Bombardier Inc.

Shirley Chenier – Senior Director, IR Pierre Beaudoin – President and CEO Pierre Alary – SVP and CFO

Walter Spracklin – RBC Capital Markets Cameron Doerksen – National Bank Financial Turan Quettawala – Scotia Bank Robert Springarn – Credit Suisse David Newman – Cormark Securities Konark Gupta – Macquarie Peter Arment – Sterne Benoit Poirier – Desjardins Capital Markets Steve Trent – Citigroup David Tyerman – Canaccord Genuity Chris Murray – AltaCorp Anthony Scilipoti – Veritas Investment Neil Dihora – Morningstar Joe Nadol – JP Morgan Turan Quettawala – Scotia Bank Deepak Kaushal – GMP Securities

Thank you, operator. [Foreign Language].

Good morning and welcome to Bombardier’s conference call intended for investors and financial analysts. We realize this is a very early morning call and we will be back to our normal 8.00 a.m.

call next quarter, we promise. I would also like to welcome representatives of the media here today and you will have the opportunity to ask your questions little bit later during question-and-answer period reserved for the media [indiscernible] and Mr.

Pierre Alary, Senior Vice President and Chief Financial Officer will discuss Bombardier’s financial results for the first quarter ended March 31, 2014. [Foreign Language] This teleconference is being webcast live on the Internet, and is also simultaneously translated into French, and in English…www.bombardier.com and the webcast archive of the integral version of this call will be available later today.

Slides for this presentation in English and French are equally available on our website and all dollar values expressed during this conference call are in U.S. dollars unless stated otherwise.

I also wish to remind you that during the course of this conference call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the corporation. Several assumptions will be made by Bombardier 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 released today. Please also note that I’m making this cautionary statement on behalf of each speaker whose remarks today will contain forward-looking statements.

Pierre Beaudoin will now begin.

[Foreign Language] Welcome to everyone. [Good morning and welcome to the teleconference] [Overlap] such an early hour, this is exceptional for this quarter due to our annual general meeting.

We’re satisfied with our first quarter results and we’re on track to be on our guidance for the full year. Both groups saw strong level of orders while some project timing resulted in transportation, garnering an exceptional high level of orders in the first quarter.

We see transportation book-to-bill to be above 1 for the full year. The strong activity is a testament to our decision to invest heavily in new products in both group and we’re starting to see the benefits of these investments.

In aerospace EBIT margin is in line with our guidance for 2014 and we also achieved important milestone such as the successful maiden flight of the Learjet 85 in April. In transportation, revenues increased by 7% excluding foreign exchange and the EBIT margin improved sequentially in the quarter.

Our continued investment in a leading portfolio of products is paying off, as demonstrated by our record backlog of $76.9 billion which sets the stage for strong revenue growth over a five-year horizon. And now I would like to let Pierre Alary go over the results in more detail.

Good morning. Our Aerospace revenues for the first quarter totaled $2.1 billion compared to $2.3 billion last year.

The decrease is mainly due to the divestiture of our flagship units and to the lower level of sales of pre-owned business aircraft. Q1 EBIT margin before special item was up 5%, in line with our guidance, and it compares to an EBIT of 4.5% last year.

Bombardier transportation revenues for the first quarter totaled $2.3 billion compared to $2.1 billion last year, representing a 7% increase excluding foreign exchange. EBIT margin was at 5% compared to 6.7% last year, the decrease is explained by lower gross margin enrolling stock due to the contracts with execution issue and a lower share of income from asset fleet [ph] which were partially offset by higher absorption of lower SG&A expenses.

However, we are seeing an increase in margin on the sequential basis. On a consolidated basis, Q1 revenues totaled $4.4 billion while EBIT before special items reached $219 million.

The net financing expense is $34 million compared to $35 million last year. Our effective income tax rate was 33.5% which is higher than what we’ve experienced in previous quarters essentially due to the change in mix of countries where profitability has been earned.

Overall, our adjusted net income totaled $151 million or $0.08 per share the same level as last year. Now looking at free cash flow, as is typically the case in the first quarter, free cash flow usage amounted to $915 million.

This compared to $590 million the previous year. Looking at our liquidity position, subsequent to quarter end, we took the opportunity of favorable capital market conditions to issue $1.8 billion of Senior Notes of which approximately $1.3 billion will be used to refinance existing debt.

As a result, our available short-term capital resources totaled on a pro forma basis $4.5 billion as of March 31, 2014, which includes cash and cash equivalents of $3 billion. A solid liquidity position is ensuring us the financial flexibility to support our development program.

To conclude, we’re making good progress in our flight test program with major milestone set in February being achieved. Our record backlog of $77 billion set the stage for strong revenue growth over the next five year horizon.

Thank you.

Thank you, Pierre. We will now start the question period for analysts and investors.

So in order to keep the duration of this call at a reasonable level, I would ask you to limit yourself to one question to give everyone a chance to participate. If you do have any remaining questions at the end and if time permits you can get back in queue and if not, you can contact me after this conference call.

We can now start with the first question. Operator?

Thank you very much. Good morning, everyone.

So I guess my first question – my only question here is on free cash flow and your capital structure I guess. You’ve guided and said about 1.6 billion to 1.9 billion in capital or CapEx for the full year, and it seems that you’re running somewhat higher than that with your CapEx spend in the first quarter, hence my question is, do you expect now to – is it just a lumpy kind of first quarter item and should that come down for the rest of the year?

And if not given that you’ve tapped the market for debt this quarter, do you have any inroads into potential government sources that, if you’re going back to your government partners on some of the support they’ve given on your programs right now, is there any room for additional government support there?

First of all, Walter, we’ve reaffirmed all of our guidance, so the $1.6 billion to $1.9 billion spend for aerospace this is our guidance, and we reaffirmed it. In terms of the investment on a sequential basis, you can expect a reduction and in fact if you look at the fourth quarter of last year, it was higher than the first quarter.

So effectively you could anticipate reduction of the investments throughout the year to complete the year between $1.6 billion and $1.9 billion. So we don’t anticipate to have to go back to any sources to increase our liquidity, we have ample liquidity to meet our plans.

Have you spoken to government at all, have you ever considered going back to governmental for any additional financial support?

No, not at all, as you know there are loans and we don’t think we need to borrow government money on this program, that’s already been done.

Okay, Thank you very much, I’ll queue up again.

Thank you.

Thanks very much and then good morning, it’s actually [indiscernible] on for Joe this morning. I was going to ask about the pricing in business jets, you didn’t call it out either way in the discussion of the margin.

Now, I was wondering what it was like in the quarter relative to last year and how you see that shaking out for the rest of the year and how it might affect the gross margin progression in aerospace for the remainder of the year?

Well, it’s still a market that is coming back but not as rapidly as the industry if you want and ourselves as anticipated, so we’re seeing a marginal price increase in some models and but overall it’s going to be a slow, we feel from a pricing perspective, we don’t expect much during the year.

Thank you.

Yeah, good morning. My questions on the inventories, so I see the pre-owned aircraft that are for sale in your inventory kicking down the last number of quarters, but the 16 white tails that you had in the quarter, I think that’s the highest we’ve seen for quite a while, I am just wondering if there is an explanation for that?

What I would say is that you saw that we – if we talked about business aircrafts as the white tails in business aircraft this quarter we’re going to deliver 200 aircraft this year, we expect to deliver these aircraft this year, I think it’s more a question of timing, it’s not always great easy to align production with sales. But I’m not concerned with the level that we have today as when I compare to the demand we’re seeing there right now.

And for used aircraft, it varies quarter-to-quarter, of course now you don’t have to select jet anymore in our used aircraft that will be a variation, but at the same time, it’s hard to take one quarter to compare to the other because it depends really on the agreement of freight quarter-to-quarter.

Okay, thank you.

Yes, good morning. I guess my question is also on the free cash flow.

So if I look at the quarter, it gave me a negative $900 million, I guess that’s about 325 versus last year. Q1 obviously was pretty strong and advance in orders, Pierre you mentioned the one-to-one book-to-bill on BT so I guess as you look forward here, advance is probably, I’m just wondering advance is going to equally strong going forward, or is it just going to be mainly inventory that’s going to drive that free cash flow overall back to your guidance that you have for the year here?

Thank you.

I guess what we’re seeing in the first quarter, it’s a typical -- we spend on the first quarter, spend on more in the second and third quarter typically it’s close to breakeven and then there is a very good cash generation in the fourth quarter, so it is not really different, it is a higher amount in the first quarter and the variance comes mostly within transportations and it’s really a question of timing. Effectively there has been high level of orders, in fact exceptional high level of orders, but when you look at the details of those orders, a portion of it is in relation to service, where we don’t get advances and that’s very normal, there is a PPP where typically the level of cash is much more aligned with the spending.

And then there was one order that we signed like the last few days of the quarter, so the cash comes in with the NTP which is a Notice To Proceed which very often happens a month or two after. So it’s really a question of timing and we do anticipate throughout the free cash flow align with profitability, generally in line with profitability as we really have in any year.

And Pierre you expect that to be sort of again a big Q4 or do you think it will be better in Q2 and Q3?

It varies, it’s a question of the contract, but typically it’s Q4, yeah, where we have a strong quarter.

You’re talking about.

Free cash flow yeah, I think inflow yeah, they’re much more significant typically in the fourth quarter.

Thank you.

Good morning. I wanted to ask you about CSeries progress, the latest on campaigns demand for the aircraft as you continue to deliver results in flight tests.

Your latest thoughts on entry into service and then if you could comment, Pierre Alary on 31 million in write downs that you took in aerospace, what's in that number?

Well first of all in the CSeries flight test program is progressing well. We're 280 hours of test.

And we're still forecasting the entry into service in the second half of 2015. We're making very good progress on that and as far as the sales are concerned, I feel very confident about our 300 units before entry into service.

I repeat on that, that has been our strategy since the beginning that’s about the level of launch order that we want to have with the options and the rights, the commitments from customers besides the firm order, I think that’s the right level of if you want discounted launch orders that we want to have.

Okay. And on the $31 million?

On the $31 million that’s first of all the relation to a total inventory of $8.7 billion. And it is really mostly the normal components of inventory write down where we do take provision for obsolescence on fares that are now turning – and that’s very normal and a portion of it is in relation to the NRV on the CSeries that we’ve explained for a couple of quarters now.

So a portion of it is in relation to that and a good portion is in relation to the normal provision for obsolescence that we take very quarter.

Okay. And then Pierre on that $484 million in invest, the CapEx in and Aerospace I assume that has a lot to do with test articles and the early, beginning stages this year of the completion of developments, so how will that trend down within your CapEx guidance for the remainder of the year.

Will it be at the time of the seventh aircraft completion? How do we think about that?

It would be a very gradual. There’s a lot of manpower into that and into the testing [indiscernible] in the CSeries.

So, it’s going to be gradual to work from this quarter to the next and towards the end of the year.

Okay thank you.

For example the 10 aircraft that we need that are in production now, whether it’s [Indiscernible] CS300 and beginning of production these components are essentially made right now. So and they’re in advance stage of production.

That’s an example that we are not going to do that again before production.

Thank you.

Good morning.

Good morning, David

Just on the BT margins and the cash flow again just looking at the high inventory that you have and how that might be pushed out and such that free cash flows could recover throughout the year. How should we think about that the free cash flow throughout the year and also the progression of margin especially it’s related to some of the things that I think – you spoke about the investor day, like the SG&A reductions the implementations of the IP et cetera, so I'm just trying to think how it might look sequentially because we did see an improvement Q1 versus Q4, so I'm trying to gauge where we should think about that.

In terms of free cash flow the trend that we have where again we spend the first two quarters more so breakeven in the third and then the good cash inflow in the fourth quarter. So that’s basically what you should expect also in transportation this year, give or take a few $100 million or so per quarter.

And then in terms of profitability, we reaffirm our guidance of 6% profitably for the whole year being a 5% which in effectively we see through a sequential increase vis-a-vis the fourth quarter of last year. So you should expect improvement and more so towards the end of the year.

And these contracts that are kind of lingering with the execution issues, it sounds like there is a gradual progress on the margin side and as you gradually put in the SG&A reductions and implement the IT, is that kind of how we should look at it towards your long term targets or is it just going to be gradual progression over the next couple of years towards those EBIT margin targets?

It’s a gradual progression, but also this could be variation quarter-to-quarter depending on the amount of delivery we do on a certain contract. So for example if we are delivering more or advancing more we do cross contract accounting on the contract that get a lower margin you may get a variation quarter-to-quarter, but it is our target to gradually get to the 6% and then the 8.

Very good, thank you!

Thank you taking my question. I like to know if given the situation Alstom is in right now with respect to its rail business and strategic alliance with GE or perhaps Siemens.

What are your thoughts about consolidation and rail market or perhaps in the signaling market? Of course you announced an Australian acquisition this morning which you didn’t disclose the amount for it.

Can you disclose the amount and also maybe share some thoughts about the consolidation in the rail market? Thank you!

Like you pointed out, we made a very small acquisition, it’s a small company in Australia because we’re always looking for opportunities to add the rail – rail, but particularly a signaling portfolio. We're following of course with a lot of interest, the Alstom story this week, we see that GE seems to be taking over potentially the energy type so it leaves us with the question of that you would have, how what, how it allows Alstom look as a pure play transportation, but really at this point we're observing and we think we’ll face the same competitor.

Any kind of any bits on the RSS, this is said [ph] that you acquired any acquisition amount or revenue or margins or anything you can share on that please?

On the Australian acquisition is that what you’re asking?

Yes, yes RSS.

It’s very small in terms of revenue.

I mean the size of the acquisition such that at any given quarter you would [Indiscernible]. We – it’s more of a way, it’s like services, or we are adding to services or we are adding to signaling very maybe gradually but these are kind of small bolt on.

Yeah we saw good team with some bolt on products and it’s not significant right now in terms of revenue, but it adds to us some knowhow.

So it will certainly help you with 8% margin goal that you have basically right?

Yes it’s a good contributor to this margin.

Okay, thank you.

Hi, yes good morning everyone, just a quick clarification. On the employment workforce reduction can you give us an update on where you are in implementing that and kind of what we should from expenses going forward?

Thank you.

Of the 1700 we have announced at Aerospace we have downsized now by 1431 so there’s a little bit to go and then it will happen in the next couple of quarters, but essentially we're very advanced in these three organizations or down facing at Aerospace. At the transportation, we're making adjustments linked to 1BP to reduce our overall SG&A and this will happen gradually as the reorganization is taking place across Bombardier Transports.

Thank you!

Yeah just in terms of turboprop you signed some nice LOI conditional orders with China and Russia so what's your level of confidence to see those orders being firm up this year. Could you give us an update?

Well, there are two I think different situation in Russia, we have also in parallel are negotiating as you know an assembly with final assembly plants with Rotex [ph]. Our teams are very active in negotiation and negotiations are progressing.

Of course in parallel we're following the situation in Ukraine and as of today we're continuing to move forward to sign this assembly agreement, which of course will help in the overall orders in Russia. It will be supportive in the overall orders in Russia, and we will adjust if there's further sanction that appears given the situation.

And in China, we are in discussion to look at doing something similar, but it's more at the beginning. And I think we will see some activities in the short-term in China with the turboprops.

But we plan to be going further in China to be the turboprops.

Thank you.

Thank you.

Hi. Good morning.

This is actually [Christine Lelog] calling in for Ron this morning.

Hi, Christine.

Hello. You mentioned that you expect to have 300 aircraft orders for the CSeries and you've said this many times before entering the service.

How did you get for your target of 300 aircraft and what makes you confident that you're going to get there. And I guess how many active campaigns are you pursuing at this time?

Well, we're already at 203. We have the entry into services second half of 2015 and so we have quite a few very active campaigns, people that have been following the program since the beginning, and now are gaining more and more confidence with the airplane as the flight test is progressing.

So when I see the level of activity and I see where we are compared to the 300 target with 203, I feel very confident that we're going to get there. How did we get there?

It’s both an evaluation of the potential of the aircraft long term and how many launch order we wanted. So we set the target five years ago.

We need a certain amount of orders to cover the first few years of production. But again, these are launch orders, so I want to also make sure that we're able to sell the aircraft based on its value and its performance rather than just launch orders.

Great. And on a separate topic with business jets, can you talk about the customer interest for the G-7000 and 8000?

It's very strong. If you look how these two products are positioned compared to our main competitor, we really offer something that is quite superior to our competitors downstream.

If you want the same performance as the aircraft and a few hundred nautical miles more, you go for Global 7000. That's ten sheet longer, so much bigger cabin.

And if you wanted an aircraft that's similar in size to their offering, we get $1,000 miles more. So we have a very strong offering and the demand is very good.

Okay. Great.

Thank you.

Hi, good morning all and thanks for taking my question. I will stick to your one question rule and I was curious with respect to how you're seeing the competitive landscape on the commercial jet side generally speaking.

And we happen to notice one of your rivals. It looks like they're complaining to the World Trade Organization about Mitsubishi Heavy Industries.

I'm just kind of wondering what you're seeing. I'm wondering how often you have been seeing Mitsubishi show up in campaigns.

So I guess you're focusing on regional jets. It's a competitive market.

Most of the time we compete with Embraer that we know very well. But we also have to be conscious that there will be three other players, Mitsubishi being one of them.

And we do see them in campaigns periodically. Now, they've also announced quite a few times delays on their programs.

So they're I guess less present in the campaign than they were a couple of years ago. But I think it will be a good competitor.

And of course, we also have Sukhoi and the Chinese are playing in campaign so the regional market is very competitive mind.

Okay. I appreciate the color.

Thanks for that.

Thank you, Steve.

Yes, good morning. I'd like to ask about the aircraft order outlook by major product line.

And by that, I mean the business jets, the CRJs and the Q400s perhaps referencing what you expect for a book to bill by area in 2014.

I think we've given you guidance in terms of delivery, but no guidance in terms of book to bill. I can tell you there's a very active market in all the categories, good demand on the CSeries category.

RJ is a good potential in the U.S. still, but there are still a lot of needs to sales capacity in the U.S.

with some 60 passengers are getting replaced and turboprop says global market. And as you saw from last quarter, we have a lot of opportunities in turboprops and business aircraft's overall coming back stronger in the higher end than in the small ties.

And that's been the case for quite a few years and that's what we're continuing to see. Overall, we said that a book to bill above one, but that's the overall portfolio.

Okay. Thank you.

Thank you.

Thank you. Good morning.

Just looking at the Challenger 350, I guess entry into service you’ve indicated should be this summer. Just looking near term, whenever there's been sort of product changeover, there's been some short-term quarter-to-quarter variation.

Do you expect that we'll probably see something like that again in this changeover or -- I think this gives any indication of what the project kind of looks like?

It's going to be minimal. This program is looking very well and it's very good order backlog and that's been signed for quite some time.

So the transition would be quite smooth. Maybe in the effect of a few units, but nothing significant.

Okay. Thank you very much.

Thank you.

Thanks very much. My question is actually just clarification or follow up to some previous questions.

With regard to the free cash flow, if we look specifically at the transportation, I notice the booking of $8 billion of new orders. And then if I try to parse through what the deposits or the advances looks like for the quarter, if I look at the note on the working capital, I see only about $70 million.

And I wondered why so little in deposits, or how should we look at that?

Well, effectively, it's a sizeable level of new orders in the first quarter. There's a couple of element to look into it, a portion of it is service for which we don't get advances, regular payment as we foresee with the service, but there's no lump sum payment in any way.

One of those orders, the PPP where typically we don't get level of advances. It's more spread over at the contract.

And then there's a one order in time, a couple of days before the end of the quarter. So their cash came in in the following quarter.

And very sizeable order, the initial deposit is typically lower. So it's going to be a more spread over the duration of the contract.

You don't provide any detail of sort of the length of time of the contract will spread over in the case of some of those ones to do?

I mean it's contract by contract. It varies from contract to contract in all of our contract.

We've got more than 500 contracts on-going at any point in time. So on specific contract, when you look at it, you have to look at it globally, and that's why because of the mix of contracts typically over full year or over a number of quarters, the cash flow is in line with profitability because of the mix of the contracts.

So a specific contract doesn't help in terms of any given period. So it's really the overall picture that is important.

And the overall picture is that, generally, the free cash flow is in line with profitability over a number of quarters.

Okay. And just going back to the question about the (indiscernible) in the inventory on aerospace, if you look at the disclosure in the MD&A that shows the backlog in lump sum production relative to target, it looks like you're comfortably in the range for each of the business jet segments.

So why would you have so many aircraft that aren't associated with orders sitting in inventory?

Well, Pierre referred to timing. A good example is that we have OD-3 delivery of business aircraft and our guidance is 200.

So production is typically even from quarter to quarter. So if you put it just base on guidance of 200, that means we produce 50 aircraft.

We'll deliver 43 that's already there, seven aircraft additional in inventory. So it's a really question that the delivery is typically skewed towards the end of the year, but production is even during the year.

And when you look at the amount of months of backlog compared to our targets, you’ve got to be careful some -- we have also some fleet orders which I think is very good for overall long-term stability. But some of the orders are spread over several years.

So nothing -- they cannot necessarily all be delivered immediately. So it's a question of timing, like we said.

And I feel confident that we (indiscernible).

I understand, but if it's a question of timing here then you build the jet in Q1. You could deliver it in Q2, then it would be associate with an order in your disclosure.

If it's a white tail, it's not associated with an order and we will get a customer on this aircraft in the next couple of quarters.

Okay. And for example, on the smaller family, we're basically selling as we build and so on.

There's a question of timing there. And that has been the case in the end of 2008.

Are there any concerns with the Learjet 40 and 45 from the previous quarter?

You need the Learjet 70, 75. It's an airplane that we have to demonstrate to see all the improvements we've made from the 40, 45, and that's what we're doing very actively right now.

And the customers' response has been great.

Okay. Thank you.

Thank you, Tony.

Yeah, hey. Good morning.

Thanks. Just a follow up on the BT gross margin, is that all due to the contractual issues that you had on those handful of contracts over the years?

Can you address just specifically on that? Thanks.

When we compare it year-over-year, there's effectively the depreciation on certain contract as compared to last year where we were at 6.7% and 5%. But that’s one element.

The other element is also in relation to our share, the income and joint venture, which is lower quarter-over-quarter.

Okay. Thanks.

Thanks very much. Two quick follow-ups here, Pierre Alary, just to follow up on the comment that you just made.

The JVs in China, if we look at what the contribution was last year and where that's gone, is that going to make a positive contribution as you're going from 5% in Q1 to a full year margin of 6%?

Well, if you look at the JVs, the income on JVs like the profitability where we do two or three contracts. So to me I look at the overall profitability.

That's one of the components. And it varies according to the execution or the timing on those contracts.

And each of the JVs, we have field four contracts. And again, with the overall BT we have more than 500.

So just a question of how it is presented and the financial that we see specifically those two -- the effect of those two or three contracts. So it's going to vary.

It could vary a lot because when we get towards the end of the contract, then the revenue comes down but the revenue is not shown if it's toward the profit. And when the profit comes down and then when we ramp up, it's the contrary.

So it's quite typical that the profitability on one specific contract could vary a lot from quarter to quarter in terms of absolute value, not necessarily in percentage, but absolute value. So as we report specifically, it shows variation but it should be looked at in the overall context.

Right. But I mean I assume that one of the ways that you're going to get from a 5% margin in Q1 to something about 6% for the remaining on-going to the year, it's from a larger contribution from JVs and that kind of play a role in that.

Is that correct?

It's going to play a role, but like any of your contracts, play a role and the overall profitability of business.

All right. Okay.

And then last one, just on moving back in air investment we had the nice step down in Q1 mostly driven by CSeries and the increase in the business jet program around the same page, it’s been running recently. What's the trajectory of business jet investment?

Is that at a peak level? If so, how long does it stay at that peak before it's trying to come down?

Well, at some point, we should expect the five to come down, the investment on the (indiscernible) to come down. But on the other side, we should see a ramp up and the global.

So overall, we should anticipate that the trajectory in the overall business aircraft which combine those two should be trending higher.

And roughly the same rate, it's been trending higher for the past few quarters?

Well, I guess it's moving in each of the various programs that we're having and the overall is going to trend as we've guided to be 1.6 to 1.9, and then lower the following year and then that will be lower [ph] billion in 2016.

And as we ramp up the Global 7000 and 8000, we have received the investment but this is a program also that's got a different cash profile than the typical commercial program for a small business jet, as advance levels are better in the upper end of the business aircraft.

Okay. Great.

Thanks very much.

Hi. Sorry, this is Christine.

We log again with a follow up question. So when we look at Bombardier aerospace, the business jet book to bill in the quarter, it was over one which kind of suggests that the market is maybe improving for business jets.

So can you talk about the pricing environment for the different product portfolios for the price environment for Learjet versus Challenger versus the Global Platform compared to a year ago? And if the market continues to improve, how should we think about incremental operating margins for these programs?

Well, we see a modest improvement with pricing, particularly in larger business aircraft. It is still a challenge in the market.

It's smaller aircraft and at the same time, we're changing in the Challenger 300 to the Challenger 350, which has additional features. So there's a product where pricing is getting better because of product improvement and market.

So overall, I think what you have to consider is a modest price improvement as the market comes back.

And the incremental operating margins?

If pricing improves, our costs are quite stable. So that would be direct improvement in profitability.

In line with achieving our target of 5% EBIT for this year, I would say.

Great. Thank you.

Thank you Christine.

Yes, just two quick follow-ups. First Pierre Alary, could you comment on the tax rate for the remainder of the year?

The tax rate, we should expect the tax rate to be 25% to 30%, closer to the 30% than 25…

Okay, that's very helpful, thank you. And then just on the CRJ 1000, the production rate has been pretty low for quite a long time including Q1.

But the backlog is fairly high. I was wondering if you could give some insight into what's going on and whether that would change, the production rate would change at some point?

Right now it's a mix of the three products for us between the 700, 900 and 1000 and we’re quite flexible on how to approach this, it’s a very similar product. As far as the backlog there is -- a good amount of this backlog is to Aero Nordstrom and they have been transitioning from their 50 passenger jets to a larger jet the 1000 and I see that as a good potential for us and as this aircraft gets better known I and I think we can see opportunity, we still have airlines like Garuda that operate this airplane and have options.

So I think there's a good potential, but we need to work on selling this platform based on its reputation, which is great at this point with the airline.

Okay, thank you.

Hi, thank you for taking the question. I just had a question about with Farnborough, the Farnborough Air Show coming up.

Do you plan to bring any models of the C-series to the air show?

The plan of Farnborough is not finalized, but the priority for the C-series is the flight test program.

Thank you.

Yes, thank you very much. I guess my -- I had two quick ones here, first of all on the debt deal, the recent one Pierre.

In fact the additional debt you took on. I've seen you're going to capitalize the interest.

Can you tell us if that's going to go to the C-series mainly?

The capitalization on the interest is, or the calculation is being done on the investment, not necessarily on the debt side. So the fact that we've took $500 million additional liquidity and before that on the other side has no impact on the calculations per say.

Okay, so that's on the income statement or not?

It will flow through the income statement, yes.

Okay, and then I guess the next one just quickly on white tails. Could you give us, I wonder if you would tell us if those are, which type of plane those are?

It's mostly business aircraft.

Yeah, but if I look at the numbers it seems like they're like higher in business aircraft, correct? Like on a quarter, from Q4 to Q1 up $185 million of inventory, on I guess five or six aircraft, correct?

Well there is change in mix from the quarter to quarter. Typically it's not the same, the same white tail if you like, so it's rolling.

So we can roll model as a higher selling price and another one. So it does have an impact on the -- you can adjust and look at the incremental dollars and incremental number of units.

The mix has changed from quarter to quarter.

Okay, thank you very much.

Thank you for taking my question. I do have a follow-up on CSeries Flight test.

You mentioned in your press release that you've reached maximum flight level and maximum speed on the envelope. I was wondering if you could tell us what the significance of this is in terms of flight test program and what other milestones are important that investors can watch for.

You know I thought of your closing reporting. So for example of the follow-up on the Farnborough question, how important is that as an indicator really on the progress of the flight test, whether or not the aircraft appears at the air show?

And I have a follow-up on CSeries, if I may.

Well you know if you look at the CSeries, I think the best way to see the progress with the reports that we gave and the amount of hours that we sold. We looked at it from an earned value perspective.

So the earning value when we slide and we are on target for delivery of second half of 2016. Getting to the full flight on local is important because they permit us to make a moderate progress in terms of the capacity of all the flight vehicles to do every test that's on the list.

Before we were limited given that we did have the full flight envelope. Farnborough is an air show of our flight tests, so one is not related to the other.

Okay, thank you and then a follow-up. You know I notice the investment working capital spend in the quarter.

I don't know if this question was asked earlier. I'm wondering if this has to do with progress on production for the first feature production aircraft.

Maybe you can give us an update on that and working capital expectations related to first production CSeries Aircraft, thank you.

I didn't get your question. I am sorry.

It looked to me that the investment on working capital was quite high in the quarter. Specifically it happens in Q1, but it seems quite high.

I'm wondering if it's related to the beginning of production for CSeries aircraft that will go to customers and if you can give us an update on the progress for the production for CSeries, the production line?

Well the change in working capital was and for the first quarter was and specific to aerospace was $220 million and compared to $124 million last year. So it's a $100 million variance and you know the $100 million in any given point is not significant.

But for CSeries is going to be very gradual and you know we're starting the production and it's going to be very-very gradual and towards the first year of delivery it will be up to 30 units for the first full year delivery and we're more than a year from that. So it's really a very gradual ramp-up.

So for CSeries we have ten aircrafts in production, when we build ten aircraft [indiscernible] plus a couple for production. Before we ramp up anything else for production per say, this would be more towards the end of the year or the beginning next year to be ready for the second half of 2015.

Okay, thank you. That's very helpful.

I'll pass on.

Okay operator, we will now begin the question series for media representatives. Well thank you all the analysts who are still on the line.

Please give us a call and we'll give you a call back. Thank you.

Well good morning. It's [indiscernible] in Germany.

I want to follow-up with the Alstom issue that was briefly discussed and how close are you following these events or discussions in Europe and could you think about bidding for Alstom if they only keep the transportation unit and sell the rest to GE?

Well we're following the -- what's happening to Alstom with a lot of interest because it is one of our main competitors. So we're making sure that we're kept aware through the media where for none.

But that's about it and we look at this transaction with interest as a competitor.

May I add one?

Yes.

So no more comment on whether you might think about joining this bidding discussion in Europe?

We have no comments on this.

Hi. We’re just wondering if it wouldn’t be possible to detail why the investment was so high during the quarter in terms of the cash usage.

And can you explain why it tends to vague throughout the course of the year?

Well. The investment is quite at the normal level.

It’s higher from versus last year but is quite typical than the first two quarters that the cash flow profile is subsided [ph]. The cash flow was negative in the first two quarters very virtually neutral in the third quarter and it’s a good cash flow before fourth, which is in relation to the way the deliveries are spread, the way the payment profile with the various customers are set up accordingly to the various constraints that we have, and that’s a trend that we experienced every year.

Okay. Thank you.

At this time, we have no further questions. I would like to give the forward to Ms.

Chenier.

Thank you, operator.

[Foreign language].

[Foreign language]. (2:20)

Thank you very much for your presence today. Have a great day.