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Hello everyone. My name is David Simmons. I'm president of the Canadian Club Toronto and I'm your host for today's event. We're very happy to welcome a physically distanced, fully vaccinated group of Canadians to our third in-person event in our 125th season. And what a room it is that we have gathered here. We have cabinet ministers, we have mayors, we have city councilors, deputy ministers, councils general from all around the world here to hear from two great leaders in our transportation business. Thank you for being here today. We're delighted also to welcome hundreds of guests online joining us virtually to partake in this conversation. We appreciate you taking the time to be here as well. As you watch today's event, please engage with us on social media. Hashtags are appearing on your screen if you're online. They're also on your table if you would like to look at the Q&A cards. You're about to learn more about how Bombardier is redefining its mission and vision and what role Ontario is going to play in driving the company forward. Ontarians have a lot to be excited about today. Many great insights will be shared during the fireside chat. I'm sure many of you will have questions. If you're in the room, you can note them on the Q&A cards on your table. We'll collect them during the address and share them with the moderator. For those of you joining remotely, we invite you to hit the submit a question button on the right side of your screen. It's been a while. Questions will be shared with the moderator. Let me acknowledge today's sponsor, TD. We appreciate your generous support. Without the support of you and sponsors like you, the Canadian Club would not be able to exist. Robust conversations happen because of your commitment to us. So, thank you. And please join me in welcoming Mr. Bob Durant, executive chair at TD Securities, to formally introduce our speakers. Welcome, Bob.
Thank you, David. I too can do screen. So, this will be brief. And just so there I'm introducing both Eric and Deborah. So, we'll do Eric first because he's going to be speaking and then Deborah and Eric are doing a Q&A session. So, welcome all to the Canadian Club Toronto. It's great that everybody is here and David's very enthusiastic about how we continue to do this and that's good. I'm very happy to be able to introduce Eric Martel, president and CEO of Bombardier and Deborah Flint, president and CEO of the Greater Toronto Airport Authority. I've had the pleasure of meeting Eric when he joined Hydro Quebec in 2015. I watched and as did everybody certainly a few who were in the province of Quebec but probably outside the province of Quebec as well as he provided very strong leadership to that organization and laid the foundation for Hydro Quebec's fairly exciting announcement more recently in New York and in New England. Eric joined Bombardier in March of 2020 or maybe April. He was telling me same day the World Health Organization declared the global pandemic, same day that Premier Legault announced that they were doing a shutdown in Quebec. So there I don't think there was no correlation Eric, just one of those timing things. But he has extensive experience in engineering aerospace and history with Bombardier. Came from Bombardier to Hydro Quebec. So after five years at Hydro Quebec, he's returning to his roots and I think that's been very critical. He's been working on refocusing the company, building the company, and laying the strategy out for future growth. And I'll leave that up to Eric to talk about. I know we're looking forward to hearing the Bombardier story Eric, your transition to a total aviation focused company, both building and service with a vision for the future. So, bienvenue merci. That's my equivalent of queen. And we're equally pleased to have Deborah Flint here as well, president and CEO, as I mentioned, of the GTA. Her leadership began as well at the GTA at the beginning of the pandemic. She has led Pearson admirably during this period, which has been very difficult and Pearson or the airport has overall been awarded the healthy airport program, won an award I should say. Prior to this she was the CEO of Los Angeles World Airports, 24 years of experience serving in executive roles in the aviation industry. She served on the board of the Federal Reserve Bank and is a director of the Honeywell Corporation. So, please join me in warmly welcoming Eric and Deborah.
So, good afternoon everyone. My colleague and I are delighted to have you with us today. As it's been a long time due probably that a CEO of Bombardier came here to Toronto to talk about the business. Actually, we're trying to go back in history. That's probably 15 years or more. But we're delighted because we do have a very strong presence here. Our facility has about 2,000 people in Down View today and as you know, we're moving to the Pearson airport sometime in 2023. Actually this morning, we'll talk about it later. We were on the site witnessing the construction that is progressing extremely well. Before I get started I'll play a small video which basically pictured the Global 7500 which we are actually building here. And the Global 7500 we have to be altogether very proud. This is the flagship airplane not just of Bombardier but this is also the flagship airplane of the entire business aviation industry. This is the airplane that goes further, higher, faster than any other airplane. It is a four zone cabin. So I'll show you the video and then we'll definitely get through the presentation.
Good. Thank you. We should all be very proud. As I said, we're building this airplane here in Canada. And I always like to say that there's probably five countries in the world that can build an airplane from A to Z. There's not that many. And we are one of them. And also, if you're interested to buy one, we can take order right after launch. Good. So I think it's important you know we did a major restructuring at Bombardier during the pandemic and I think everybody were focused on their TV watching the different stats. So maybe we thought it was a good thing to refresh everybody's memory in terms of where we are today. But Bombardier today is a leading company purely in business jet aviation, a pure play. We don't manufacture airplanes anymore for airlines like we used to. We're not in the train business anymore. So if there's issue here in Toronto about the train, don't call me. I cannot do anything anymore. And we have a fully refreshed portfolio going into right now. So we have this airplane that we just talked about. We have announced a month ago our new Challenger 3500. We still have 13,000 people in our company today. 2,000 of them are here in the greater Toronto. But also we always like to say that probably for every one of our employees there's an employee at one of our suppliers. So probably the impact of being present here is about 4,000 jobs and as you know they are well-paid jobs. We have also 5,000 business jets flying everywhere in the world. So we show our product not just in Canada, in the US, of course, we show our product everywhere. If you go to Africa, if you go to any country in the world, you will see where we stand. We're a company of about 5.6 billion US dollars because our numbers are in US. And we're growing to 7.5 billion. And I'll get back to that in US also by 2025 and with the ambition of having an EBITDA at 20%. Just maybe rapidly these are the results we announced last week. This was our third quarter. So as you can see our revenue have grown from 1.2 billion to 1.4 billion. We're taking out 0.2 here because this is business we don't have anymore. But the most important piece is the EBITDA. So our profitability went from 84 to 142 million which is about 9.8% and our ambition is to grow this to 20 by 2025. But also our free cash flow usage. This was a big challenge for a company our balance sheet and we've addressed it. We've paid down $3 billion of debt since the beginning of the year and we have clear goals over the next few years but we as a company are generating cash now. So this is something that we were probably already planning to happen more next year but I can probably claim right now we're ahead of plan. So first we've been executing our plan perfectly. I have to say my team has done an amazing job and also right now we are getting tailwind from the market. A lot of people today that cannot fly a segment because an airline has canceled a segment or they want to fly more safely they are trying and enjoying actually flying on a business jet which leaves at the time the moment you want, you're going to be with your family alone safer. So clearly we've seen a lot of people. Fleet operators like which is a lot of our customers are fleet operators like NetJets that Warren Buffett owns. It is an airline. They have 550 business jets flying all around the world. They're just one example. We have three big customers that are in that similar situation. But they've seen their customer list growing by 35 to 40%. Because people are now adapting this new model of traveling with a business jet. So interesting picture in good timing for us as we were basically restructuring our company. We still have a global presence. I won't go through all of them but we are significantly growing also our service business to achieve our 7.5 billion of revenue by 25. We're going to grow the service business which is a very lucrative business for us from 1.2 billion to 2 billion US. So you can see here we have a spread. We have a presence on all continents. We have facilities and we're building in our service business today new facilities. We are actually now finishing the building of a huge service center of about 400,000 to 500,000 square feet in London. We have one building in Australia. We have actually quadrupling the space we have in Fort Lauderdale in Florida. So a stronger presence clearly all around the world and this is happening as we speak. Actually also the one in Singapore is quadrupling. So I was there when we started that facility in 2011 and 12 and today it's been very successful and I know that there's some people from Singapore here today but we've been building and growing that facility quite significantly. So one question that I get all the time is okay Bombardier is doing business yet but who is your competitor? Who are your competitors? If you look at the first nine months of this year and you look at the market share of the deliveries. So Bombardier delivered 25% of the airplanes this year in the market that we're competing in. Gulfstream delivered 24, Textron 23, Embraer 16. And then you see the others even Dassault which used to be a big competitor is only 4%. But I think also one of the reasons why we did and we've announced last year in our restructuring that we were not going to produce the Learjet family anymore. So we're winding down that production line in Wichita. And the reason is that the medium and large segment represent 90% of the revenue of the whole business aircraft world. So if you look at it by revenue and not by deliveries, you look at Bombardier, we're 39% and Gulfstream 37%. So between us and Gulfstream, we are the two dominating players. We're pretty much 75 to 80% of the whole business aircraft market with the medium and large segment. So we're in a unique position. We are with Gulfstream the two biggest players out there in business jets and we have an amazing product portfolio to be able to compete and this year clearly we've been revamping our backlog. We've been filling backlog which was a problem for the last five years but clearly over the last years we've been in a position to have quite extensive backlog which brings stability and visibility on our business. And if you look at the in-service fleet, the pie chart to the right clearly our fleet is about 5,000 airplanes which is about 31% of all the airplanes flying in the medium and large segment. And again you see those circles I won't get into all detail here but Bombardier in terms of presence we're everywhere in the world and you can see that we're either number one or number two. So if you look at North America clearly this is Gulfstream's biggest competitor but we have 32% of the fleet and our competitor has about 34%. So we're number two but this is US territory where the biggest market is and Gulfstream is in the US. And we're only 2% behind them in North America. If you look at Europe we're number two also and this is Dassault territory of course. So they have 34% we have 33%. So despite that we're not European and we're not American we've been very very close in those two big markets and then if you look around the world Russia, Latin America, Africa, Middle East and Asia Pacific we're number one. So a very strong presence of being number one or number two all around the world and representing our country. This is our plan basically in numbers and this is where we want to bring this company and our plan right now as I mentioned is we're actually a bit ahead not to a point where we will think about changing target because the target the market can also change but we are feeling very confident that we can achieve our business growing from 5.6 to 7.5 billion and look also at the spread of revenue. Our service business which is about 18% of revenue today will grow to 27%. And this is a very resilient business even if there is a downturn or something. We will have a business that still generates revenue and profit. You see our EBITDA this year we guided for something a bit more than 575. We're clearly in a good position to achieve better than that, but we're targeting 1.5 billion by 2025 and all the actions and the game plan to achieve that is actually delivering right now. I think one thing that we need to position our company extremely well and last week we published our first ESG plan. And we have clear goals, and they're not like in 2060, they're in 2025. So most of us will be around to witness us achieving this and we feel pretty comfortable. We want to reduce our greenhouse gas emissions by 25% as a company. Actually, the new site we're going to have here in Toronto is reducing greenhouse gas emissions by 50%. So moving from the actual site to the new site will give us 50% reduction in greenhouse gas emissions. We want to reduce lost time accidents for our people. We want to have more women in management. Today we're at about 24%. We want to be greater than 30. So we're definitely working hard and I have Dan Brennan here our VP HR supporting and leading us through that. And of course employee engagement. Employee engagement was difficult at Bombardier. We've been through some tough years and clearly if you want to be successful, you need motivated people, people that are engaged and I always say that the 13,000 people that we have, if they are well informed and feel good about the company, they're the best ambassadors that we can have out there to talk about our company. So this is a bit the game plan for the next 10 years. Clearly the job that we have also I mentioned that 2,000 jobs here in Toronto are usually very well paid, 85,000 on average is the salary our people are getting. So our investment in R&D also over the last few years have been massive and when our industry develops a program, a new program which we will eventually do, there's nothing announced right now but eventually we'll need to develop new airplanes. Those are substantial investments that need support but we are working and thinking about this, assessing what our competitors are doing but eventually we'll get there and we've patented since 2010 almost 300 new inventions that belong to us. If you look at the new Pearson facility, so this is first of all, we're extremely proud. This is a Bombardier funded project 100%. This is a $400 or if you prefer $500 million Canadian for a new state-of-the-art facility. We're going to be producing all the Global product, what we call the green airplane. And then the interior finishing is done in a completion center in Montreal. This is 42 acres of lease at the Pearson facility and this is long-term. So our commitment today to this community is not just for the next 5 years. This is we have a lease until 2056. So we'll be around for a long time and with the jobs that of course it brings with it. And clearly just our annual spend on material from this facility is about $2.5 billion US every year. So that's quite substantial in terms of and the 2,000 jobs I already talked about that. So that's what it is. And on the sustainability actually I mentioned the lower GHG emission by more than half. This is going to be reducing water use. This is going to be 10% reduction in lighting cost. So there's a lot of benefit of this new facility that we're going to be bringing forward. So let me play I think it's the next one is the video. So if I'm not mistaken, this is a video of our Challenger 3500 that we just announced.
So this airplane that we call the Challenger 3500 is a derivative of an airplane that was initially called the Challenger 350 and developed in the early 2000s but this is also something very important for Bombardier to be able to refresh its product line on a regular basis. So we are famously renowned for having the best interior. And I always like to tell my team the interior is the most important thing because the guy that buys the airplane is sitting in the back most of the time. Some are pilots, but it's a minority. So the interior on this one is amazing. And we got a good response. We launched it I think it was September 15, 14, something like that. We were at the Las Vegas Air Show a couple of weeks ago and that airplane actually is selling extremely well since we launched it in September. So we're in a good place. So thanks for listening to me. Now I'm going to go and answer the difficult questions that Deborah has for me.
Yes. When am I getting a ride on that new Challenger? It looks fantastic. Welcome. Thanks. It's great to see everyone here. You know, with Eric, I feel like we're a dynamic duo, Eric. It you know what we represent when we think about it. Very few countries can boast in the way that you just have. Number one, the ability to fully manufacture aircraft within a country. And then of course for team GTA and Pearson airport, very few countries have an airport that is one of the top gateways to their continent. So you know we have something that really is the envy of cities and countries around and I think Mayor Crombie also is the envy of many mayors because of the way she has championed aerospace in Mississauga. So we have a lot to be proud of as we sit here this afternoon. We know that the intersection of the jobs that are created, the reputation and the legacy that aviation has really strengthens economies. So we also know that's very competitive out there. At Toronto Pearson we're very focused on creating the airport of the future. So I'm interested to hear from you Eric, what does the future of the aerospace industry look like?
I think our industry is clearly under transformation right now. I don't know if we're going to go back to what it used to be. I doubt it. You know, our industry like just if I speak about Bombardier, we're a pure play business aircraft company today. We clearly see this capability for us to grow significantly. You know I was talking about the fleet operators today that manage that. But I think our industry is going to be different. I think it's good for us. Our presence here in Toronto. I think if the business aircraft market is still progressing now that we are going to be at the Pearson airport, I think this is going to bring traffic. This is going to bring people. And it's not just about the jobs we bring, people in the hotels, pilots come in here to inspect the airplane and do different things. So I think it's important that we do realize as a nation though that we have an industry that is you know and we should not take it for granted because other countries are trying very hard and very capable countries, not to mention Japan, not to mention China, they've been trying for years to build an airplane and I need to mention Russia too, but it's been challenging. So we can do it from A to Z. This is a skill set that we have in this country, this capability. So we should definitely make sure we preserve it as I think the demand overall will continue to grow as there's more people. So they'll be but I think people will expect a different experience at some point and I think we have to be mindful of that. We have to always tell my team the most important thing is to listen to the customer. What do they want? What do they anticipate? It's interesting amongst a group of experts to have the conversation but what are they looking for? And I think our industry, private aviation, brings a new way of traveling, more on time, more choice, more flexibility, and clearly a safer way to travel if you travel with your families.
You mentioned that Bombardier is making this investment into the facilities here, 500 million Canadian dollars. So how do you think about the ecosystem and what it needs to do to support that investment paying off by spades? We know that government doesn't always need to come to the table with money, right? There are other ways that governments can support. What have you seen elsewhere around the world that has provided that competitive advantage that you would like to see happen here in Canada as well?
I think sometimes the entire system as you said around having schools. We're going to face a major challenge here. We're staying in the greater Toronto area but we have about 50% of our employees today that are 55 years old and up on the shop floor. So our plan right now is to work with the different local schools to get younger people to join this industry. So I think from a government point of view having their support to make sure that these schools exist, to make sure that we are promoting our industry within the schools so that we can attract people is very important. And I think we always have to watch what the other countries are doing. We want to make sure that our industry which is very unique again could be competitive. My main two competitors right now are Gulfstream and Dassault and if you look at the type of government support it takes different forms. Some of it is very much by military investment. So they can develop a new cockpit from a military application and just use it eventually to compete with us. We don't do that. I have to develop it, spend millions and hundreds of millions of dollars to do the same thing. And same thing with Dassault in France, they have a fighter division, they have the Falcon, but clearly their government is very supportive. Last year they sold 15 airplanes. The government purchased eight of them. So that's the industry we're in and last year was a bit of an exception clearly for the reasons we know. But I think it's important for our government to watch also what kind of support they're getting so that we are not in a weaker position to compete with these guys.
Well, and let's think about the next challenges right in front of us as an industry as well. Yesterday the United Nations conference on climate began, right? COP26. For us at Toronto Pearson, we've had a very strong history of investing in emission reduction programs at the airport and this is a very important change for the industry. You laid out some very lofty goals, ones that are very quick and they're demonstrable which is very important for the entire ecosystem. What do you see is necessary for the aviation sector to be not just perceived but to be actually cleaner and greener? What's the ecosystem? What's the support needed to make that transition?
