Standard & Poor's Upgrades Bombardier

Bombardier Inc. (BDRAD.PK) was upgraded by Standard & Poor’s Ratings Services Monday, placing it one level below investment grade.

The Montreal plane and train maker was upgraded to a “BB+” rating and was also removed from S&P’s “CreditWatch,” where it was placed on Dec. 3, 2007.

Greg Pau S&P’s credit analyst, said in a statement that:

Our rating action on Bombardier reflects the material improvement in its financial measures and liquidity, and management's focus on financial health and cost efficiency.

Earlier this month, Bombardier’s management said that achieving investment grade is an immediate priority, adding that it would focus its free cash in the near-term on doing so, including the $1-billion in long-term debt it paid off last year and the $826-million contribution to pension plan assets.

Those efforts combined with its substantial order books, its improved cash flow and increased geographic diversification contributed to the ratings upgrade, S&P said.

In a statement S & P said:

This, together with its improved financial flexibility, should place Bombardier in a better position to weather the next downturn in the cyclical aerospace and transportation industries and to support the capital spending required for its businesses.

S&P said it also looked into the potential financial impact the launch of its CSeries family of 110-to-130 seat jet would have on its balance sheet, and found Bombardier should be able to support the program with “a moderate degree of cost escalation or delays.”

The ratings service added that its ratings could be upgraded if the company improves its financial measures by further reducing debt and maintaining strong cash flow.