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 Steven Trent - Citi Turan Quettawala - Scotia Bank Steve Hansen - Raymond James Robert Spingarn - Credit Suisse Ronald Epstein - Bank of America, Merrill Lynch Seth Seifman - JPMorgan Satish Amoon - BMO Capital Markets Kevin Chiang - CIBC David Tyerman - Cormark Securities Konark Gupta - Macquarie Capital

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

This conference call is broadcast live on the Internet. For copies of our earnings release and supporting documents in both English and French, or to retrieve the webcast archive of this call available later today, please visit our website at bombardier.com.

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 performance and key achievements for this quarter.

John Di Bert, our Chief Financial Officer, will then review our financial results for the third quarter ended September 30, 2017. I would now like to turn over the discussion to Alain.

Well, thank you, Patrick and good morning, everyone and thanks again for joining the call this morning. This was a very exciting quarter for Bombardier as we announced our game changing C-Series partnership with Airbus.

This is a defining moment for Bombardier. Airbus joining the C-Series program is a strong endorsement of the aircraft, the market potential and the opportunity for long-term value creations.

Overwhelmingly customer interest and positive feedback we average this in the past two week gives us great confidence that we have the right partner and that we are on the right path to unlocking the full potential of the C-Series. This is truly a win-win-win situation.

Combining Airbus’s double reach and scale, with our the state-of-the-art aircraft we will generate new value for our customers, our suppliers and shareholders. As we said in the press release, we announced an [AOI] (Ph) to sell up to 61 C-Series aircraft to a European customer.

This includes 31 aircraft we expect to finalize the agreement by the end of the year. This new order confirms the increasing confidence that airlines and leasing companies add in the C-Series and we expect to see accelerating sales momentum in the months ahead.

Beyond the C-Series partners announcement, this quarter marks two years since we launched our five year transformation plan and I’m very pleased with the progress made so far. the team is doing a remarkable job and we are on-track to achieve the goal we have set out in November 2015.

We have a clear line of sites on our 2018 cash flow breakeven objectives. We have demonstrated our ability to reduce cost and productivity and then the margins.

We had executed on our growth programs and we are taking the big strategic steps necessary to unleash the full value of our portfolio. As we close out 2017, we are very well positioned to achieve our full-year guidance.

In fact, we now expect EBIT to be at the top end of our guidance range at $630 million or above. This is a 50% improvement over last year.

On revenue and free cash flow, we anticipate ending the year within our guidance range even as we manage through the Pratt engine delivery challenges. As noted in our press release, we are taking down our C-Series delivery reforecast to 20 to 22 aircraft for 2017.

This is the result of the ramp up issues at Pratt and they need to deliver production engines to support customer operations. This is a short-term issue that Pratt is actively addressing.

Pratt is also providing us with cash advances to support our production ramp up, and John will go through the details in just a few minutes. Few words on the Trade Case pending in the United States.

As you know, we believe that Boeing’s petition is an unjustified attack on the airlines, they are flying public and innovation in the aerospace industry, and we will continue to vigorously defend ourselves against this attack. In the meantime, our partnership with Airbus provides a solution for serving existing and future U.S.

customers. And like more bargain, Airbus has a long history of investing in train jobs in the United States, establishing its C-Series assembly line in Mobile, Alabama, further extends that commitment.

To be clear, this will be a full and complete assembly line. And import duties simply do not apply to products manufactured in the United States.

We expect to obtain all regulatory approvals for our Airbus partnership next year. In the meantime, we are working closely with Delta on a short-term solution to preserve our 2018 production ramp up.

We will provide more details when we give our 2018 guidance later this year. Turning now to business aircraft, which again delivered solid performance.

With several quarters of strong profitability, we are confident in full-year margins of roughly 8% at business aircraft. We also remain on-track to deliver 135 aircrafts this year.

By improving productivity and operational efficiency, we have demonstrated that business aircraft can perform in any market environment, and BBA is well positioned to deliver stronger earnings growth as the market recovers. Overall, the business jet market is performing as expected.

We see continuing signs of stabilization, including higher aircraft utilization and lower levels of pre-owned inventory. Flight testing on the Global 7000 continues to go extremely well, we now have four aircraft in flight testing and they are demonstrating high levels of maturity and reliability.

Entering to service remains on-track for the second half of next year. The aircraft is sold out through 2021, and customer interest continues to grow as we approach EIS.

Last month, we displayed flight test vehicle number four with a fully fitted interior cabin at NBAA. Feedback was just outstanding.

Customers are clearly beginning to realize, how game changing the Global 7000 will be. This is simply the best aircraft out there and there was no other aircraft like it.

The 7000 combines unmatched range, speed and operating cost with an expectation cabin. It's size, comfort and performance make it a truly remarkable aircraft.

Another important growth driver at BBA is capturing additional aftermarket ore from our large installed base of 4700 aircrafts out there in the field. For the year, we have continue to expand both our service offerings and footprint.

We recently added more interior capabilities at our Two Sun facility and launched a new smart service program. This program allows us to better serve customers that are not currently enrolled in the power by the hour of programs.

We will talk more about it when in the coming months and especially when we talk about our 2018 guidance. Turning now to our train business, which is firing on all cylinders.

BT continues to grow revenue, improve margins and increase in the size and quality of its pipeline. For the quarter, revenues were up 20% as we continue to execute on key projects.

Orders year-to-date are $6.7 billion, this is 8% higher than the same period last year. BT's backlog now stand at $33 billion.

This solid order book combined with the strong market outlook gives us clear visibility to achieving our $10 billion target by 2020. We are confident that we have the scale, the technology and people to compete and win in the marketplace.

And as the competitive landscape evolves, we will continue to assess opportunities to make our rail business even stronger. For now we are [indiscernible] and his team are focused on completing their transformation.

This includes executing on their sites specialization and product standardization strategies to reduce cost, and productivity and to diverse program execution. A few comments on our on our Aerostructure segment.

This business has unmatched manufacturing capabilities that are under appreciated. In the third quarter, Aerostructures grew margins to 9.3% while supporting the ramp up of our two key growth programs, the C-Series and the Global 7000.

As a supplier to these program, Aerostructure is very well positioned to benefit from their growth and the team is laser focused on ramping up production and reducing cost. Okay, I will stop here and conclude by saying that we feel very good about where we are about and about the actions that we have taken so far.

We are squarely on-track to deliver on our commitments that we made two years ago. And we're taking the necessary steps to unleash the full value of the Bombardier portfolio.

With, that I will turn it over to John to review the Q3 financial results.

Thank you, Alain and good morning everyone. With another solid quarter executing our strategy, we continue to make great progress on or plans to build earnings power.

We are entering the fourth quarter with confidence. We are delivering on top-line guidance at transportation, business aircraft and Aerostructures.

And with 8.5% plus margins realized in the third quarter, we are firmly positioned to meet our guidance of approximately 8% across those businesses for the full-year. This strength puts us on-track to exceed even the higher end of our consolidated profit guidance looking to achieve EBIT before special items of $630 million or better.

As I pointed out, that’s close to a 50% improvement from 2016 on a stable top-line. Let me summarize the third quarter numbers.

Consolidated revenues totaled $3.8 billion or 3% better year-over-year. Notably BC revenues were up 20% reflecting the significant project ramp ups we had anticipated.

On the aerospace side, volumes continue to show stability in business jets and a back ended ramp up on the C-Series. On the C-Series front, the engine delays coming from Pratt & Whitney are reducing our delivery expectations this year.

We are now targeting 20 to 22 deliveries in 2017. The reduction from 30 to 35 units represents a 300 to $500 million revenue impact relative to our original plan.

As such, we are revising our full-year consolidated revenue estimates from 1% to 3% growth to flat year-over-year. So we see full-year revenues of approximately $16.3 billion driven by continued strength at BT and good delivery momentum [indiscernible] aimed at the fourth quarter.

On the earnings front, EBIT before special items reached $165 million in the quarter almost double the same period last year. profitability reflects our continued progress and our turnaround plan, growing higher margin activities and controlling cost.

These efforts led to 8.5% margins at BT, 8.8% at BBA, and 9.3% at Aerostructures. Having already realized $457 million of the EBIT before special items in the first nine-months our expectations for the full-year of $630 million or above implies fourth quarter EBIT to continue growing sequentially.

Our free cash flow usage for the quarter was 495 million consistent with expectation and in support of delivery growth in both claims and train Q4 and to 2018. Specifically during the quarter, we grew inventory by $450 million mainly to support accelerating deliveries in key transportation projects over the coming months.

This higher working capital was also driven by the early ramp up of the Global 7000 assembly and additional C-Series aircraft inventory. Taking into account the C-Series delivery plan, we now see full-year free cash flow usage equal or better than last year at approximately $1 billion.

The lower end of the guidance range. This implies a strong positive cash flow quarters to finish the year consistent with typical Q4 patterns.

Finally, adjusted EPS was $0.01 negative in the quarter effected by a higher tax expense resulting from unfavorable country mix. With year-to-date adjusted EPS slightly above breakeven, we now expect full-year EPS to improve significantly over 2016.

Let's turn to a review of the unit’s individual performances. Starting with our rail business.

Transportation is reaching a turning point on its path to sales growth. The business is gearing up for an acceleration of delivery activities, starting in the fourth quarter, spanning a number of large projects.

Already in Q3, revenues increased by 20% year-over-year, up to $2.1 billion. On a constant currency basis, this growth remain impressive at 17%.

We expect a similar growth profile for the business in the fourth quarter on its way to $8.5 billion full-year revenues, supported by favorable FX. And as deliveries accelerate, inventory is expected to reduce, contributing to positive cash flows in the last few months of the year and throughout 2018.

For the quarter, EBIT before special items was $181 million, increasing 30% year-over-year for the third consecutive quarter, representing a margin of 8.5%. In addition to more higher margin systems revenues, we continue to see strong contribution from our Chinese JVs, offsetting the lower margins of certain recovery projects.

The 8.2% margin year-to-date reports full-year guidance of approximately 8%. In addition, the restructuring momentum driving BT’s operations in 2017 to translate should into additional earnings power in the years to come.

In summary, BT continues to perform, ramping up key projects and securing new ones for the future. Its book-to-bill continues to trend at or above one, with significant orders from Asia and Europe.

Business aircraft also continued to perform, with a focus on execution of its Global 7000 development program and aftermarket growth. BBA delivered 31 aircraft in the quarter, Global and Challenger deliveries were generally in line with the same period a year ago at nine and 18 minutes respectively.

While Learjet saw four deliveries. Year-to-date, total deliveries reached 96 aircraft or 70% of the 135 aircraft target for the full-year.

Revenues of business aircraft reached $1.1 billion during the period, lower by $200 million over Q3, 2016 mainly as a result of leaner pre-owned aircraft inventories, leading to fewer aircraft available for sale. Also of note, during the quarter, we recorded incremental revenues from our aftermarket business, coming from recent investments in our service network.

This incremental volume from our service business offset some of the planned reduction on the OEM side. For the full-year, revenues continue to trend $4 billion or $5 billion guiding.

On the earnings front, EBIT before special items was $96 million or 8.8%, representing a 240 basis point margin improvement versus one year ago. The progress this quarter comes predominantly from better mix and growing aftermarket business, and it’s fueled by lower tooling amortization.

with strong year-to-date EBIT margins of 8.5% in business aircraft and considering the aircraft mix expected in the fourth quarter, we reiterate our full-year margin guidance of approximately 8%. Finally, backlog at quarter-end continue to lead the industry at $14.5 billion.

With continued market stabilization, we advanced towards 2018 with production aligned to market. Moving to commercial aircraft.

C-Series deliveries in the quarter totaled five aircraft accumulating to 12 so far this year with recent delays in engine deliveries we revised our delivery targets for the full-year to some 20 to 22 aircraft, down from our previous expectation of 30. We are working closely with Pratt & Whitney and our airline customers to reschedule deliveries in the near future as more engines become available.

At this point, Pratt & Whitney had agreed to support excess inventory generated by engine delays through a supplier advance. Starting in Q4, they will deploy this advance against aircraft built, but not delivered.

This funding will not be included in our free cash flow metric, but will benefit overall liquidity and cash on hand. On our established platforms, four CRJs and 7 Q400s were delivered in the quarter, reaching a combined 39 deliveries year-to-date tracking well against our full-year target of approximately 50 deliveries.

From a revenue standpoint, additional C-Series deliveries contributed to offset lower CRJ and Q400 production. With year-to-date revenues of $1.7 billion and fewer C-Series deliveries anticipated in Q4, we revised BCA's revenue guidance to $2.5 billion from $2.9 billion.

From the learning curve and cost perspective, C-Series is performing according to plan contributing to BCA's EBIT loss of $235 million year-to-date and tracking well to our $400 million guidance. I want to pause for a minute and address some of the highlights of the partnerships with Airbus and answer some important questions that we have been getting.

First, the actions of both Boeing and Airbus now show a clear endorsement of the game changing C-Series capabilities as well as the attractive market that was designed to serve. We are very proud to welcome Airbus's program.

We are excited about the benefits of our deal which unlocks the full potential upside of the C-Series while it removes several risks from the point of execution. Industry experts as a sales group and [indiscernible] insight have each increased their delivery forecast for the C-Series by as much as 50% over the next 20 years.

This fully support the value creation of the deal and our belief shared by most that the C-Series market opportunity is significant. From a free cash flow perspective, I would say three things.

First, cash invested through closing continues to increase our ownership in the program beyond the current 63% driving upside to our participation in the program post closing. Second, with Airbus by our side, we preserve and enhance our growth to breakeven in 2020 on the C-Series.

This means the first year post closing will be the last year of funding requirements, including the sample required for final assembly line in Alabama. These investments which are already part of our five year cash flow plan, go against $700 million maximum commitment with Airbus.

And in exchange, Bombardier will receive Class B share in the C-Series LP. Finally with the additional volume and synergies expected by partnering with Airbus, this transaction is accretive to free cash flow post 2020.

Now going back to the quarter and looking at Aerostructures. Revenues totaled $343 million stable over the last year.

EBIT before special items grew to 9.3% its highest level so far in this year. Improved sequentially and year-over-year as it benefitted from increasing aftermarket sales and positive currency effects.

In that context, we continue to see full-year margins at approximately 8%. So to conclude, I want to shed some light on 2017 performance and what this means for a five year turnaround plan.

If we look past the short-term revenues, and cash deferral resulting from the lower C-Series deliveries, we would be trending to the top end of guidance on all fronts, revenue, EBIT and free cash flow. We are doing what we said we would do and all that while making significant progress on the flight test program of the Global 7000 and tracking for 2018 entering to service.

Restructuring Q3 train projects to set them up for renewed growth and enhance profitability. Driving our transformation through structural changes on how we do business making our margin expansion sustainable and strategically positioning the C-Series for long-term commercial success and value creation for Bombardier’s shareholders.

This demonstrates we are on the right track to meet and in certain cases exceed our financial objectives. Specifically for 2018, targets this progress needs improving margins as we hope production rates steady in our aerospace segment to stay aligned with markets and with better economics from the business units and continued discipline we remain on-track to meet our cash breakeven objective for the year.

With that operator, we are ready for our first question.

Yes, thanks, good morning. Just a question on business aircraft, I’m wondering if you can maybe just talk a bit about what you are seeing out there as far as order activity, any changes in the last quarter from what you saw earlier this year and you know it sounds like you are pretty comfortable with the production rates that you have going into 2018.

But maybe you can just discuss where and what specific product lines you might see some risks on the production rates heading into next year?

Good morning. We believe that we are at the right place, right now on the 135 aircrafts.

We are still taking a pretty pragmatic view on the market, we are seeing some good signs especially in the U.S. market at pretty much across and the full product range that we have from the Challenger 350 up to the Global 6000.

And the rest of the world is pretty much unchanged right now, so we believe that there is upside potential in the coming years. So whether you look at China, Middle East or Russia which have been pretty good markets especially for the upper end of our product portfolio.

So we think that 135 aircraft a year is the low point and the market is pretty much supporting that.

Okay, thank you.

Thank you gentlemen and good morning to everybody. I’m just curious when we think about your tie up with Airbus, what do you see for the industry regarding longer-term pricing on commercial aircraft, and any read through on your end, what this means for your competitors perhaps looking to undertake similar types of alliances?

Thank you.

As you know, it’s tough to discuss pricing. So that's not something that we are going to start, talking publicly and openly, but I would see the punch line here is, this deal is good for the industry and it's good for customers.

It will trade value, it's really clear that I mean, in that segment of the market 100 to 150 seat class, I mean there is really two competitors today Embraer and us. If you look at the low end of the narrow body product lines - Airbus and Boeing, there wasn't really no sales or very, very little sales.

So really there was like two competitors before, there will still be two competitors moving forward. Now in terms of potential further consolidation, I’m sure, you understand that I would be speculating.

So I would rather talk about what we have done in a proactive way and I'm very proud of what we have done with Airbus and I really believe that this will fully unleash the value of our major investment in the C-Series. And as customers are saying, they love the product, they love the performance of the aircraft, and so far, I mean they are positive - their reaction from customers on this deal has been super positive.

So, I mean, we look at this partnership with Airbus in a very optimistic way.

Okay. I appreciate it.

That’s very helpful. Thank you very much.

Yes, good morning, and thank you for taking my question. I guess I was wondering if you can talk a little bit about your competitive positioning in the transportation business, considering the combination that was announced by Alstom, Siemens and I guess maybe to the extent that you can show some light maybe on potentially if you guys will be considering something with some of the other players in the industry?

Thank you.

Hey, good morning, Turan. For sure, we will continue to look at the competitive landscapes and assets, but some potential moves as long as they would trade no value for shareholders, and we will look at all options.

So, I mean, as I said before, everything is possible, but it needs to make some good strategic size. In the meantime, we have an amazing franchise [indiscernible] and his team are doing a great job in transforming our train business, like has never done before.

So, I mean, we're growing margins, we are improving our execution performance, and the team is focused on delivering on our commitments. So, I mean, it's all ends on increasing performance of that business unit, so that we strengthen this and whatever we do here will help us to be stronger in the long run from a strategic view point.

So that's kind of it. I mean, we are focused on execution and continuing to assess strategic options.

Thank you.

Good morning John. Just a quick one, is it possible to attribute this latest C-Series order to the Airbus deal?

Is it too difficult to do that just yet or you described earlier - I mean asking another way you described earlier that your sales momentum is accelerating. Just trying to get sense for how many sort of late stage campaigns you might have had in place prior to the deal.

And how those have changed since the announcement. Just to give us a flavor for what kind of accelerated momentum we might expect on the sales front.

Thanks.

Good morning. Clearly, I mean we have a good aircraft, we have a great aircraft.

And customer feedback on the performance of the aircraft has been just like outstanding. So we add and we still have a number of very active campaigns ongoing and this one year is part of what the team has been doing for a while.

And as I have been saying before, it takes time to close a deal. The customer need to be ready to place like orders.

So at the same time, it is clear that Airbus coming into the program is adding confidence about the long-term success of the program. So I wouldn't they are today totally lean, but it is clearly helping us to accelerate sales momentum.

Okay, very good. Thank you.

Good morning. Alain, I have two questions, actually I guess one is for John, one is for you.

Hopefully you can hear me. So, Alain at a very high level, you have talked about the strategy with Airbus we understand it, but what is the purpose behind the call option down the road?

Is it Bombardier's intension to exit this business at some point? I asked that question in the context, if you built the great airplanes, so I can't imagine you don't want to be in that business long-term.

And then John, for you, to what extent is the higher EBIT a result of fewer C-Series deliveries this year. And will the Pratt & Whitney impact expanded into 2018 and how far into 2018?

So let me say the first piece of it. Robert, I think that like as we have seen in many M&As you have that to call and a put option and that's exactly what we have.

We're talking seven to eight years down the road here. So I mean it's tough to predict exactly what is going to happen so far.

I would say we're going into this partnership with Airbus and have positive and constructive and with the long-term view on staying in the program. Should at that time, either party willing to continue or seeing opportunities to do something else.

That's what the call option and the put option is therefore. So I don't think there was more to read into this.

And we like the business clearly, we love the product, we like the business. And right now our thinking is to stay involved in the commercial Aerospace segment.

Hey Rob, maybe just taking on the second part of your question. So to be clear, we are continuing to build aircraft in Airbus.

So we continue to remove the line and that means that all of the kind of expense that was related to those early aircraft is largely going to continue to take place. So the impact of the lower deliveries is not very significant on full-year I would say expectations, guidance and as a result, we have the arrangements with the Pratt & Whitney where they are going through back us on some of those inventory investments, so marginal impact.

The plan for 2018, again, recall we have customers behind all of those deliveries. I think we had an original plan when we first set this out of the ramp up some 45 to 55 aircraft.

We are going to be disciplined and prudent, we are working with Pratt to make sure we have clarity as to schedule and timing for next year’s deliveries of engines and make sure that we correlate ourselves very well. So at this point in time, it’s too early to call a number for next year, but you know probably on the lower end of that range and then we will pick the right spot with both customers and Pratt and what is right through for the business.

Thank you.

Good morning guys. So Alain a quick question for you.

When you think about your supply base on the C-Series, post the UTC, Rockwell [indiscernible] on the last earnings call you know Greg mentioned that they will be about 35% of the content on the plain. I mean how do you think about that, are you comfortable with that, is it a good thing, it’s a bad thing and it just kind of what are your broad thoughts on it, because we are seeing some change in dynamics in the supply chain and this is one of them?

Yes, good morning Ron. Clearly supply chain is about scale today and I mean the more the scale you add the better it is.

The better it is when you negotiate, but also the better it is when you want to reduce cost. So it goes both ways.

So I mean the UTC, Rockwell merger clearly increase the content that UTC will add on some of our aircraft not just commercial side but on the business aircraft side as well. So clearly we are watching it closely, but we think that coming back to the C-Series that adding the power of the Airbus procurement organization and supply chain expertise is going to be good news in term of helping us to achieve the trust target and fully unleashing the value of the investment that we have made.

So, we scale highlight, I think that it’s good for supplier if it’s well done and it’s doing good for us in this case with Airbus.

Okay, if I can just follow-on with a maybe a really big strategic question. Assuming all of this goes through with Airbus and kind of the reason that’s approved, how do you expect your competitors to react?

I mean sort of one movement from one competitor will naturally drive something from somebody else. I mean have you guys thought about that and what do you think the potential reaction could be?

Yes, like I said Ron, I think I would rather be careful and not speculate about what our competitors are going to do, but I would say that. We do add that best aircrafts in the 100 to 150 seat plus.

Like a [indiscernible] it is the aircraft that brings the most value to customers from a operating cost standpoint from a cabin comfort standpoint and there is nothing that comes close to matching it on range and performance. So you add this to the Airbus product portfolio and the narrow body segment with the 320 to 321 and there you add a full product portfolio covering the narrow body range.

So I feel that is really adding value to Airbus, and it's helping the C-Series to fully unleash the full value of the program, and I would say that we will be very well positioned to compete successfully and gain our fair share of the market.

And just one follow-on to that, if I may. Is there been any talk of unifying the cockpits between the two airplanes, be it that they both fly by wire be it both sides stick, is there been any talk about maybe making the pilot transition from one to the other more simple?

I guess that we would get ahead of ourselves here, who will first complete that deal, make sure that we successfully close it, and then we will talk about integration and then optimization of the aircraft. But as you know, Ron, as you just said there, the beauty here of this partnership between Airbus and Bombardier on the C-Series is the aircraft architecture of the 320 family and the C-Series very common.

So I think that in terms of potential optimization opportunities clearly there is like some good moves that could be made over the next few years.

Great. Thank you very much.

Thanks very much and good morning. Alain, you mentioned that the Aerostructures business was under appreciated.

What are some of the things you think about doing to make sure that it does become appreciated, including by investors?

Well, clearly, this is a good solid business with good top-line revenues and good margins. About 75% of the volume relates to what we do at Bombardier and about 25% comes from external customers.

So what we are talking about here is a business that is in the range of $1.7 billion with amazing capability and we have capacity that we can do something else with. So that's what we're thinking about.

Now that we have stabilized the C-Series, we have the Global 7000 coming on stream, it will add like good solid volume to that business unit. The question that is on our mind is how do we further grow volume at Aerostructure.

And it can be done in multiple ways, you know and going more aggressively with external suppliers, looking at potential partnership and things like that. The name of the game here is, we want to break more value, because we have great capabilities and we can bring value to customers in multiple forms.

Great. And then if I could just follow-up very quickly.

I appreciate your comment earlier that aircraft that are made in the U.S. are not subject to tariffs and that makes a lot of sense of course, but if someone wanted to make the argument that significant portions of the aircraft are coming in from other places, are you concerned at all that there's still residual risk of the tariff on portions of the aircraft, and if not, what gives you the legal confidence to think that you can get pass that.

Let's say that that we are very confidence. The reality here is like just to start with there is over 50% of the content on the C-Series that is coming from the U.S.

over 50%. That creates 22,000 jobs in the U.S.

today. That is before us putting an assembly line that's more U.S.

content on the C-Series than Boeing as on the 787. So it is already a largely a U.S.

product. Now we are going to have a full a complete assembly line in Mobile that will further increase the U.S.

content. So when you think about value creation in the U.S.

from a job standpoint. This is an amazing product, so we will make it a domestic product based in the U.S., assembled in the U.S.

with very high level of U.S. content which will be creating Thousands of jobs and billions of dollars in the U.S.

Great. Thank you very much.

Great thank you. Question maybe for John.

So rough math will get us to about $2.5 billion of cash at the end of this year like cash balances. And considering the typical seasonal cash burn that you get in the first half of the year.

The outlook looks a little bit uncomfortable close to $1.5 billion I think what sort of you need that at a minimum for transport and aerospace if ‘m not mistaken. You mentioned the Pratt & Whitney support.

I'm wondering if you can put some number around that and if you have other lever that you have to get you through this short-term kind of liquidity position?

Yes so let me take that couple of ways Satish. First of all by design when we laid out this plan some two, three years ago, and this was going to be the turning point and we knew that, so we are designing the business around that and we have been very proactive in terms of the cash and liquidity and we're going to continue to do so.

let me just a few highlights of how I see where we are today and then I will just touch back on your comments on 2018. So right now we have right sized the business strong profitability across every units.

7000 is going through the final year of development, we're ready for entering facility to the back end of 1018. Trains accelerating, we have got growth coming, we have built up some quite a bit of inventories but that’s also by design as we wanted to kind of re-launch some projects when you go back 18 months.

So the fact of the matter is that we are here, because that’s where we designed the plan to be. We're going into the fourth quarter, fourth quarter to be solid cash generating quarter, that will leave us as you said kind of in that range of north of $2 billion or close to $2.5 billion of cash.

So Alain and I have always been very disciplined and in terms of how we have manage the cash flow. we're in the planning cycle as we speak for not only 2018 but also be the longer term.

Continues to see a nice clean path to the breakeven. And we will keep ourselves proactive and look at all option and make sure that we provide the right basis for 2018 to be successful.

And the reason that we do so with so much confidence is because when we look at our 2020 objectives the ones we set out with you profitability and cash flow of this business still very strong very positive. So we know what we need to do to get the job done through 2018 in terms of execution, keep our options open, be disciplined, complete the planning cycle and then make sure that we have the right level of liquidity throughout the year.

Okay, great. Just one other question, so when we look at the delivery of C-Series, is the plan to get you back on-track in 2018 or is sort of the delivery run rates sort of kind of goes down a little bit through 2018?

So when we set out the plan and again that was November 2015 and the impact was about 2018 being 45 to 55 aircraft, that was a target ramp and this year we set 2022. I would say that we will need a little bit more work with Pratt to kind of figure out the sequence and the scheduling of engines into the next year.

At this point in time, what is obviously very positive is we are working with customers very closely. The aircraft in 2018 are all backed by customer orders that are firm and ultimately a little bit early to call number, but I would say you would be looking at a lower end of the range and will pick the right number somewhere around that space 40 plus when we put out our guidance for next year and that’s a few weeks or a couple of months away.

So stay tuned but the reality is that customers on the other end of this are working flexibly with us, Pratt & Whitney working very hard to recover the schedule on this interruption and we are still moving our lines. So we haven’t stopped any of the momentum with respect to assembly.

My expectation is we will give you as a number that will be something around 40 to 45 when we are all set and done, but stay tuned.

Thank you. Very helpful.

Hey thanks for taking my question here. Maybe just two quick ones just clarification points.

I think earlier you had mentioned you are seeing some positive outlook for business jets and you mentioned the Challenger and Global looking goods. Just wondering what you are seeing on the Learjet front and just how this fits within your investment portfolio or product portfolio overall here?

Well, good morning. As we said on the Lear, we want to keep on driving sales, there was a bit of a pressure on pricing and that nothing has changed there.

I mean it’s a great franchise and we have got a very large install base, we are maximizing after market activities on that front. And we will continue to take as much value as we can with our Lear franchise.

So right now focus on maximizing performance of the product and making sure that we increase sales.

Thanks for that and just a clarification point a round, is it the shortfall cash payments. To the extent these are triggered within the Airbus joint venture.

Does this increase your proportional interest in the C-Series, does that get accounted towards the capital investment or is that outside of I guess any potential increase in your interest in the C-Series investment.

Thanks for your question. So any cash that’s injected against that $700 million commitment over three year will be rewarded with equity and that’s kind of a Class-B share and it will have a stipulated return and those will become redeemable at some point in time through the same quarter call options should be choose.

So they are investments and we will come back with capital or an equity stake, but we will not dilute the class-A shares. So just to be clear, it does not dilute the common interest.

That’s it for me. Thank you for taking my questions.

Yes, good morning. Just two questions.

The first one on BBA side, I have noticed the backlog keeps going down, down 6% since the end of December and it was down 10% in 2015. I was wondering, how to square that with your commentary that the market stabilizing?

Yes. I mean, we have been using a bit of the backlog clearly over the past like two years, but at the same time, we also took the rate down from over 200 aircraft, I mean in 2015, over 220 aircraft down to 135.

So I think the common is, more than 135 aircraft a year, we believe that this is in line with the market demand. So with that level of production activity, we believe that we will be able to start rebuilding the backlog as the markets start recovering.

So as I said, I think that in the U.S., we're seeing some good signs, still kind of flattish you know rest of the world, and we think that we have reached the bottom. We have never seen a good recovery in business aircraft as you know, since 2008.

So we're proud of what we have done in terms of adjusting rate and when you look at it moving forward, we believe that we will continue to keep our market share and most importantly now, we have the Global 7000 coming into service towards the end of next year and that will trade huge value for our business aircraft franchise.

So, do you think you can stabilize that backlog soon?

Well, I mean, obviously, there's a bit of a speculation here but like our thinking right now based on what we are seeing is, yes. So, I think that we're seeing better level of activities and we think that the world economy is still good, and therefore, I mean, as you know business aircraft is largely willing to corporate profits, and we think that in the short to medium-term, this will continue to improve.

Okay. And my other question was on the Aerostructures, so I’m wondering if there are any margin implications for the unit from the Airbus C-Series deal, and related to that, can you let us know what the sales that BAEF has to the C-Series?

I can take the first part of this, in terms of sales with C-Series, maybe you guys can look at it quickly. But, clearly the thing that Airbus does, the Airbus deal does or it secure volume, and an increase volume.

And therefore, will help us reduce cost and that is fundamental. And that was a bit of my comment earlier when I talk about the Aerostructure business.

This is a good business, $1.7 billion overall and now with Airbus coming in and as you have seen, I mean, the sales forecast is going up with Airbus. Meaning, there will be more production units into the system which will help with the overate of absorption, which will also help on the material side as we use and leverage the Airbus procurement system to help us take these cost down.

So we are seeing the Airbus partnership as a plus for our Aerostructure business.

Would it change pricing?

Excuse me?

Would it change pricing?

Do you mean will it change pricing trends.

Yes, you are using transfer pricing now that can be…

Obviously we're going to need to make it cost competitive for the aircraft itself. So where an internal supplier to Airbus in that days.

So I mean we need to work the cut down as we would do with any customers. So and clearly will continue to be aggressive on that front.

So again, I think the key here is Airbus deal brings additional volume, secure volume for the long run will up as they cut down on multiple fronts. And there will be clearly some repo benefits on the pricing side going back into the C-Series program.

Okay, I'm sorry Patrick.

It's John. I think, I may have picked up on the backend of that answer.

But no, I would say that exactly that we are already in the competitive cost structure environment and we do so to support the future. Don't forget we did a JV going back a year ago already, which means that we have established contractual pricing between DAS and the C-Series JV when we brought in our first partners Quebec .

That continues and the name of the game really is about using the strength of the program now and the acceleration of overtime of volumes and stability of production to take cost out. So I think that lands about the rest of this, at the end we have always been focused on cost and that's where we are going to be focused in DAS that's what they do very well and they will be able to support the program with the Airbus of course.

Perfect. Thank you.

Alright operator, we'll take our last question please.

Good morning and thanks for taking my question. Just have a couple of questions one on free cash and business jet if I may quickly.

So John you recently mentioned that Airbus deal would not impact free cash flow outlook to 2020. Now the engine delays and design changes on Pratt & Whitney are continuing and we are not sure if Delta could delay deliveries next year, but you are also winning new orders at the same time.

So can you please remind us what are the key puts and takes in breakeven free cash flow next year?

Well I guess in terms of free cash flow I think we are going to see a cycle where you will have strong top-line growth, that will mean conversion of inventories that we have been building up the train business is a example of that. We're coming off the development cycle with respect to the 7000.

So front end of the year will consume more as we go into the final stages of the development [indiscernible] and then build up working capital inventory. You have them at cycle that begin kind of later half of the year with advances on the 7000 as we start to get ready for 2019 deliveries.

So you the advances ahead of delivery in the backend of the year. So those are kind of nice contributors to finding some of the program final stage.

At BCA we continue to take cost out. Obviously we continue to come down a learning curve with respect to the program.

As I said we will get the final kind of look of what we produce next year that will be a materially more than this year obviously and cost again will leverage as well as cash on hand. You will have more deliveries contributing to cash flow in the backend of the year there as well.

So I would say that's how the years start to complete. Don't forget the train business strong quarter this quarter and that’s something we expect to continue and we have been building that up in the sense that inventories are part of the just pre-delivery where you will see good cash flow.

So those are there is some of the sales growth plans for next year. As far as you know the comments around the turbo fan and [GCF] (Ph) these are you know mostly manufacturing issues and performance of the aircraft, the engine, the fuel efficiency, the noise have all been outstanding.

So I mean we will look past all of the this, we are working closely with Pratt and they stood up behind their product that comes to the table they make sure that they have mitigated the impacts to us in the short-term here with the inventory we’ll be holding and we’ll work through that next as we unwind it based on deliveries that come off of their new delivery schedule. So for 2018, we are kind of putting the final touches on the plan, we still see a good path to the breakeven objective and we’ll give you guys more color as we get through our Investor Day.

Okay, and Alain just on the business jet, so when I do some math on the book-to-bill ratio on a dollar basis it looks pretty reasonable in Q3. So can you just help us understand the product mix versus demand in that book-to-bill ratio number and are you seeing anything different than what you are competitors have been telling us in terms of demand and pricing in the market?

Thank you.

I think that clearly we have been - the Challenger keeps doing extremely well. I mean the Challenger 360 product line our Global also is pretty strong and Learjet is like a little bit softer and that was you know as per plan and as expected.

So that’s kind of what we are seeing, I would say this is sort of consistent and what happened in the previous few years and the past few years and it’s also what we are seeing moving forward. So a great product line on Challenger and Global a bit more challenging on the Lear going forward.

In terms of competitors, I think that everybody in the industry has seen the market challenge and I would see I’m very proud because we were very proactive in adjusting our production rate in line with market demand. We were the first one to doing this and looking forward I still think that we have the best product lines out there and when we add the Global 7000, we will have the best business franchise in the world.

So I think that we are positioning ourselves extremely well there.

Okay, that’s great. Thank you so much.

That’s good so thank you everyone for being on the call. Have a good day.