Bombardier, Inc. (TSX:BBD.B) is losing altitude, and investors who missed the rally earlier this year are wondering if the pullback is an opportunity to buy.

Let’s take a look at the airplane and train maker to see if it deserves to be in your portfolio.

CSeries struggles

Bombardier’s woes are well known to Canadian investors, and most of the pain can be attributed to the company’s CSeries jet program.

Long delays and serious budget over runs have forced the company to rack up US$9 billion in debt. That’s a lot for a company that only has a market capitalization of less than US$3 billion.

The balance sheet is so overleveraged that Bombardier was forced to get US$2.5 billion in aid this year from the Quebec government and the province’s pension fund (CDPQ). The province now owns a 49.5% stake in the CSeries business, and the CDPQ has a 30% position in Bombardier Transport as a result of the cash infusions.

Are clearer skies ahead?

Bombardier is finally generating some revenue from the CSeries planes, and that should ease the negative cash flow problem.

Swiss International Airlines took delivery of two jets this summer, and, aside from a few minor glitches, the feedback on the performance of the new planes has been positive.

Analysts originally expected Bombardier to deliver a total of 15 CSeries jets by the end of 2016. This would have gone a long way to reassuring investors that the program is finally off the runway, but Bombardier just warned that it will only deliver seven CSeries planes this year due to delays at the company’s engine supplier.

As a result, the company says revenue will come in at the low end of 2016 guidance, and the market is wondering, once again, if the pain will continue through 2017.

Order book

Bombardier’s stock slipped below $1 per share back in February when investors decided the CSeries program was putting the company’s solvency at risk. Bombardier hadn’t received a new order since September 2014, and the outlook for the sector wasn’t great.

Things suddenly turned around on the announcement of deals from Air Canada, Air Baltic, and Delta Air Lines.

The three companies ordered a total of 127 new CSeries jets, pushing Bombardier’s order book above the 300 planes the company had targeted before the delivery of the first jet. The new deals also sent the stock surging back above $2 per share, where it pretty much stayed until the end of August.

In recent weeks, however, the stock has given back more than 20% of the gains.

What’s going on?

Investors might be concerned that Bombardier will have trouble selling additional planes.

The company took an “onerous” US$490 million charge in Q2 2016 related to the planes it sold in the first half of this year.

Analysts speculated that Bombardier dropped its price significantly to get the new deals, and that appears to be the case. One report suggests the company had to provide a 75% discount to Delta to secure that contract.

If other airlines want the same deal, Bombardier could face challenges selling additional planes at a higher margin.

Should you buy the dip?

Bombardier is still burning through cash and will likely need to raise more capital in the next 12-18 months. Pundits say the federal government will provide the next rescue package, but negotiations are ongoing, and there is no guarantee a deal will be reached.

The company is making progress, but headwinds remain strong for the CSeries program. As such, I would avoid the stock today.

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