(Reuters) - Canada's Bombardier reported a 43% increase in quarterly adjusted profit on Thursday and used less free cash, helped by a recovery in business aviation, as rising COVID-19 vaccinations encourage travel.
It expects improved revenue this year from business aircraft activities over 2020 as the vaccination roll-out in the United States, the world's largest market for corporate aircraft, boosts travel demand.
Chief Executive Éric Martel told analysts that aircraft pricing would be in line with what was expected or even slightly better. A rebound in U.S. business aviation traffic to pre-pandemic levels is expected to help boost growth in higher-margin aftermarket services.
Bombardier also disclosed it had been contacted by the U.S. Department of Justice over decade-old airplane deals in Indonesia, widening a separate British corruption probe.
Montreal-based Bombardier has emerged as a pure-play business jet maker after divesting assets, including its rail business to Alstom (PA:ALSO) in January, to pay down debt.
Bombardier previously announced early results on Monday after contesting a bondholder's claims that its recent sales of non-core assets breach the terms of certain notes.
Free cash flow usage, a metric closely watched by investors, improved by $357 million year-over-year, Bombardier said.
“Our objective is to sequentially improve free cash flow over the next three quarters,” said Bombardier Chief Financial Officer Bart Demosky.
Bombardier said its first quarter book-to-bill, which measures orders to deliveries, was greater than 1.0 on strong sales activity, which is expected to continue into the second quarter.
Bombardier's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to $123 million in the first quarter, from $86 million a year earlier.
It remains on track to deliver between 110 and 120 business aircraft in 2021 after full-year deliveries fell 20% to 114 jets in 2020.
Business jet revenue increased by 18% to $1.3 billion in the quarter.