Bombardier Defense: The Domino Effect Nobody Is Pricing Correctly

Few companies at this summit carry a more instructive recent history than Bombardier. A decade ago the company was near bankruptcy, weighed down by the CSeries program and a debt-to-EBITDA ratio of 41.5x. Today it is a fundamentally different business. CEO Éric Martel took the helm in April 2020 at the company's lowest point and executed one of the most disciplined corporate turnarounds in Canadian aerospace history. Every non-core asset is gone: commercial aviation sold to Mitsubishi, the C Series handed to Airbus, rail transferred to Alstom. What remains is a pure-play business aviation company with a high-margin services franchise and a defence arm that is growing faster than any other part of the business.

The debt reduction story is the foundation of everything else. Bombardier reduced its total debt by $4.9 billion between December 2020 and December 2024, bringing the net debt-to-EBITDA ratio from 41.5x down to 2.9x - a 93% improvement in four years. By year-end 2025 that ratio had dropped further to 1.9x. Moody's upgraded Bombardier's credit rating from B2 to B1 in May 2024. S&P followed in June 2024. The company that was discussing bankruptcy in 2015 is now generating over $1 billion in free cash flow annually and growing its backlog faster than it can deliver aircraft.

In conversations with industry stakeholders, Martel has articulated a thesis that the financial press has consistently undervalued: defence spending is a domino effect. When the United States signals, explicitly or through political pressure, that it will no longer serve as the unconditional security guarantor for its allies, every country in that alliance is forced to make a decision. Spend on your own defence, or accept a level of strategic dependency that both electorates and treasuries are increasingly unwilling to tolerate. That decision, multiplied across 32 NATO members and dozens of non-NATO partners, is the largest single expansion of defence procurement in a generation. And it is happening now, not in a forecast, but in actual budget decisions already passed and signed.

The 20% single-year increase in European and Canadian defence spending is the fastest rate of growth since the Cold War. It is not a forecast. It is a 2025 actual. For the first time in NATO history, all 32 member states simultaneously met or exceeded the 2% GDP baseline. The political trajectory is contractually committed to 5% by 2035. That commitment, translated into procurement, represents trillions in new orders for defence aviation, special mission aircraft, government transport, and military services over the next decade. Every percentage point increase in European defence spending translates directly into orders for the category of aircraft Bombardier specialises in.

This is where the market consistently misprices Bombardier's defence exposure. The company does not manufacture fighter jets or naval vessels. What it manufactures are platforms - the Global 6500, Global 7500, Global 8000, Challenger 350, and Challenger 650 - that in military and government configuration become something fundamentally different from a luxury aircraft.

A single Global 6500 in defence configuration can serve as a VIP and head-of-state transport carrying a foreign minister to summit negotiations, an Intelligence, Surveillance and Reconnaissance platform conducting maritime patrol over contested waters, a medevac aircraft evacuating casualties from a conflict zone, a humanitarian supply delivery vehicle dropping medical aid into a disaster area, or a special mission carrier supporting signals intelligence operations.

These are not pilot programs. These are decade-long contractual relationships with sovereign military customers across NATO's core membership. The service agreements compound in value over time as the in-service fleet grows and ages into prime maintenance and modification windows. Services revenue grew 25% year over year in Q1 2026 to $617 million, and that number will continue to scale as every government aircraft delivered today becomes a long-term service contract tomorrow.

The competitive narrative between Bombardier and Gulfstream is frequently reduced to a billings comparison that Gulfstream currently leads. The fuller picture is more instructive.

Gulfstream leads on current billings. Bombardier leads on backlog and order velocity by a significant margin. A $20.3 billion backlog versus $15.5 billion, combined with a 3.6x book-to-bill versus 1.2x, means Bombardier is accumulating future revenue at a rate the current billings gap does not reflect. Gulfstream's defence exposure is embedded within General Dynamics, a $60 billion-plus defence conglomerate where aviation is one division among many. Bombardier Defense is the primary growth vector of an independent pure-play company, meaning every defence dollar flows directly to the equity thesis without being diluted across ship systems, land vehicles, or IT services contracts.

The product quality argument also deserves examination. The Global 8000 became the fastest civil aircraft since the Concorde, reaching Mach 0.95 in certification and achieving the lowest cabin altitude in business aviation at 2,691 feet. These are not marketing claims. They are certified performance milestones that no competitor currently matches in the ultra-long-range category.

On September 8, 2026, President Trump posted: "NO MORE SELLING BOMBARDIER IN THE UNITED STATES! Their products aren't good enough!" He threatened 50% tariffs on Canadian-built aircraft. Bombardier's stock dropped 6.5% in a single session.

The threat contains a structural contradiction that Martel identified and responded to immediately. Bombardier employs over 3,500 workers directly in the United States across facilities in Kansas, Texas, Arizona, Florida, Connecticut, Illinois, Delaware, California, and Washington D.C. Its aircraft are built with American engines, American avionics, and American-made components throughout the supply chain. Seven of the nine largest US business aviation operators by flight hours fly Bombardier platforms. There are 5,425 Canadian-made aircraft currently in service registered in the US, operated by 115 operators across airlines, fractional ownership programs, and government customers. American Airlines and Delta Air Lines rely on Canadian-built aircraft for domestic route coverage.

“The presence of Bombardier in Wichita supports a local workforce of more than a thousand employees, who contribute their talent and expertise to our nation's defense and aerospace capabilities.”

Republican Senator Roger Marshall of Kansas

Bombardier's response to the threat was precise: it announced 500 net new US job openings, including a new service centre in Fort Wayne, Indiana, even as the tariff threat was still active.

The investment case for Bombardier at this summit is not complicated. It is a company that completed its turnaround, eliminated $5 billion in debt, built a $20 billion backlog, grew its defence business to $1 billion five years ahead of plan, and is now entering the largest sustained global defence procurement cycle since the Cold War with the only NATO-aligned pure-play business aviation platform that has proven military derivatives, decade-long service contracts, and sovereign government customers already signed.

The domino effect Martel described is not a forecast. The dominoes are falling. European defence budgets are rising 20% annually. NATO's 5% GDP commitment is contractual. Mid-sized military operators need multi-mission aircraft that one platform can serve without buying four separate fleets. Bombardier builds that platform. Under Martel's leadership the company has gone from selling assets to survive to having the balance sheet, backlog, and product range to grow into the market the geopolitical moment is creating.

Numbers tell part of the story. The other part is harder to quantify but impossible to ignore for anyone who has been close to the company. Éric Martel is not a CEO who manages Bombardier from a boardroom. He walks the assembly line. He shows up on the floor in Dorval and Wichita and asks the people building the aircraft what they need. In an industry where executive leadership often becomes detached from the physical reality of manufacturing, that discipline - staying connected to the product, to the process, to the people executing the plan - is rarer than it should be and more consequential than most financial models account for.

The turnaround Bombardier executed between 2020 and 2025 required more than a good strategy. It required a culture that believed the company could survive, then recover, then grow. That belief does not come from investor presentations. It comes from a leader who is visibly present, genuinely accountable, and humble enough to understand that the people assembling the aircraft are as important to the outcome as the people pricing the contracts. Martel has built that culture at Bombardier. The backlog, the credit upgrades, the defence milestones, and the free cash flow are the measurable results. The less measurable result is a workforce that ranked Bombardier a worldwide industry-leading 80% employee engagement score since 2024 - a number that does not happen in a company where leadership is distant or performative.