Bombardier Inc.

Patrick Ghoche - Vice President, Investor Relations Alain Bellemare - President and Chief Executive Officer John Di Bert - Senior Vice President and Chief Financial Officer

Cameron Doerksen - National Bank Financial Kristine Liwag - Bank of America Merrill Lynch Benoit Poirier - Desjardins Securities Seth Seifman - JPMorgan Derek Spronk - RBC Capital Markets Robert Springarn - Credit Suisse Cai von Rumohr - Cowen & Company Turan Quettawala - Scotiabank David Tyerman - Cormark Securities

Thank you. Good morning, everyone, and thank you for joining us for this review of our third quarter’s performance.

This conference call is broadcast live on the Internet. For copies of our earnings release and supporting documents in both English and French.

All dollar values expressed during this call are in U.S. dollars unless stated otherwise.

I also wish to remind you that during the course of this call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the corporation. I bring your attention to Page 2 of our presentation.

Several assumptions were made in preparing these statements and we wish to emphasize that there are risks that actual events or results may differ materially from these statements. For additional information on such assumptions, please refer to the MD&A.

I’m making this cautionary statement on behalf of each speaker whose remarks today will contain forward-looking statements. In a few moments, Alain Bellemare, our President and Chief Executive Officer will address our operational performance and our continued strategic focus.

John Di Bert, our Chief Financial Officer will then review our financial results for the third quarter ended September 30, 2016. I would now like to turn over to Alain.

Well, thank you, Patrick, and good morning, everyone, and thank you for joining us today. As you all saw in the press release this morning, this was a strong quarter for Bombardier.

We delivered our financial commitments. We continued to execute on our growth programs with the certification of the CS100.

And last just week the very successful first flight of our new Global 7000, which will be the benchmark in ultra-long range business aircraft, and we are successfully executing on our turnaround plan and steadily transforming our company. With this strong performance and a good momentum we have generated across all business units, we now expect to finish the year at the high-end of EBIT, which significantly improved year-over-year cash performance and with better operating margins at each of our business units as per plan.

As we close out 2016 and look forward to 2017, we are confident in our strategy, our turnaround plan, and in our ability to achieve our 2018 and 2020 goals, with a strong and highly committed leadership team. We remain focused on improving operational efficiency, flawlessly executing new programs and maintaining a disciplined and proactive approach that will allow us to perform in any market environment.

Along with disciplined cash performance, a key part of our turnaround plan is transforming our operations to reduce cash, to leverage our scale of $16 billion plus, and to become more efficient across our supply chain and in our own operations. In the first nine months of 2016, we have made solid progress in these areas.

We are more than 80% complete with the first major workforce reduction that we launched in the first quarter, and we are on track to exceed our 2016 cost saving targets for both our direct and indirect spend. Last month, we launched the next in our operations transformation.

The focus of this actions is to better leverage our global footprint through site optimization, specialization and streamlining our back-office and non-production workforce across both our transportation and aerospace businesses. These actions clearly demonstrate our commitment to drive profitable earnings growth and strong casual generation.

Together, they will result in annual cost savings of $500 million to $600 million. We expect to reach the full run rate by the end of 2018.

Before asking John to go through our financial results in detail, let me share with you a few highlights from the business units starting with Bombardier Transportation, which had a strong quarter. As you know, Laurent and his team are focused on transforming our Rail segment from a strong and stable business into a higher growth, higher margin rail solution provider.

Solid progress can be seen in transportation margin improvement, which we now expect to exceed 6.5% for 2016. This improvement puts us firmly on the path to achieve our 8% goal for 2020, as we continue to drive productivity and improve our cost structure through workforce optimization, product standardization, and by better leveraging our low-cost footprint.

Further supporting our growth objectives was BT strong third quarter order activity with a very solid book-to-bill of 1.6. This included the $1.2 billion East Anglia win in the UK.

We expect strong order activity to continue, as we close out the year and a full-year book-to-bill above 1. We’re also improving the quality of our backlog with contracts that include higher service content and contracts that are based on existing platforms, leveraging our past R&D investments to reduce execution risk and cost, and make us more competitive in the marketplace.

Looking ahead, BT will continue to focus on three things. One, growing top line; two, securing a more favorable mix with more service and signaling revenues and future contracts; and three, operational transformation derive margin expansion on our $31 billion backlog.

I will share more details at the upcoming Investor Day. At Commercial Aircraft the C Series continues to perform exceptionally well in service.

A few numbers. We now have three CS100 in service with suite.

We have collectively flew more than 1,100 revenue flights and have committed more than 1,500 flight hours. Aircraft performance has been excellent exceeding expectations with industry-leading reliability for a new aircraft platform, and the feedback from our customer and passengers continues to be outstanding.

One other data point, the first C Series A-Check was successfully completed last week, with no issue or findings further highlighting the C Series ease of maintenance and low operating cost was the fact that the check was conducted in just under five hours well below the current industry standards. We expect to deliver four more C Series this year and the CS 300 volume remains on schedule to enter into service next month with airBaltic.

As far as the BT team did with SWISS, we’re working very closely with airBaltic to ensure another smooth entry-into-service for our customer. Customer interest in the C Series campaign activity remains very strong across the industry, including with low cost and mainline carriers.

Earlier this month, the C Series flew to China for a Zhuhai Air Show. On the airline feedback we received at the show, it is clear that the C Series unmatched passenger experience, lowest operating costs, and its best-in-class noise and emission performance is truly being recognized by airlines around the world.

On the engine delivery issue, we are working very closely with Pratt & Whitney. We have received their assurance that they are addressing the matter and taking the necessary steps to support our 2017 production schedule.

Of course, we’ll provide more detail and complete BCA guidance at next month’s Investor Day. Turning now to Business Aircraft, which had another strong quarter with an industry-leading 36 aircraft deliveries, bringing our year-to-date total to 109, very good performance, given the current market condition.

With this strong performance, we now expect to exceed our original guidance of 150 deliveries for the full-year with better revenue and EBIT performance, again, good word by David and the team. We are clearly seeing the benefits of the proactive actions and the business model announcement we took last year.

As mentioned earlier, we also achieved a key milestone last week with a very successful first flight of our Global 7000. And we remain on track for entry-into-service in the second-half of 2018 as per plan.

Our existing strong backlog and the increasing customer interest in the 7000 and 8000 clearly confirm, as these class defining ultra-long range business jets will position Bombardier for strong growth. These are truly game changing aircraft.

The 7000 is the first and only clean sheet business jet, with four living spaces and a separate crew rest area, providing unique value, unparalleled comfort and unmatched interior design flexibilities, in other words the best cabin in the industry. This flexibility combined with the aircrafts range and performance will set a new standard, making the 7000 the best business jet in the industry.

As we manage business aircraft moving forward, we will continue to be disciplined in our approach and proactive interactions to protect our brand and our margin performance in any market environment. Okay, let me stop here, and turn it over to John to review our Q3 financial results.

Thank you, Alain, and good morning, everyone. Our third quarter performance highlights the progress we are making in our transformation, and most importantly, that signals a step forward towards stronger and sustainable operability.

We’re gaining traction through strong execution and focused effort. And we continue to grow confidence in our ability to deliver on our 2016 commitment, as well as our 2018 and 2020 goals.

Given our performance after three quarter, we are raising 2016 EBIT target at each of our four business units and we’re tightening our consolidated EBIT guidance to the top end of the range at $350 million to $400 million. Let me provide some highlights on our progress on margin and cash.

In Q3, EBIT before special items was 16% better than 2015, growing from $75 million to $87 million. Segment margins were 6.4% at BBA, 7.9% at BT, and 8.6% at Aerostructures, each improving over last year and outpacing our full-year margin guidance.

After the first nine months, BBA EBIT margins before special items are 6.6% better than guidance of 6% and ahead of 2015 at 5.7%. At BT, Q3 margins before special items, 11.9% are above our 6% guidance and year-to-date margins grew over 100 basis points from the same period in 2015 to 6.7%.

At Commercial Aircraft, we expect to be approximately $100 million better than full-year EBIT guidance. Even as we ensure a flawless entry-into-service for the features.

Our improved earnings estimate is a result of solid execution. We certified the C Series 300 as planned, met our CS100 entry-into-service target in the summer, and the three aircraft in passenger service are performing very well.

Finally, we’re starting to see sustained progress in free cash flow, where cash usage for the quarter improved by approximately $500 million versus last year, driven by improved cash from operations and the ramp down of C Series developments trend. So with year-to-date cash usage of $1.6 billion going into a positive free cash flow fourth quarter, we see a comfortable path towards a full-year cash flow usage guidance of $1.15 billion to $1.45 billion.

These margins and free cash flow gains are encouraging, particularly, as we exit this transition year with lower CapEx spend and two restructuring actions underway. Let’s now turn to our Q3 consolidated results, followed by a review of business units financial performance and updated guidance for 2016.

On chart five, we recorded revenue of $3.7 billion, as we successfully navigated current markets with deliveries and continued our disciplined operating approach to working capital, particularly influencing revenues at BGT. Total revenue for the first three quarters is $12 billion, which full-year expectations pointing to approximately $16.5 million, influenced by C Series revised delivery schedule and supported by a seasonally strong fourth quarter.

As I mentioned at the outset, profitability for the quarter was on plan across the board. Consolidated EBIT before special items is $323 million, after three quarters.

This points to a strong 2016 relative to our original guidance of $200 million to $400 million. We now fully expect to be close to the high-end of that range and we are tightening EBIT guidance to $350 million to $400 million.

In Q3, free cash flow usage totaled $320 million, closely tracking third quarter ramp up investments in the C Series up $360 million. There’s a good sign as we’re beginning to establish a base for cash flow break-even in 2018.

Q3 free cash flow is a $0.5 billion better than last year underpinned by two factors; one, progress on cash from operations, and two, lower development spend. Now, let me expand on this.

Cash flow from operations in Q3 would exceed $200 million when excluding the inventory buildup of the C Series, which exceptionally included carrying three C Series aircraft waiting for engines at quarter end. Recurring positive cash flow from operations is a significant improvement, driven by better possibility and working capital management.

Second, year-over-year CapEx is trending down significantly now that the two C Series variants are fully certified. Development spend is not concentrated on the Global 7000, which entered the flight test program phase last week with its first flight.

Turning to chart 6, let me update you on liquidity. We ended the third quarter with $3.4 billion of cash on hand, increasing from $2.7 billion when we started 2016.

Cash on hand will continue to grow as we head into the cash generating fourth quarter, with liquidity of more than $4.4 billion by year end, we will be entering 2017 with strength. One final word on workforce optimization before we review each of the business units performance.

As Alain mentioned, we have now completed 80% of our previously announced initiatives. In the third quarter, we recorded a $24 million restructuring charge totaling $180 million year-to-date.

We will be largely complete on this initial phase by year-end. Now, with the combined effects of our October announcement, we continue to expect the aggregate restructuring charges for 2016 to fall within $250 million to $300 million.

Looking at our Q3 2016 financial results by business unit on chart 7. Let’s start with BT.

The transportation market continues to exhibit after signal trends and our performance in the first nine months supports our growth prospects. With a book-to-bill of 1.6 in the quarter and 1.1 year-to-date, we expect to complete 7th consecutive year with a book-to-bill at or above 1.

BT revenues were $1.8 billion for the quarter against $2 billion last year. The year-over-year decrease is largely driven by proactive and disciplined project management, prioritizing cash, as we work to synchronize our supply chain and reduce lead times.

Our reduced working capital contributes to deferring revenue recognition into subsequent quarters. Reflecting this into the full-year, revenue expectations at BT are approximately $8 billion for 2016.

Our improving operations combined with cost cutting efforts have translated into margin improvement, supported by a strong project mix, BT EBIT before special items grew to 7.9% for Q3, a substantial improvement over third quarter 2015. For the full-year, we expect margins to be better than 6.5%, more than 50 basis points ahead of our original guidance.

At Business Aircraft, we delivered 36 business jets and continue to lead the industry in 2016 in that respect. Year-to-date, we have 109 aircraft deliveries and we expect a strong finish to the year, adding 40 to 50 units in Q4, driving us towards full-year revenues of approximately $5.5 billion at BBA.

Revenues in the quarter totaled $1.3 billion, returning to the traditional mix of light, medium and large aircraft. Although, we are still continuing tough pricing environment in the light jet market, we delivered seven Learjet aircraft in the quarter.

Given solid deliveries and seasonally soft order pattern for Q3, we’re pleased with our year-to-date book-to-bill of 0.8. In the quarter, we in fact, improved the quality of our $16.5 billion backlog through practice cancellations that will support stronger future earnings.

122 gross orders so far this year, we’re seeing decent activity that we expect will carry through into the last quarter. Business jet EBIT continues to impress during this year, where we realigned production to market.

With EBIT margins well above 6%, BBA is demonstrating the benefits of our early action, our focus on cost cuttings, and the enhancements to our pre-owned business. After nine months, our cumulative EBIT before special items stand at $269 million on track to improve on the $308 million in earnings reported for full-year 2016.

Now, moving to Commercial Aircraft, focus continues on execution, ramping up production, and supporting the C Series in service. At $538 million, revenues in the quarter increased versus last year, despite a muted contribution from C Series with only one delivery.

On a full-year basis, we expect revenues at BCA to approximate $2.7 billion, including seven C Series deliveries. Nonetheless, since the beginning of the year, we demonstrated tight cost control at BCA leading to an EBIT loss before special items of $107 million for the quarter and $276 million so far this year.

As I mentioned in my introduction, our ability to closely manage the C Series entry-into-service, while mitigating the impact of engine delays allows us to improve our EBIT expectations for the year by $100 million to a loss of $450 million. Turning to CRJ and Q400.

Deliveries were in line with 2015, as we entered the latter half of the year on Commercial Aircraft. Year-to-date, we have delivered 61 regional aircraft, up from 56 one year ago.

We’re on track to our 2016 delivery target of 85 to 90 aircraft at BCA. Finally, Q and CRJ orders were lumpy in the quarter.

So far this year, we’re seeing good activity on the Q400, where book-to-bill stands at 0.8. This before adding the LOI signed with Philippine Airlines for 12 aircrafts in the past month.

For a CRJ as market-wide activity remain slow, we continue to actively engage with our 60-plus customers to be positioned for order pickup. At Aerostructures and Engineering, production ramp up of the C Series components is driving significant activity in Belfast, as 2017 deliveries entered into the production site.

Revenues for the quarter were $337 million, driven as usual by internal sales. Those sales were lower than originally forecasted, as we managed production to align with commercial and business aircraft.

This change is expected to lead to a full-year revenue of approximately $1.6 billion with minimal impact on consolidated revenues. Cost control is key at Aerostructures and its margins are showcasing the results of several transformation initiatives since the beginning of the year.

EBIT before special items of $29 million came in line with last year, equivalent to a strong 8.6% margin. We’re increasing our full-year EBIT margin guidance to approximately 8% from our original 7.5% expectation.

Our actions are driving results. Our 2016 profitability and free cash flow improvements are early indication of Bombardier’s tremendous value creation runway.

We have a very strong liquidity position and are continuing to take decisive action. We are entering the next phase of our turnaround plan with confidence, as we focus on building earnings and cash flow growth.

I look forward to updating you on our turnaround plan and providing detailed 2017 guidance at our December 15, Investor Day. We’re ready to take our first question.

Yes, good morning. Just wanted to dig a little bit into the BT margin in the quarter, obviously, a very strong performance at 7.9%.

Was there anything, I guess, maybe that was unusual in the quarter that would have driven margin that high, and yes, maybe if you could just maybe give some color around that?

Good morning, Cameron, this is John. So I’d say that what you’re really seeing in BT fundamentally is just strong execution in what we’re trying to do improve the business.

You’ve seen a lot of cost reduction initiatives we’ve announced over the year. Laurent and his team are working very well in terms of improving not only earnings, but also working capital and the cash flow at the business.

And we have good product mix in Q3, yes, that’s for sure, but the margin growth is a sign of current performance and also things to come. So with the recent announcements in terms of restructuring, we expect to continue to be able to increase margin.

And you’ve seen that we’ve raised our guidance for the full-year. So we announced the margins ahead of 9%, so better than what we had – we guided earlier this year, and we’re well positioned towards 8% goals for our turnaround plan, team is doing a great job, so just the strong execution.

Okay. Maybe just quickly, secondly, just maybe a supply chain question.

In North America, BT has a fairly significant supply chain. In Mexico, we also have a – BA has a large facility in Mexico.

Obviously, we’ve got some maybe some increased uncertainty about trade deals come up recently. I’m wondering if that uncertainty affects any of your plans around supply chain?

Good morning, Cameron, it’s Alain. Not really to be honest with you, I mean, we’ve been – we’re a global player.

We work everywhere around the world. And Mexico is one of our operations are doing well.

We have a very large presence in the U.S., thousands of people and multiple suppliers and many customers. And it’s, I guess, you’re referring to the U.S.

election here. I think that it’s – it would be too early to speculate about what that would imply from a trade perspective.

But I feel that it’s – it shouldn’t impact our operation at all.

Okay. Thank you.

Hi, good morning, guys. It’s actually Kristine Li while calling in for Ron.

Alain, in 2011, Bombardier signed a strategic agreement with COMAC to collaborate on the C919 in the C Series. Can you discuss how this disagreement has worked in practice compared to what the company may have expected?

And the genesis of this question is understand what your strategic agreement with China Railway in transportation, which you announced in September, what this could mean for Bombardier going forward?

Okay, good morning, Kristine. I would say, on the COMAC side very little.

There was – it’s prior to my time. So I really don’t know much about that other than to say, there has not been much in term of collaboration with COMAC.

The MOU would just sign with CRC is a very critical one. We have a very large presence in China.

We have over 5,000 people, and we have six joint ventures. We have – we are the only Western player on the train side that has such a presence.

So we benefit from our presence and through the Chinese market as well. So what we have agreed with the Chinese there with CRC is to do more collaboration moving forward on a more global scale.

Does that mean, you’re bidding on contracts together? And can you discuss what are you doing more of the strategy and design and they’re doing manufacturing?

Can you just provide a little bit more color?

I would say, I would just say right now that I want to be careful. I mean, that’s – a lot of that has come – I mean, it’s confidential and it’s also competitive intelligence.

So, I mean, I would just say that, we’re looking at growing together on a global scale. Meaning that, we will look at partnership, where it makes – where it make sense on a case by case business on specific projects.

Great. Thank you very much.

Thank you so much.

Yes, good morning and congratulations for the results. I was wondering, Alain, if you could provide more color about what you foresee for the business jet on the business jet side in terms of booking activity?

And also what type of production rate movement we might see in 2017, given the current environment?

Good morning, Benoit. As you saw, we had a pretty strong quarter, given the current market dynamic.

So we feel good. I feel very good about what the – David and the team are doing.

And I also feel very good about what we’ve done in 2015. I think we were very proactive in making significant adjustment to our rates.

I feel that we’re at a good place right now. We are still looking at where is the market going.

And I believe that we’re in the right place and the right zone for this year and also for next year, as well, maybe a bit more fine tuning here and there. But by and large, we have a book-to-bill of about 0.8 so far and we’re driving to have a book-to-bill closer to 1 by the end of the year.

So I think the great job by the team. The exciting thing in business aircraft on top of it is a Global 7000 first flight, where a lot of people, I didn’t believe that we would fly this year, we did, as per plan.

And that Global 7000 is an amazing machine. It’s going to be the best business aircraft in the industry, and we are very confident to have this aircraft coming into service, as per plan by the end of 2018.

So overall, I feel that we have taken the proactive actions that were needed in business aircraft and the team is executing well.

Okay. And quickly any update on the strategic review for Learjet, Alain?

As we said last time, I mean, this – we are looking at the Learjet franchise, it is a good franchise. We have thousands of aircrafts flying today.

The team is – has been looking at making some fine tuning in the marketplace on pricing and things like that to see how how we can reenergize sales, and we actually had a pretty good quarter. The third quarter was our best quarter this year.

Having said that, it’s still one of the toughest segment of business aircraft, the low-end of business aircraft the light segment. So we will continue to keep an eye on this, and we’ll see what we do.

Okay. Thanks for the time.

Okay. Thanks.

Thanks very much, Alain. Good morning.

I wonder if you could talk maybe a little bit more about the global and sort of the flight test program and where we go from here that the hours and milestones and then a little bit about the cash train profile in terms of the development cost stay at this level through next year and then what the inventory build might be?

Okay, good morning, Seth. As you saw, we had a first flight last week.

I mean, we’ve already flown since then second time. I mean, the aircraft is actually performing very, very good.

I mean, we’re capturing a lot of the learnings from the C Series, which have been built into the Global 7000. So when you look at our the flight this maturity, we’re already starting at a pretty good place versus where we started on the C Series, which gives us confidence now with like an almost a year-and-a-half, 18 to 24 months program in flight test program to full certification in front of us that we will – it’s our entry-into-service target in the second-half of 2018.

In term of the spending and cash flow, I will turn it to John.

Good morning, Seth.

Good morning.

So the program is, as you know now and into the the flight test program phase, so we’re going to build up some flight test vehicle hardware next year. That’ll continue base in the program.

It’ll be the only major aerospace program in development, so that’s going to be, I think, for us strong focus, and we’ll be able to manage as we have very well in terms of the program milestone. When you look at how we’re looking at kind of the cash flow versus really as a program, you can see this year, BBA spending about $160 million or so, $170 million a quarter and investing in their product.

I think that you kind of keep that base, you add some working capital probably into 2017. So we will bump up a little bit in terms of cash usage.

But I think, generally overall, part of an improving cash flow story.

Great. And then just to follow-up sort of a related question, the development spending on the C Series side.

I think at the beginning of the year, you guys had talked about that, the billion of cash consumption on C Series this year by about half of that being for CapEx for development. And it looks like you’re going to under run that pretty substantially, I mean, maybe by about $200 million or so based on the program tooling, is that fair?

No, I’d say that right now we’re actually bang on within $50 million plus/minus either way of that billion. So, we’ll – now we close out the fourth quarter here.

But, Alain, we’re looking at probably being in the neighbor of about a $1 billion for 2016, and still very confident as we look out towards the program and into 2017/2018 and onwards that we will be within the $2 billion that we outlined. So we’ll talk more about C Series at Investor Day.

But I think fundamental here tracking well for this year about a $1 billion, maybe a little lighter in terms of the tooling side of it, but just overall on the program, given also the impact of moving some of the aircrafts for the engine delay, still within the $1 billion kind of safety and then from there kind of the other $1 billion over the next three years or so.

Okay. Thank you.

Thank you.

Good morning. This is Derek Spronk on behalf of Walter.

The geared turbofan engine that was for a while it’s being developed. There were – turned about possible increases especially on high frequency routs.

How has the engine performed now that it’s in commercial service? Has has been the dispatch or reliability of the C Series so far?

Good morning, Walter, it’s Alain, very good. The performance of the aircraft and service is excellent.

Actually we’ve been working on multiple projects over the past like 20 years, and I would see the best I’ve ever seen. So and that’s just me talking, I mean, that’s the feedback we’re getting from the customer.

As far the engine, the engine is also performing extremely well in service. So I think that what we’re seeing is more like a production ramp up issue.

Pratt is managing that and we’re working closely with them. But overall, we’re very pleased with the maturity of the aircraft and service, and soon we will have our CS300 in service with airBaltic, and we’re good to go already to support them, as they started their operation.

Great. And I see production issue on the GTF, is that a C Series GTF production issue, or is that a GTF production issues all raound?

GTF production issue.

Okay, great. And then finally, now that you have the C Series in commercial service.

Are you able to get C data from SWISS there, the performance data that you’re starting to compile all, and utilize that as you look for new sales globally for the C Series?

Yes, absolutely, the answer is yes. I mean and that is – that’s the reason, I’d say – I was saying that the aircraft performance is very, very good.

The SWISS team is very pleased with the overall performance whatever we’re talking about operating costs, maintainability of the aircraft and service, I mean, all the metrics on noise footprint, emission and things like that. So overall, it’s clear that a lot of people are waiting to see all the aircraft was going to performance in service, and we are just delighted to see another performance out there in the field.

Okay, great. Thanks very much.

Thanks.

Good morning, I wanted to ask really two things. First, Alain, on the biz jet side with the book-to-bill net of 0.8 year-to-date and your comment earlier that you think you’re closer to 1.0 for the year, that kind of implies about 50 orders or so in Q4.

So first, is that realistic? And since I would think some of those are 7000s and those don’t deliver for a couple of years or more, can you still keep deliveries flat in 2017 against what will be a tough comp with the higher deliveries this year?

And then second question is for, John, and it has to do with Slide 7, on the commercial guidance adjustment. Is that all C Series, in other words, the $300 million drop in sales and the $100 million increase in profit?

Is that all the deferred the eight units on the C Series, and if so does that mean $12 million loss per C Series being deferred to the right?

Okay. So let me take that one first, it’s John speaking.

So when you talk about the $300 million of sales adjustments that’s largely C Series you can, whatever, I mean do a little bit of math one way or the other. But it’s in that ballpark for the aircraft for taking off of the schedule.

When it comes to profitability, that’s different. That’s really about execution.

We launched this year, needing to certify entry-into-service, the 300 engines and the – certify the 300 entry-into-service on the 100 and support the fleet and ramp up production. Essentially, what this is saying is, we have hit every milestone as expected.

We’ve been very disciplined in terms of how we’ve deployed not only cash, but also we managed expenses on the program, and we’ve got the results we needed from program execution in terms of performance and in fleet or in service liability. So what that $100 million really reflects is the fact that, we’re just executing very well, and not so much any relation or very little relation to the delivery schedule.

Don’t forget that the early units we take the expenses as we bring in inventories. So, yes, we managed a little bit of inventory in terms of the schedule adjustment, but there are large adjustment in terms of the guidance here just good performance.

So some of those aircraft already built and the costs are in prior periods?

So we continue to obviously ramp up the line. We’re mitigating some of the inventory.

But as inventory comes in for production, we’re still taking an NRV adjustment to what...

I see.

It’s not the biggest part of that $100 million improvement. The biggest part of that $100 improvement that’s just knowing that we’re on track against our milestone and any continuity required is no longer required at this point.

I see. Okay.

And, Alain, thank you on the biz jet.

And on the business jet, Robert, we’re – let me clarify. We’re striving to our 10, okay.

I don’t want to minimize the challenge of that in a submarket environment. I think that the team has done extremely well so far this year.

I’m not sure if we’re going to get to 10 by the end of this year, but that’s what the team is working on. So you are right in saying that the market is still difficult.

We’re seeing that, it’s tough and pretty much all markets Russia, China, South America and low-end of the market right now, like I was saying earlier the light jet segment of the market, where the Lear is also still very challenging. Having said that, I think that we put our production rate in a pretty good zone.

It does not mean that we’re not going to fine tune it a little bit more for 2017, but it’s not going to be anything that is as material as it was in 2015. So I think that we took the tough actions in 2015.

And if you look at what we’re doing with our challenger 350, or 650, or Global 5000, 6000, we are selling well. I mean, these are products that bring tremendous value to customers in the marketplace.

Understanding what you’re saying about the 7000 is absolutely right. I mean, we are selling 7000 and it’s true that they’re not to going to come into service right now.

These new sales are going to be probably post-2020, because we’re pretty booked until 2020 on the Global 7000. But our existing platforms are very good.

So we will continue to take a very disciplined approach to our production rates on Business Aircraft. So that we continue to drive margin expansion, protect the brand, protect the value of the aircraft.

But by and large, I think, that we are in a good place, doesn’t mean that we’re not going to do some further fine tuning to it.

Okay. Thank you both.

Okay. Thanks, Robert.

Yes, thank you very much and good performance. So your pre-owned biz jet inventories were down over 50% in the quarter, very good performance.

Where do you expect them to be at the end of the year? And what sort of impact are you seeing from the fact that two of your competitors have indicated that they have excess whitetail inventories, and one of them was not previously done much in the way of price discounting, is indicating that they finally also are having to price discount to move product?

Good morning, Cai, and thanks for asking that question. Again, I will start by saying, I’m very proud of what David and the team did in 2015.

I think that we saw that coming and we really adjusted our production rate very early earlier than anybody else in the industry. And as a result, I think that we are in a much better place.

As part of our turnaround plan, we also put a lot of focus on, what we call, business and on business model announcement. And one big piece of it was to manage used aircraft.

And if you look at where we were in 2015 and where we are today, we’ll see a significant drop from $400 million to now less than a $100 million. Now, this was done by honestly taking a strong focus on it, moving it, moving aircraft being discipline in trading in aircraft.

And the fact is the team has been doing just a super job. Now, where is this thing going to go?

It’s likely to be moving a little bit up and down from this point. I think that same thing now, we’re getting into a place, which does make sense where you have to do some trade-in to sell new aircraft.

So we will be disciplined, but we will also at the same time continue to be aggressive and moving new aircraft around. So by and large, I think that, where we are is a good place.

It could go up a little bit, but we’re not going to go back up to where we were in 2015. So whether we move up plus or minus $50 million, $75 million, I mean, I don’t know to be honest with you, it will depend on what we see and what type of trade we have to take in.

Thank you very much. And then turning to the C Series, you indicated that Pratt is there to support you in 2017.

As you see it right now, does that mean support you to your original target of deliveries in 2017, plus the catch up of seven or so that have slipped out of 2016, or is it just to do the target that you had for 2017?

Yes.

Good morning, Cai. This is John.

So the way we’re looking at it right now is that, we’re working with them. We see that 30, 35 that we put out there.

If you recall, last year, we were in New York on the five-year production ramp. We still see that as being the goal, the target for next year.

And as we work through and synchronize ourselves with their schedule, we’ll see if we have any possibility to recover some of the seven. I think that’s a work in progress fundamentally, and we’ll get more clarity as we go here.

But the 30, 35, I think is still the range that the right one for us.

Okay. And then the last one is, when you indicated the C Series deliveries, I think, you took your cash outflow guidance up a bit.

And I think you just said that you’re still near a $1 billion cash out for the 2016. So, what then if that hasn’t changed?

What was the reason for the cash flow – cash outflow guide to increase?

Still a guide. So, when you look at it you, you’ve – we’ve talked about the aircraft that don’t get sold, that obviously, comes without the – then you don’t collect the cash, and that’s a fundamental, that that’s stress on our cash lines.

I talked about the $1 billion and I said plus/minus $50 million or so. So, the point there is that there’s still a little bit of stress on the $1 billion, nothing that I’m concerned about.

And fundamentally, if you look at our range, 115 to 145, we’re still confident we’re going to come into that range. So bottom line is, we want to be proactive, give you guys some visibility as to where we saw things.

We needed to take some actions as an organization here and as a manufacturing kind of the operations team to size out how we would do this. We’re mitigating some of that stress.

It’s not fully gone. And we have a range 115 to 145.

We’re working very. If you look at where we are in Q3 this year year-to-date, $1.56 billion of cash used, looking at the 2.40 can make an assumption on that.

But it would tell you that we’re size into the range that we expect to be. So as far as I’m concerned, it’s just managing through some of the adversity and doing the right things from a business operating point of view.

Thank you very much.

Yes, good morning. I have my question.

I just wanted to add a little bit on the margins that you guys are coming in ahead, obviously coming in ahead of your expectation here a little bit in the year. I assume maybe that with the restructuring that you’re doing right now.

Are you coming in sort of a little bit ahead of that that you were thinking a lay, or is it just that you’re finding more opportunities to streamline operations? And so as we think about the longer-term margin guide, is it fair to assume that maybe some of that is happening a little bit slower than you expected.

Yes, good morning, Turan. We – when we put our turnaround plan in place, obviously, we took like that was a pragmatic approach to this, and we’ve been doing extremely well.

We’re actually tracking a little bit ahead of plan. So, I mean, that is one of the driver.

But like the fundamental driver of this margin improvement is very good discipline execution by each of the business unit.

Thank you. And I guess, just last one, more question for me here on the BT revenue.

You took it down a little bit and also on a next currency basis, I think, it’s down. So just John, can you give us a sense of how much the contract figure, the deferred revenue because of what you’re doing on the working capital side is a factor there in some of the revenue decline in that BT?

Yes, when it’s all said and done, I’d say that, you see in the working capital discipline, you see in the product management, $200 million of that $100 is related to just strong discipline. We continue to manage projects, I think, in a very effective way.

And so what’s important, I think, if you look at book-to-bill 1.6 times, you’ve got $2.9 billion of orders. We’ll have whatever six or seven consecutive year now above one.

So we feel pretty good about 2017 growth in terms of top line at BT. We also feel very good about how we’re operating and managing the business in a much more lean and effective way.

So a combination of the working capital project management, better margins, and growth, I think we really are where we want to be in terms of the train business and Laurent is doing a really, really good job. So I think it’s been all just a good story there altogether.

Perfect. So, I guess, net-net on an X currency currency basis, you expect growth in BT next year in revenue?

Yes, I think, we’re – we’ve positioned ourselves well here with another solid year of orders.

Thank you.

Operator, we have time for one caller.

Yes. Good morning.

My first question, John, you mentioned that mix was one of the contributors to the BT high margin contribution in Q3. I’m just wondering if you could quantify that.

And I’m just trying to get an idea of, there is a chance that this is going to come down materially to a more normal level going forward?

I’d say that the color I’ll give on BT margins is really, number one, a cost reduction initiatives from the beginning of the year very well executed, continue to execute. Number two, we’ve launched additional initiatives here in October.

So that will continue to contribute to a margin expansion and growth. Three, project execution and just disciplined management of those projects, including an accelerating and improving on the projects, where we’ve had some challenges.

I think that’s the other fundamental. And then what you can read out of the – all of that is that, you’ve got margin momentum in the year.

we’re improving our full-year guidance to reflect that kind of performance with 6.5%. And we’re very well positioned towards our 8% goals for BT as a business unit.

I’d say that, you’ll see continued momentum and you had this project mix in Q3 at 7.9% margin. We can afford a little bit of that project mix to normalize and still be tracking a very strong margin performance into 2017, and then 2017 will be discuss a little bit more detail when we get together in December, but I think that will be another good story.

Okay, very good. And then just the other question, the CRJ order backlog is definitely drifting down here.

You started the year at 79, you’re down to 60 now. Any thought on where we go from here on this, because you’re hitting dangerously low it seems?

Yes. So, maybe I’ll take this one here is that, on the CRJ, if you look at it fundamentally what we feel, we feel good about where we are.

I mean, we continue to proactively manage through the year-end 2016, very disciplined on how we’re managing production and rates. And we’re size where we want to be in the second-half of 2016.

I think, if you look over 2015 and 2016, you see something in kind of the probably when it’s often done about 40 deliveries in those years. I think, it would be a little bit lighter next year.

It’s a great aircraft. W continue to work with customers.

The campaign activity has been a bit of a low cycle. And when you look at order performance, we’ve had great quarter and then we had the software bit lumpy.

So right now what we do is, we look out. We have good visibility probably over the next nine months.

I think the next three quarters have pretty good visibility. For next year, you should expect a little bit lighter volumes when it’s all said and done.

But our current rates and how we’re managing the business right now is already tuned into that.

Okay, very good. That’s helpful.

Thank you.

Thank you. So let me close the call by saying that I’m very confident in our strategy, our leadership team, and also in our ability to achieve both our 2016 guidance and our 2020 goals.

I mean, we have – Bombardier on its path to profitable earnings growth and cash generation and we will remain focus on improving productivity. Our turnaround plan is in full motion as we speak right now.

We have launched two major ways of reduction this year, and the first one is 80% completed, and the second one is getting very good traction. We are executing on our new programs, the CS100 and CS300 are both now certified, and they’ll both be in service before the end of the year with very good performance.

And the 7000 is flying and we remain confident that the 7000 in service in the second-half of 2018. And we will continue to apply a very disciplined and proactive approach to managing our product portfolio.

So I understand, I mean, we all do here, I’d say, a lot of work ahead of us. But Bombardier today is a much better and stronger company than it was a year ago.

And we are committed – the entire team here is committed to delivering superior value to our shareholders and customer. So looking ahead to 2017, we feel that we’re in a good position.

We are launching key initiatives that are needed to achieve our margin growth and goal and goals. So it’s all about focusing on executing our five-year turnaround plan.

So we look forward to seeing you in New York on December 15, and I thank you so much for being on the call this morning. Thanks.