has a deferred tax asset of US$1.16B, which it has been recognising as it earns, and the statutory rate in Canada is 26.5%.⁵ At that rate, US$1.16B of asset shelters about US$4.4B of future profit. In my base case the shelter is used up around 2029 or 2030, and the cash tax bill steps from tens of millions to hundreds. That is not an accounting point. It is about US$0.35B a year of cash that reaches owners now and will not later E (estimate).

The balance sheet

Debt was US$10.1B at the end of 2020 including Transportation’s, US$7.0B after its sale, US$5.2B at the end of 2025 and US$4.05B at 30 June 2026.⁶¹⁴³⁵ The company’s measure of adjusted net debt to adjusted EBITDA was 41.5 at the end of 2020, 4.6 in 2022, 3.3 in 2023, 2.9 in 2024, 1.9 in 2025 and 1.6 in June 2026, with a target of about 1.5.³¹³¹²⁵ Cash was US$1.45B and available liquidity US$1.9B at June, with a new US$750M secured credit line to 2031 replacing a US$450M one.⁵ Nothing matures before November 2030.⁵ Moody’s now rates it Ba2 with a positive outlook and S&P rates it BB-, both below investment grade.¹⁸⁵

Two items sit outside that debt. The preferred shares are 2,684,527 Series 2, 9,315,473 Series 3 and 9,400,000 Series 4, each with a C$25 par value, which is C$535M or about US$383M.³ And the net pension liability was US$197M at June 2026.⁵ I include both in the claims ahead of the shares. I do not count lease liabilities of US$452M as debt, because I deduct lease payments from cash flow.⁵

The price in numbers

On those numbers the shares trade at 16.7 times last-12-month EBITDA and 22.7 times adjusted earnings, and the free cash flow yield is 9.2% of market value, but that last number has about US$1B of working-capital help in it. The shares have risen about four times since the end of March 2025, when they closed at C$80.98, and about 7.2 times since November 2016, when they were C$45.50.¹ There is no common dividend, so the 21.8% a year is all price C (calculated). The shares have been up and down by more than that: they fell 91% from the end of the second quarter of 2018 to March 2020.¹ The last close is 12% under the high of C$373.41 on 27 July 2026, three days before the second-quarter report.¹ I don’t know what drove that fall, and I don’t want to guess.

VIValuation

First, how this goes badly wrong

Before any numbers, I ask what would hurt an owner most. I count three ways.

The cycle turns, and the deposits go back. Business jets are bought by people and companies that are doing well. When they stop, orders stop, deliveries fall and the money customers paid in advance has to be funded by someone. In 2020 Bombardier’s business-aircraft deliveries fell from 142 to 114 and free cash flow was negative US$1.9B.⁶ Contract liabilities are US$6.6B today.⁵ A fall like 2020 does not need a recession; 2025 was a record year, 689 aircraft against a ten-year average of 569.³ My bear takes deliveries from 160 to 128 by 2029 and has US$0.3B of the deposits running off.

The cash tax shelter ends and the next aircraft costs real money. Two things keep owners’ cash high now: an income tax bill of US$18M, and a capital budget of US$153M in 2025 and about US$300M in 2026.³⁴ Neither is permanent. The tax asset runs out in a few years in my model, and capital spending was US$1.1B to US$1.2B in 2016 and 2017 when the company was building new aircraft.¹⁶¹⁷ Nobody has announced a next programme. If one is needed in the 2030s, capital spending will be much higher than today’s, and my base assumes it rises to about US$450M.

I pay a full price for a good result. The shares are up about four times in 19 months and trade at 16.7 times last-12-month EBITDA.¹ A cyclical business at a high multiple is exposed to two things at once: the earnings falling and the multiple falling. That is not about the business. It is about what an owner pays.

What an owner can really take out

In 2025 owner cash was US$977M, or C$14 a share at today’s rate, 4.3% of the price C (calculated).³ Before the working-capital help it was nearer US$0.87B to US$0.97B. In my base case cash before debt service is US$1,247M in 2026, US$1,463M in 2028 and US$1,269M in 2030, when the tax shelter is mostly gone and capital spending is higher. Take off about US$0.25B of net interest and US$0.02B of preferred dividends and an owner has about US$1.0B a year in 2030, or C$14 a share E (estimate). That is close to reported net income of 2025, and about half of reported free cash flow of the last 12 months, US$2.1B. The gap between those two is the point of this section.

What I can’t judge

I can’t say where the business-jet cycle is. Deliveries have been rising for four years and the order book is the longest it has been, but I have no way to read what a customer will do in 2028. I can’t say what the next aircraft will cost or when it will be needed. I can’t say what the first few hundred Global 8000 aircraft earn, because the company does not publish margins by model. I can’t say how the United States will treat aircraft built in Canada: the 2025 report lists tariffs and the 2026 review of the trade agreement among the risks, and says that the company’s supply chain runs across three countries.³ Last, I can’t see the split between manufacturing and services profit. The company reports one number, so I assumed services earns a 27.5% margin and manufacturing 12.8% in 2025, which add up to the US$1,559M reported, and I mark both as estimates. For that reason I show a ladder of deliveries and not one number.

How the cases are built

I build each case year by year in US dollars. Manufacturing revenue is aircraft delivered times revenue per aircraft, with revenue per aircraft starting at US$46.3M. Services revenue grows from US$2.65B. Each business earns its own margin, and the sum is adjusted EBITDA. Cash tax follows the deferred tax asset: 5% of profit while the sheltered pool of about US$4.4B lasts, and 26.5% after. Capital spending is the company’s guided US$300M in 2026, rising to about US$450M by 2029 and growing 2% after, and I deduct US$30M a year for leases and about US$60M for the cost of shares bought for stock plans beyond what is expensed. Working capital is a small inflow when manufacturing revenue grows and 40% of any fall comes out as cash, because customers’ advances run off with deliveries. I discount at 9.5%. That is the Government of Canada ten-year yield of 3.74% plus 5.8 points, and the extra points over the 8.5% I use for Couche-Tard and 9.0% for CPKC are for a BB- credit, orders that come and go, and a capital need I can’t see.²³¹⁸ I stop at 2036 and then grow the last year’s cash at 2.5% in the base case. The 2026 figure counts only the second half, because net debt is taken at 30 June. Cash earned between 1 July and now is not in the balance sheet I have, and the third-quarter report will show it.

Three comparisons help. My base 2026 adjusted EBITDA is US$1,684M, against guidance of more than US$1,625M; the company beat its 2025 EBITDA guidance by US$9M and its revenue guidance by US$0.3B.⁴³ My base then grows 5.0% a year to US$2.7B in 2036, which is modest next to the 15% of 2025, because I let deliveries level off at 175 and I do not assume the margin keeps widening beyond 2030. My bull reaches US$2.7B in 2030. Against management’s own markers for 2030, the bull is not a strawman: services grows 8.6% a year, at the top of “mid to high single digits”; Defense at US$1.0B to US$1.5B and pre-owned at US$0.5B to US$1.0B would be US$1.5B to US$2.5B of my bull’s US$10.6B of manufacturing revenue; and services plus Defense at the top of its range would be 36% of revenue, short of the “up to 50%” the company mentions.³ A higher bull case exists. I did not build on “up to half”, because it needs services to keep growing near its 2020 to 2025 pace of 18% a year for four more years.

Put in plain words, the price needs 2030 adjusted EBITDA of about US$2.9B, 30% above my base and 7% above my bull, along with a business that is worth that for ever. It could come from 271 aircraft a year, which is not plausible, or from margins 5.4 points above my base in both businesses, an adjusted EBITDA margin near 23% against 16.3% in 2025. It also corresponds to a discount rate of 7.5% on my base cash flows, which would be a cost of capital for a low-risk investment-grade business. None of these is silly in isolation. Together they say that the market is paying for a company that is better than Gulfstream and almost free of the cycle E (estimate).

The margin of safety, and the price against the range

My margin-of-safety price is C$160, US$114. It is 70% of my base value. At that price an owner would have a 30% cushion against being wrong about the cycle and the tax and capital lines, and the price would be 34% above my bear. It would be about 11 times last-12-month adjusted earnings and 9 times EBITDA. The shares closed between C$118.64 (30 June 2025) and C$195.03 (30 September 2025) at around that level.¹ At C$327.01 there is no margin of safety. The price is 43% above my base, 5% above my bull, and 2.7 times my bear. My weighted value, with 25% on the bear, 50% on the base and 25% on the bull, is C$222.

The price reflects a real debate, and the case for the market being right needs naming. It says that Bombardier is a duopoly-type business with a record backlog, that Gulfstream earns 14.5% operating margins and Bombardier is on the way there, that services will go on growing at 14% a year, that free cash flow will be more than US$1.0B this year, that the credit is moving to investment grade, and that all of this deserves 16 times EBITDA. If I give that all of its weight, my bull case is where the price lands. If the shares reach that and the credit improves to investment grade, so that I can use 8.5%, my base value rises to C$271, which is still below the price. The case against says that deliveries are at a record, that the cash flow has deposits in it, that the tax bill is about to rise, that the next aircraft is coming, and that the price is about C$100 above anything my arithmetic supports. I give the second side more of the weight, and I would not be surprised if the first side were right for a while.

The next best use of the same dollar

The closest comparison I have worked through on this site is Couche-Tard, a Canadian company with a similar size, whose base return to October 2036 is 7.5% a year in my work. Bombardier’s base return is 4.5% a year E (estimate). The Government of Canada ten-year bond pays 3.74%, and I ask 9.5% from a risk like this one.²³ Bombardier’s base return beats the bond by about 0.7 points and falls short of what I ask by 5.0. It differs from the 7.5% above because that is the rate at which my base cash flows equal the price, while this return assumes the value I put on the business in October 2036. Bombardier is a good business, and better than it was five years ago. The price is a separate question. A good business at a price that needs more than my bull is a poor purchase for the same reason a poor business at a low price can be a good one. I give neither a grade.

The bull case needs many things at once, so I multiply them out. Deliveries of 200 a year (about 25% likely, by my guess), services growth near 9% for four years (45%), a manufacturing margin of 15% (35%), capital spending that stays under US$500M (60%) and no downturn in ten years (35%). Together that is about 1% if they are independent. They are not, since a strong market helps four of the five, so I call it 5% to 8%, not 25% E (estimate). My 25% weight on the bull is generous on that arithmetic.

Where this could be in 5 and 10 years

For the base to be right at five years, deliveries have to be near 175 to 180, services near US$3.6B and adjusted EBITDA about US$2.3B in 2031, and the value is then C$245 a share, which is below today’s price, because five years of cash have gone out and the rest has grown. At ten years the base reaches C$284. In the bear, EBITDA stays near US$1.6B to US$1.9B and the value is C$138; in the bull it is US$3.4B in 2036 and the value C$416. The four inputs that drive it are deliveries, margins, capital spending and the 9.5% rate. These are estimates of value, not forecasts of the share price. The market price can sit above or below value for years, and in the last ten years the shares ranged from C$7.00 to C$373.41.¹

VIIThe case for the price

What most people miss

Three things cut in Bombardier’s favour and get little attention. First, owners’ cash is not taxed yet. The company paid US$18M of income tax in 2025 on pre-tax income of US$835M and US$10M in the first half of 2026, and it carries a deferred tax asset of US$1.16B.³⁵ Second, customers fund the company. Contract liabilities are US$6.6B, about 28% of the market value, and they have risen US$1.7B in six months, which has also helped the cash flow.⁵ Third, supply of used aircraft is scarce. Pre-owned business jets for sale were 6.5% of the fleet in June 2026, against a ten-year average of 7.5%, and for the Global models 4.5%, down from 6.5% a year earlier, which supports the price of new ones.⁵

The bull case

In plain words: Bombardier is a two-product franchise with a record backlog, its newest jet has just entered service, services is a growing annuity on 5,200 aircraft, and the balance sheet has been repaired. Management has put numbers on the next steps. It has guided for 2026 to more than 157 aircraft, more than US$10.0B of revenue, more than US$1,625M of adjusted EBITDA and more than US$1.0B of free cash flow.³⁴ For 2030 it describes mid to high single-digit services growth, Defense revenue of US$1.0B to US$1.5B, pre-owned revenue of US$0.5B to US$1.0B, and Defense and Services together at up to half of revenue.³ Chief executive Éric Martel said in late October that the company’s new wave of US expansion and hiring “reflects our long-term confidence in this market”.²⁰ The rating agencies agree on direction: S&P raised to BB- in June 2025, Moody’s to Ba3 in November 2025 and Ba2 on 17 August 2026 with a positive outlook.³¹⁸

I found no named analyst or fund manager whose published view on this company I could verify, so the bull case here is management’s. The one named holder I can document is the Bombardier family, whose four principal shareholders own 82.39% of the Class A shares, a holding recorded in the 2026 circular, not a statement of view.⁸

Against reality

If Bombardier hits its guidance and grows services as it says, the model gives a value near my base, C$229 a share. The price of C$327.01 is 43% above that. It is possible, and it needs more than the plan. To be worth C$327.01, the business would have to earn about US$2.9B of adjusted EBITDA in 2030, from US$1.59B over the last 12 months. That is 14% a year for four and a half years C (calculated). At the 16.3% margin of 2025 it would be revenue of US$18B, nearly twice the US$9.55B of 2025, and even my bull case, at US$2.7B, falls short by 7%. Deliveries would have to reach the 200 a year of my bull and margins would have to go well beyond it.

The distance is about the multiple. Today’s EBITDA is paid for at 16.7 times. At about 12 times, which is what my base value implies, the same business is worth C$229. I multiplied out the odds for my bull in Valuation: about 1% if the five conditions are independent, perhaps 5% to 8% with the overlap E (estimate). The price asks for more than the bull.

What a 10x would take. Ten times C$327.01 is C$3,270, a market value of about C$325B, or US$232B. At 20 times earnings that needs about US$11.6B of net income, 12 times the US$975M of 2025 C (calculated). At a net margin of 10%, the 2025 level, that is revenue of about US$116B, 12 times today’s, or roughly 8 times the annual pace of General Dynamics’ whole aerospace segment, which made US$10.3B in nine months.⁷ In ten years it would take 26% a year. For comparison, the shares rose 21.8% a year over the last ten years, from C$45.50 to C$327.01, but that decade took in a 91% fall from mid-2018 to March 2020 and a recovery from a deep low, which a company this size cannot repeat, and the business jet market is not growing by multiples.¹ Tenfold from here is close to impossible, and I would not build anything on it.

Where I come down

What moved me was the cash: free cash flow of US$1.07B in 2025, owner cash of US$977M, debt down US$5.0B, and a services line that is growing 14%. What did not move me was the price, since I cannot build a case in which cash flows justify C$327.01, and the cash flow of the last 12 months has deposits in it. What would raise my values is deliveries above 180 a year with a manufacturing margin above 14%, services growth that stays near 10%, and a decision on the next aircraft that costs less than I assume. Each additional 10 aircraft a year from 2029 is worth about C$9 to C$12 a share.

VIIIRisks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest, and a test of each.

• Tariffs and the trade agreement. Bombardier builds aircraft in Canada, the United States and Mexico and sells to the United States. The 2025 report names the executive orders of 1 February 2025 and the 2026 review of the USMCA, and says the company could absorb some or all of new tariffs and see orders delayed or cancelled with deposits returned less liquidated damages.³ I cannot estimate the odds. Management says it has had constructive conversations with the US administration, and in late October announced US$270M of first-phase US investment and 800 hires.²⁰
• Supply chain. The 2025 report lists supplier-disruption costs among the things that held back margin, and the company is buying MHICA, a Mississauga aerostructures plant, partly to improve supply.³¹⁹
• Credit. Ratings are Ba2 and BB-. Interest paid was US$403M over the last 12 months, and the notes run to 2035 at 5.875% to 8.75%.⁵ The Series 3 preferred shares reset in August 2027.³
• Concentration. One new customer, BOND, accounts for 50 firm aircraft and up to 120 with options. I do not know how orders are spread among customers.³
• Control. The family holds 48% of the votes, and the Class B holders cannot overrule it.⁸

What a bad year looks like in the model

The surprise is how little a two-year downturn costs if it ends. Deliveries 20% lower for two years take C$10 off the base, because the value sits in the long run and the customers’ deposits come back with the recovery. What matters more is anything permanent: services growing at half the pace costs C$26, and a lower terminal value hurts a lot more. The risk is not a bad year. It is a bad decade.