(MENAFN- AFP) Debt ratings firm Fitch downgraded Canadian planes and trains manufacturer Bombardier on Monday, citing delays in the launch of its new CSeries regional jets in a sluggish market.
Bombardier's BB+ rating was changed to BB, after the world's third largest manufacturer of commercial jets last week announced a six-month delay to launch its CSeries aircraft.
The smallest of its new narrow-body aircrafts, the CS100, was to be flight-tested in December, but that was pushed to the end of June, the company said, blaming the delay on key suppliers missing deliveries on time.
Fitch noted that Bombardier has spent heavily on developing the aircrafts to break into a market dominated by Boeing and Airbus, and while the production delays won't increase its costs, Bombardier may incur some penalties.
Bombardier also faces an uphill battle convincing major airlines to support less profitable regional air service. It currently has 138 firm orders for the CSeries, well below its target of 300 by the time the jets enter service.
"The level of new orders during the next 12-18 months will be important for the success of the aircraft and Bombardier's ability to develop a viable market for the aircraft," said Fitch in a statement.
Fitch said Bombardier's debt to profitability ratio, meanwhile, is approaching 4.5 times, up from 3.3 times at the end of 2011, due to $500 million in new debt issued in the first quarter and weaker earnings.
"Credit metrics may not improve significantly until the regional aircraft and business jet markets recover and Bombardier gets beyond its peak program expenditures," Fitch concluded.
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