Moody's Upgrades Bombardier as Balance Sheet Improves

Bombardier Aerospace continues to improve its credit ratings, with the latest Moody’s upgrade from Ba3 to Ba2 with a positive outlook. The upgrade announced this week is another signal that the business jet manufacturer is moving from a deeply debt-laden company to one transitioning into growth mode.

The latest Moody’s rating followed Bombardier’s second-quarter earnings release in which the Montreal-headquartered manufacturer reported improvements such as a $392 million year-over-year swing in free cash flow to $228 million, a $356 million reduction in net debt, a strengthened available liquidity of $1.9 billion, and access to a revolving credit facility of $750 million that replaced a previous $450 million facility. The company’s earliest debt maturity is now in November 2030.

All the while, Bombardier's business has improved, with a backlog ballooning by $4.3 billion since the end of 2025 to $21.8 billion by the halfway point of this year.

This is a marked change from 2021, when Bombardier had sold off the remainder of its non-business-jet-related assets and emerged as a pure-play company that was nearly buried in debt. Since then, it has shaved off more than $6 billion in debt, including $1.1 billion in the first half of this year alone. The restructuring resulted in $460 million in annual interest savings. Its long-term debt was around $4 billion at the end of June.

Bombardier president and CEO Éric Martel earlier this year declared that the company’s turnaround plan was complete. “In 2021, we set ambitious financial objectives for where we wanted to be in 2025 and further laid out the foundation for our future. I must say, at the time, we were met with some skepticism,” he told analysts. “Looking at where we are today, I am so proud to say that we’ve delivered top to bottom, even on metrics we reset upward in 2023, halfway through the journey.”

As the company released its earnings on July 30, Martel further stated: “Over the past several years we have worked diligently to strengthen our balance sheet and improve our cash generation… The good news is that we have moved from managing constraints to creating options, giving us significantly more flexibility for the future.”

As such, Bombardier has invested heavily in services and is now reaping returns, with each quarter surpassing the previous one in revenues ($674 million for the most recent quarter). At the same time, the airframer is looking for other areas to grow—both organically and through acquisition. On new products, however, it has remained quiet, although many have suggested an updated Challenger could be next.

The upgrade was the second from Moody’s in the past 12 months, noted Bombardier CFO and executive v-p Bart Demosky. “It reflects the consistent operational performance we have delivered and our sustained focus on deleveraging over recent years, as well as our strong track record of earnings growth, free cash flow generation and continued revenue diversification through our services and defense businesses,” he commented.

Demosky called the improved credit rating an “important milestone in our journey to further strengthen Bombardier's financial profile and create long-term value for all stakeholders.”

While improved, Bombardier still has work to do, according to Moody’s, which says this of its “Ba” ratings in general: “Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk.” However, the rating of a positive outlook suggests more upgrades could come, and this has been a long climb from 2020, when Moody’s assigned a Caa2-PD (Probability of Default) rating.