Bonjour tout le monde. Hello, everyone. Thank you for taking part in Bombardier's 2023 Investor Day. I'm standing in Bombardier's Laurent Beaudoin Completion Center. Behind me is our dynamic completion line where exceptional Global aircraft are outfitted with handmade interiors after they've flown in from our aircraft manufacturing facility in Toronto, Ontario, and soon to be at Pearson Airport. Every day, thousands of employees contribute to the success of our organization and share their talent, craft, and expertise in creating unique business aviation experiences. During this Investor Day, we are pleased to share the progress we have made over the past two years towards our 2025 goals and share our strategic priorities going forward. Our management team is excited to tell you the next steps in our strategy in securing Bombardier's position as a leader in business aviation.
They'll also discuss how we will capitalize on new opportunities to ensure a promising future for all our stakeholders. Our presenters today include Bombardier's President and Chief Executive Officer, Éric Martel, our Executive Vice President, Aftermarket Services and Strategy, Paul Sislian, and our Executive Vice President and Chief Financial Officer, Bart Demosky. Throughout the event, our Vice President of Communications, Marketing and Public Affairs, Ève Laurier, will also introduce you to Bombardier team members who are instrumental in progressing important initiatives. We'll also leave ample time for Q&A period. Our three presenters will be happy to interact with you directly from our B studio in Montreal. Questions will be limited to sell-side analysts and institutional investors. I'd like to remind you that if you'd like to ask a question during the Q&A session, please use the number posted on the Investor Day 2023 page of our website.
Before we begin, I'd like to draw your attention to the disclaimer of our presentation. During the course of this Investor Day, we will make projections or other forward-looking statements regarding future events, future results, or the future financial performance of the corporation. Several assumptions were made in preparing these statements. These assumptions are based on our current knowledge as it exists today. I wish to emphasize that there are risks that actual events or results may differ materially from these statements. I am making this cautionary statement on behalf of each speaker whose remarks today contain forward-looking statements. With that, I'll turn it over to Éric to get started.
Hello, and thank you all for tuning in. Bonjour et bienvenue à tous. This session is an opportunity for Bombardier to connect with the financial community and shareholders to dig into the numbers and to talk to you about our vision of the future. We will also be communicating some important updates about Bombardier's trajectory. I am speaking to you from our industrial design lab at Bombardier's Montreal area headquarters. What you see around me is the demo cabin for our newest business jet, the Global 8000 aircraft. In many ways, the Global 8000 is the perfect example of what we're capable of at Bombardier. A business jet that will fly farther and faster than any other, with cabin innovation that continues to raise the bar for the entire industry.
As our talented teams bring amazing products like this one to the market, our company is delivering impressive financial results and making important strategic decisions to become even stronger. The future is extremely bright for Bombardier, it's my pleasure to tell you more about the road ahead for this exceptional company. As you can see, we've made a significant progress since 2020, with every passing quarter, we have built a foundation for a more resilient business. Our revenues have grown to $6.9 billion, a 23% increase from 2020. During that time, our aftermarket revenues have increased by an astonishing 50%. We've more than quadrupled our profitability to $930 million EBITDA. We've generated $835 million in cash over the last two years.
Perhaps the most important part of this story is how we've managed our debt since 2020. At the start of this year, our net leverage was down to 4.6 x. We've benefited from credit rating upgrades from both S&P and Moody's in 2022. Because we've been consistently opportunistic and proactive, today, Bombardier's total debt is 45% lower than it was in 2020 when you include this year's debt-related transaction. We've made excellent progress to de-risk the company. While we capitalize on strong demand for business jet, we stayed through our strategic priorities. All of our strategic priorities launched two years ago are perfectly on track or ahead of plan. Whether it's our Global 7500 contributions, our cost reduction program, aftermarket expansion, or deleveraging, we have accomplished a lot.
The achievements you see pictured here are the results of careful planning. Operationally, we've continued to evolve our business and position ourselves for the future. We launched the Global 8000 aircraft with extremely positive response. We started delivering the Challenger 3500 aircraft, the incredibly popular evolution of our best-selling Challenger 350. We created Bombardier Defense to grow our presence in this important market and to capitalize on our trusted platforms and our unique expertise. We launched a certified pre-owned program to offer high-quality Bombardier aircraft that come with a manufacturer's warranty. We grew our customer service footprint for Learjet, Challenger, and Global Jet by a remarkable 50%. Last year alone, we opened and expanded four service centers in Melbourne, Singapore, Miami, and London. Most recently, we broke ground on another service center project in Abu Dhabi.
We're currently building a brand new state-of-the-art facility at Pearson Airport in Toronto for the assembly of our Global business jets. The way we do business is as important as the results. We are using our talents not only to grow our business, but to build a more sustainable future. We have a target to reach net zero emissions by 2050, a clear path to get there. Our EcoJet research project, which you can see on this slide, seeks to dramatically reduce emissions by fundamentally changing the shape of the aircraft. We are currently conducting test flights using scale models. In addition to planning for the future, we're making real changes today. We recently announced a landmark agreement with Signature Aviation to cover the totality of our flight operation with sustainable aviation fuel through book and claim.
Bombardier is the only business jet manufacturer to have published environmental product declarations for our newest aircraft. This is a third-party document that takes into account the entire life cycle of our products. There are many other initiatives on their way as well. You'll be able to get all the details in our newest ESG report coming out in May. Turning now to market trends and a revenue forecast. There is one important aspect to consider, growth in the medium and large categories in terms of absolute dollars. Over the past 18 months, we have certainly talked a lot about the pandemic serving as an accelerator for business jet adoption. Today, if you cross-reference our internal forecasts with external sources, as seen here, it clearly paints a picture that favors Bombardier portfolio. This is, again, exactly on plan with our strategic direction to focus on Challenger and Global Jet.
While the light category is projected to shrink in terms of overall market value, medium and large jets will not only remain stable, but they are also expected to command close to 90% of our revenues. This is particularly important because Bombardier is number one or number two in every geographic market we compete in. Focusing our energy and investments in this space was the right move and continues to be the foundation for Bombardier's excellent performance. Another important factor is resilience. Historically, the large category has remained very stable through economic cycles, and this trend continues to this day. Bombardier's industry-leading portfolio is well-positioned to capture demand in this space. Our Global 7500 is the flagship of the industry, and we're currently evolving it into the Global 8000 aircraft, which is expected to enter service in 2025.
These jets are the gold standard in business aviation, and we are clear leaders in this segment. The Global 5500 and Global 6500 aircraft are high-performance long-range jets with a proven track record of reliability and comfort. Our customers simply love these planes. The Global 6500 aircraft is also a go-to platform for defense missions like airborne surveillance. The Challenger 650 continue to be a customer favorite thanks to its range, large cabin, and advantages operating costs versus the competition. Finally, the Challenger 3500 business jet, which entered service a few months ago, is proving to be an extremely popular derivative of the best-selling Challenger 300 series. Here, Bombardier's made a smart investment to protect its number one position in the super-midsize market on a product with good margins.
Thanks to this outstanding portfolio, Bombardier had the highest number of deliveries amongst business jet manufacturer for the last two years, as reported by General Aviation Manufacturers Association. Thanks to our strong portfolio and the structural shift in demand, Bombardier's backlog is in an excellent position. It has increased by more than $4 billion since 2020, reaching $14.8 billion today. It is diversified across many different customer types as well as across all of our platforms. Today, our backlog spans 18-24 months, which we believe is the right range to balance our production rates, manufacturing costs, and customer demand. This gives us predictability and confidence as we look at the next few years. Given this predictability, we now expect to reach a delivery volume of approximately 150 aircraft by 2025.
This will also drive significant revenue growth as we continue to deliver more medium and large aircraft. You should also note that our plants are equipped to produce more aircraft without further infrastructure investment, but we will remain disciplined in how we manage the business. I can't repeat enough, predictability is key, and it is something our workforce appreciate as well. Given our strong business execution and fundamentals, I am pleased to announce that Bombardier is updating its 2025 objectives. We are now targeting more than $9 billion in revenue by 2025, with an Adjusted EBITDA of greater than $1.625 billion and a healthy margin of approximately 18%. We're completing the repair of our balance sheet, reaching a net leverage in the range of 2x to 2.5 x by 2025.
This is excellent news and a testament to the diligent work we're doing today to deleverage our balance sheet. We're predicting that free cash flow will reach more than $900 million by 2025. Bombardier's strong cash generation and credit metrics that are approaching investment grade will result in meaningful value creation, giving us abundant capital allocation optionality during the second half of the decade. I am extremely pleased to share these new objective with you today and to give you some context as to how we'll get there. When it comes to the overall industry landscape, we're happy to see that four fundamental tailwinds continue to provide momentum for business aviation. We've rebuilt our backlog, as mentioned earlier. Flight utilizations level are 21% higher than 2019 levels.
Pre-owned aircraft inventory remains low, the number of people turning to business jet travel continues to grow. We expect these tailwinds to have the upper and over the headwinds facing our industry. We continue to see high interest rates and inflation, as well as the potential for a recession. Supply chain disruptions are improving, certain issue are persistent. I should mention that Bombardier is doing an excellent job to proactively address this issue and minimize disruption to our operation. Geopolitical tension remain, of course, we all must focus on sustainability. Let me repeat that Bombardier is being extremely proactive. We are leaders in building a greener future for our industry, we have positive messages for our stakeholder in this regards.
With the economic fundamentals in place in a context of strong demand for our product and services, the following strategic priorities will keep us on track to reach our 2025 and beyond. We will maintain our leadership position in the medium and large categories. We have the talent and the portfolio to stay on top. We are taking steps to materially grow our defense business. We created Bombardier Defense last year. We see strong potential for growth in this area. We will continue our aftermarket success story. We're delivering exceptional service and are consistently coming up with new ways to enhance our customer offering, including our certified pre-owned aircraft program. Finally, we remain deeply focused on finishing the work required to repair our balance sheet.
Bombardier is in stronger position today than it has been in many years. I thank my team for helping to get us there with such a bright future ahead of us. Our people continue to be integral part of our success. I am privileged to work with more than 15,000 talented colleagues. We will continue to have talent as our company grows. Before we hear from Paul, who will present a more detail look at our strategy, I'd like to hand it over to Ève Laurier, who is the Vice President of Communications, Marketing, and Public Affairs to tell us more about some additional features and content we'll be sharing during today's session.
Hello, everyone. Today, we are hearing a lot about how incredibly Bombardier has been performing from a financial point of view. There are a lot of great talents in this company and tons of stories to tell. You will see three vignettes in this presentation. We're also gonna talk about the transformation of Bombardier because, yes, we make the most wonderful jets in the world. We need systems, and we need a vision. David Murray is gonna talk to you about transformation, but also about operational excellence, which is truly in our DNA. Before we do that, we would like to share this video with you, which underscores the importance of sustainability for us in this company.
Bombardier is committed and focused on being proactive on issues that matter, like protecting the environment, increasing diversity, and having a responsible supply chain. We have a plan. ESG stands for environmental, social, and governance, three core factors measuring corporate sustainability. ESG is a framework for forward-looking strategies and goals that enhance our company's impact in the communities where we operate. It's an important tool in our journey to build a more resilient business for the future. Our vision, to be the number one leader in sustainable aviation by offering the most advanced and environmentally responsible aircraft. Let's take a look at what ESG really means for us. We aim to manufacture and maintain aircraft with the smallest possible environmental footprint. We're working on improving the energy efficiency of our production processes and operations, using renewable energy and increasing the number of electric vehicles in our fleet.
We're also optimizing our manufacturing practices to reduce water consumption and waste production. We want to lead in sustainable aviation through designing innovative and environmentally responsible products. To achieve this goal, we're focused on our product's entire life cycle using sustainable, highly efficient materials and on the adoption of sustainable aviation fuel, SAF. The social component of our strategy is all about taking care of our people, customers, and communities by being a vector of positive change. Regarding the health and safety of our teams, our goal is to reduce exposure at the source and embed wellbeing and mental health support in our employee value proposition. To lead toward an inclusive world, we're focused on increasing the number of hires from underrepresented groups, we're equipping leaders to identify unconscious biases in decision-making, and we're measuring diversity progress across our company.
We'll keep working on creating customer-centered products and services, supporting local community initiatives that fit with our sustainability goals, and ensuring best-in-class personal data protection for all employees and customers globally. Finally, the G in ESG pertains to governance factors. We want to provide a strong governance to sustain shareholder value, uphold the highest ethical integrity and leadership standards. We aim to lead supplier practices in environment, ethics, and employment. That's our plan. How will we know we've delivered on our plan? As a first step, we set four goals for 2025: cut greenhouse gas emissions by 25%, reduce lost time incident rate by 30%, 30% of management jobs occupied by women, 75% score on our employee engagement survey.
Everyone has a role to play, this is just the beginning. Join us in our journey toward a sustainable future. Find out more about our ESG plan at bombardier.com/sustainability.
Hello, everyone, and thank you for joining us. I'm thrilled to be speaking to you in my new capacity as Executive Vice President of Bombardier's Aftermarket Services and Corporate Strategy. Prior to this role, I spent the last seven years on the business aviation management team overseeing our manufacturing operations, supply chain, and industrial footprint. With that, I was deeply involved in all strategic decisions and overall orientation of our company. I had the opportunity to lead the talented people managing our entire operations and to successfully ramp up the Global 7500 aircraft. Over the past few weeks, I also had the privilege to meet with a lot of our new colleagues, and I'm truly energized by the opportunities that lie ahead. Today, I'll share more insight about Bombardier's priorities as we continue to grow and develop our business over the next several years.
Before we jump into the details, I want to take a moment to acknowledge the exceptional venue that I'm in at the moment, the Bombardier Flight Test Center in Wichita, Kansas. Just behind me is our flight test vehicle for our new Global 8000 aircraft, the flagship of a new era. The Global 8000 leverages all of the outstanding attributes of our Global 7500 aircraft and is becoming the fastest and longest range business jet in the world. In fact, it's also becoming the fastest civil aircraft since the Concorde. The talent and expertise at this facility goes well beyond our flight test capabilities. The team's skills are at the heart of our flexible Bombardier Defense business. In 2022, we designated Wichita as our U.S. headquarters, a testament to our long history in the United States. Our company has evolved in so many ways.
The team has set the foundation for what is now a growing defense business. They have time and time again proven to be flexible, mission-ready partner and secured key work in the United States Air Force. In fact, some of the most frequently flown Global BACN-equipped aircraft are operated under the USAF flag. Thanks to the combined forces of our engineering and product development teams right here in Kansas, our growth strategy as a partner of choice for defense missions is becoming a reality. That's what we do at Bombardier: we make things happen. Having these two teams co-located right here at our U.S. headquarters, along with our world-class aircraft service center, is really the perfect embodiment of Bombardier's growth strategy, product leadership, defense, and services. For our first pillar, I'd like to start by looking at our market leadership position.
Around the world, whether it's medium or large jets, Bombardier is an established market leader. With more than 30% share in almost every region. This exceptionally strong market position continues to be fueled by our steadfast commitment to innovation, ingenuity, and strategic development of our industry-defining aircraft. Our comprehensive portfolio is built to meet the needs of customers flying in the continental U.S., as well as those looking for transatlantic or transpacific flights. We also have a diverse and regionally established team that is well-positioned to continue capturing market share. Our installed base is also a competitive advantage. With more than 5,000 Bombardier aircraft flying today, of which 3,000 are medium and large aircraft, our large pool of customers are constantly looking to replace and refresh their business jets and are proud ambassadors of our brand.
As we all know, customer retention and loyalty are essential to business aviation. I can't tell you how many clients I've seen return as happy customers for Globals and Challengers in my time running production. At Bombardier, we are focused on providing an exceptional customer experience, as well as continuing to push the boundaries of innovation to keep making the best aircraft in business aviation. That passion for innovation is clear when you look at our actions. Innovation is at the core of Bombardier's DNA. We have maintained our market leadership largely thanks to our ability to design and develop exceptional products. Over the past 15 years, we have produced an impressive eight new aircraft launches thanks to our talented and dedicated teams. We have also invested significantly in our product portfolio.
These well-placed investments have enabled us to continue to innovate and implement cutting-edge technologies on our aircraft with the latest pilot upgrades, clean sheet designs, product upgrades and much, much more. This will ensure that our aircraft continue to lead business aviation in the medium and long range segments. Bombardier's Challenger and Global aircraft families are world-renowned for their smooth flying aerodynamics, exceptional cabin designs, and overall performance and reliability. In the months and years ahead, we will continue to innovate and update our existing fleet to meet the high standards for our customers. The core ability to design and develop the best aircraft in the world is something that does not appear on a financial statement line item, but it is something that very few in the world can replicate.
These capabilities, passed on from generation to generation of engineers, are built into the fabric of our company and extend through more than 40 years that we have been present in business aviation. In order to retain our market leadership, we will continue to focus on five enablers of innovation. First, Bombardier relies on its passionate teams to bring the best products to life. Our skilled teams around the world work relentlessly to imagine, create, and support the most impressive products in the industry. We create and manage our intellectual property. Take the Global 7500 wing, soon to be the Global 8000 aircraft. It's an award-winning, once-in-a-generation design that has reset how high speed wings can perform on takeoff and landing or at low speeds. It's a work of art, an engineering masterpiece, and it's built on multiple Bombardier patents.
Bombardier also counts on a solid ecosystem of partners to support the ongoing development of its platforms. Our priority is to offer the very best products, and we are proud to collaborate with the best partners in order to do so. We also focus on operational excellence. When we look at adopting lean manufacturing principles and a continuous improvement mindset, speaking the same language and approaching processes the same way is key. We have a solid foundation for this, and it continues to yield benefits to our bottom line. That brings me to the last pillar, the balance sheet. Bart will cover this in greater detail, but it's important to note that financial health is important to all of us. As we near 2025, it's clear that Bombardier will have significant capital allocation optionality. The second strategic pillar we will cover is the defense business.
As Éric mentioned, 2022 saw the creation of Bombardier Defense, a new brand for an experienced team. Our Challenger and Global aircraft platforms are perfectly suited to conduct special missions and have all the capabilities to stand out in the defense market. Their performance speaks for itself. They offer speed, range, endurance, and payload capabilities at an industry-leading altitude. More than the products themselves, our technical capabilities, world-class flight test center, and engineering know-how are key differentiators that set Bombardier apart. We are leveraging the unique expertise we have within the company, as well as the solid ecosystem we have built to support our growth in this sector. Some of our active platforms and customers are highlighted right on this page.
As I noted, we are a long-time partner of the US Armed Forces, and we proudly participate in and support programs like the Battlefield Airborne Communications Node or BACN with our Global aircraft. Our aircraft also support the PEGASUS program of the German Armed Forces. As well, Saab's GlobalEye airborne surveillance solution has been chosen by Sweden and the United Arab Emirates. Bombardier has been strategically looking at defense market for some time now as an opportunity for growth. This opportunity has been further compounded by an acceleration in demand attributed in part to the geopolitical tensions and international security concerns that we're all witnessing. Given our leading portfolio of versatile aircraft platforms as well as our proven expertise, Bombardier has all the attributes to continue to increase its presence in the defense market.
We identified four key defense markets in which our aircraft excel to support the growth of our division. Together, these four markets represent approximately 3,000 active aircraft of all types, including modified business jets. First, Bombardier Defense provides reliable, safe, and secure transportation for heads of state and VVIP clients. Our aircraft allow officials around the world to arrive efficiently and directly at destination and optimize productivity while flying. Our jets are ideally suited to perform maritime patrol missions, allowing for quick transit out of base, more time on station, and ultimately to cover more ground. This is thanks to their endurance, versatility, and class-leading range capabilities.
Bombardier has delivered numerous aircraft with intelligence, surveillance, reconnaissance, and target acquisition capabilities and is becoming the service provider of choice for multiple armed force services and foreign allies. In fact, Global 6000 and Global 6500 jets have become one of the most popular choices for these missions. Finally, command and control. The ability for our aircraft to fly at very high altitudes allows them to be at the center of the battlefield, providing eyes and strategic oversight to support operations as airborne early warning or communication relays. Our platforms are used for the United States BACN and Saab GlobalEye programs, two key examples of the value that Bombardier adds for its customers. Bombardier Defense is the choice of governments around the world who trust our proven and established platforms and benefit from our aircraft's longer flight time and lower operating costs.
We rely on our renowned expertise to deliver complete and flexible solutions and to support the aircraft during its entire life cycle. Turning our focus to the defense market forecast now. Based on recent studies, the global demand for defense aircraft over the next 10 years will be approximately 375 units within the markets we have identified. Bombardier is poised to compete for a significant share of this demand. We are actively answering several proposals and tenders. We are also positioning our sales team and engineering teams across the globe to ensure that we are offering the best solution for each of our customers' needs. This market forecast represents as we compete and win in this market, we expect a portion of these deliveries to be incremental to the traditional business jet demand.
We have seen good traction so far. We must remind ourselves that defense programs are long to operationalize and the procurement, design, and modification cycles can last many years. As such, we are preparing our company and infrastructure to enhance our participation in this segment for the long run. What is truly value-added for Bombardier Defense is that we don't only participate in aircraft delivery. We're there through the life cycle of the entire aircraft. When clients around the world choose Bombardier Defense, they have access to Bombardier's tip-to-tail OEM expertise from program development to program delivery, all the way to operations and sustainment services. Along with our partners, the solutions we offer range from turnkey packages of complete design, building, testing, and certification to specialized engineering support and technical oversight of customer projects.
Our teams leverage full in-house engineering resources and capabilities from aircraft modification and system integration, working in close collaboration with Bombardier Flight Test Center. Above our ability to build outstanding jets, we add value and see an opportunity to be more involved in the engineering services and aircraft modifications. As the manufacturer, we have access to performance data and in-house engineering expertise that can be tailored to the customer's needs. Participating in the entire life cycle allows for Bombardier to deliver exceptional, customized, and flexible support to our partners throughout the life of these programs and provides us with strong recurring margins. We believe that we can triple our revenues from this business as we cross the second half of the decade. Growth will come from higher aircraft deliveries as well as from the modifications and engineering services that these defense programs will require.
This growth has already started with the creation of a dedicated organization that has expanded its footprint in the United States. We're maximizing sales by ensuring our efforts are focused and our team is active in talking to the right people. We will also continue to leverage our best-in-class aircraft to provide optimal solutions to our customers around the world. Finally, we deliver much more than an aircraft. We aim together with our partners to support our customers throughout the different phases of the program life cycle. Simply, Bombardier Defense is becoming another predictable revenue stream. We are growing this business responsibly and generate significant return on invested capital by leveraging our aircraft platforms and our world-class capabilities and facilities, such as the Bombardier Flight Test Center where I'm currently standing.
In case you missed it, our Bombardier Flight Test Center team recently pushed our Global 8000 aircraft supersonic. Here's an air-to-air video of the team at work.
This is Bombardier 29. Requesting clearance for takeoff. Target locked 1.01. You ready? It is ready. Safety ready. T hree, two, one. Green light. There's the Mach. I can feel it. Definitely went Mach 1 there. We're at 43. We're above bingo. Beautiful.
Let's turn now to my new day job, proudly ensuring more than 5,000 jets fly on time, receive parts quickly, and are maintained to the highest standards. I've just walked over to another part of our Bombardier U.S. headquarters here in Wichita, which is also home to one of our service centers. I am on site at this amazing facility to take you through our aftermarket expansion and certified pre-owned program, which is our third strategic pillar. Bombardier continues to invest significantly in its aftermarket business. I'm proud to report we are well on our way to meeting our objectives.
We have increased revenues by more than 50% over the past couple of years, are on track to meet our goal of $2 billion in revenues by 2025. There is a clear opportunity for growth beyond that point. Over the last few years, we experienced several substantial achievements which will provide a solid foundation for years to come. We added close to 1 million sq ft of new service capacity to our worldwide network, bringing significant enhancements to our facilities in Singapore and London Biggin Hill. We developed new service centers in Melbourne, Australia and Miami, Florida to better serve our customers in Asia Pacific and the U.S. respectively. We also enhanced our service capabilities in Europe with the continued refinement of our Berlin service center and a new line maintenance station in Paris.
As the year closed, we broke ground on our newest service facility in Abu Dhabi to better serve our customers in the Middle East. Our worldwide service network was very busy last year with more than 8,000 unique visits. To better support our customers, we also added more than 250 skilled technicians to the team. As business aviation continues to flourish, we will continue to enhance our service capabilities across our network, adding new products and services to ensure we provide our customers with the best service experience in business aviation. Our strategy to bring your jets home is working and our market share is increasing. To support this market share growth, there are four key areas that we are focusing on.
We have spent the last few years constructing and commissioning new service centers, and we have seen immediate success as they have progressively opened. From there is still much we can do to optimize this footprint. Whether it's applying new methods and techniques, increasing our utilization in our new facilities, and leveraging our Bombardier Operational Excellence framework, we will fully operationalize our new investments and better serve our customers. I am very excited about the opportunities ahead. We are a customer-centric organization with the customer experience at the forefront. Not only does this support our ambitions to grow the aftermarket, but it is also a key part in retaining customers and keeping them loyal to Bombardier over the long term.
We've made great progress in improving our customer satisfaction over the past few years, and as I join the aftermarket organization, I will strive to ensure we continue elevating our exceptional service. We will also continue to develop and grow our digital solutions. For example, our SmartLink Plus connected aircraft program contributes to ensure we have the requisite big data to help us develop the maintenance offering to provide the support services our customers have come to expect from Bombardier. Finally, we will continue to refine and drive our parts distribution capabilities throughout the entire service network. Parts availability is one of the key reasons why customers choose Bombardier. We have seven parts depots worldwide, creating a global distribution channel that provides us with a strong competitive advantage.
We are on a great path, and as we continue to develop these strategies, we will have the proper trajectory to create significant aftermarket growth going forward. I'm very excited to share that we continue to grow our certified pre-owned aircraft program, a new segment that we see as a strong aftermarket driver going forward. We introduced this program a little over a year ago, and thus far it has shown definite signs of success. Each year there is an average of 460 Bombardier pre-owned aircraft transactions. This is a significant market in which we see an opportunity to create value through a unique value proposition as the OEM. These are the only pre-owned aircraft which benefit from the OEM advantages, including a one-year warranty, refreshed interiors, the latest technology, and an overall turnkey solution that provides peace of mind to our customers, particularly with first-time buyers.
It provides another access point to high-quality OEM aircraft and increases the residual value of our jets. These jets sell at a premium to fair market value of comparable aircraft and have been recognized separately from the regular pre-owned jets by three major appraisal companies. As we've established this business model, we've managed each CPO aircraft as a project. Our focus over the next few years will turn towards operationalizing this business and increasing our participation in the pre-owned market. Our strategy is putting us on a clear path to reach our objectives and to continue to provide our customers with the best products and services in the industry. On top of this, the reason why our clients choose Bombardier over and over again is our obsession with customer service. This is the foundation of everything we do and what keeps our dedicated workforce motivated and striving for excellence.
In a few moments, Bart Demosky will walk you through our financial overview and show you how our commitment to deliver exceptional products and services has allowed us to create significant value. Speaking of exceptional products, I'm pleased to turn it over to Ève Laurier, who had a chance to meet with some of our talented professional sales engineers to share some insights on the Global 8000 experience.
In 2022 in Geneva at EBACE, we launched a Global 8000. I was able to get a maximum security card for this. There's a lot of smart things happening in this lab. This is where we test the things that our super smart, talented individuals believe should go inside of an aircraft. I'm gonna take you inside, and we're gonna meet some of the really smart and very passionate people that worked on the Global 7500 and 8000. Follow me. Mindy, you work at Bombardier as an engineering professional. You know the Global 8000. What do you love about the Global 8000?
The Global 8000 went supersonic, and that's one of the most amazing features that we were able to do. What's really interesting is when you have to certify the top speed of an aircraft, you have to be able to show that it goes Mach 0.07 more than the top speed. That means to certify Mach 0.94, we had to show that it could go at least Mach 1.01. The interesting part of this whole project, the Supersonic project, was to find a chase aircraft that could follow those speeds and have a calibrated airspeed. Interestingly enough, we went to NASA.
We borrowed one of their F/A-18s. When the Global 7500 started its speed campaign, the F/A-18s actually had to turn on their afterburners. Just picture those aircraft going at those speeds, and this fighter jet had to turn on their afterburners. It's absolutely incredible.
It was a great day for Bombardier, wasn't it?
It was.
Supersonic, we did it.
Yes.
Thank you, Mindy.
Thank you.
Melissa, one of the things that customers tell us about or ask questions about is reliability. You know a lot about the Global 8000 reliability. I think you may have a few anecdotes.
Yeah, I can tell you some. I remember a customer visit we did about a year after the Global 7500 had entered service. We brought our demo aircraft, which was serial number 6, the sixth airplane we ever built. Our flight crew was there. They started talking to the customer about everything they had done in their first year of operation. They went to 35 cities, logged over 1,000 hours of flight. They covered a distance equivalent to 20 x around the Earth. Done all of this in our first year with only the sixth aircraft that we had ever built. Now that the airplane has been in service for four years, we keep regularly doing 1,000 hours per year, which, like, just to put that number in context, it's more than double what an average business jet would fly.
Wow.
To me, that really shows how reliable the Global 7500 aircraft really is.
Katherine, I've had the opportunity to talk to you recently, and you told me that sustainability is real. When we designed the Global 7500, we looked at sustainability because we have a environmental product declaration.
Yes, exactly.
Okay, tell us about that.
Sustainability is a very important aspect to Bombardier, and we actually helped lead the development of the first environmental product declaration for a business jet. EPD for short includes the design phase, the manufacturing, the production, and the end of life. You really get a full view of the environmental impact for the entire aircraft, which is really interesting.
When we talk about innovation about a jet company, people think, you know, speed and range which, you know, we're covering.
Yeah.
We are. We're the fastest, furthest, but we also are in sustainability.
Yes.
We will own up to our ESG promise, and we will do everything we can with people like you that are pulling us towards more innovation. Adrian, you get to tell us about one of your passions, which is interior design, specifically the Nuage seat.
You know, this is the best-kept secret on a Global 7500, the Nuage seat. Right now, I had the opportunity with a couple that I introduced all the features of the Nuage seats, one gentleman was very tall. I said, "Sir, let me extend the bottom cushion so we can get a little bit of support on the back of your knees. Have a seat. Let's put you in that. Recline the back, the backrest, so you can have a little bit of a comfortable seating position." I said, "You're probably looking for a little support under the back of your head." I said, "Let's tilt the comfort headrest.
Get the top surface right under the nook of your head." He said, "Oh, yeah." I said, "You're one step away from the ultimate seating position." Said, "Look where your hands fall, perfectly in line with the controls. Hit that button. Out comes the leg rest, and there you are in the optimum position for your journey, sir." He just kinda sat back, and it was at that moment that I realized that expression of happiness was really confirmation for, at least for me anyways, that we're doing something different at Bombardier.
I think you deserve to go sit.
Well, thank you. I think I will.
You are a step away from the ultimate seating position.
Thank you, Ève.
Thank you, Adrian. Chet, over the years, I've had the opportunity to speak to a lot of clients, most of which wanna talk about one very important thing: how far does it go? That's what they wanna know. Tell us about the range of this aircraft.
Recently, Ève, I was with the Global 7500 aircraft in Asia, and I was showing some journalists and customer prospects the range of the Global 7500 and the Global 8000 on a map. They'd all say, "Well, this is practically the whole world.
Yeah.
I'd have to explain to them that, yes, you are flying for 16 to 17 hours on this aircraft, and that it's a lot of distance. It's also real capability, right, that we've seen in service from our most demanding fleet operators and our own demonstration team. That's how we got to hold the record for the longest flight in business aviation to Detroit, a whole 8,225 nautical miles.
Innovation doesn't stop at Bombardier ever. Thank you, Chet.
From a standpoint to ensure the best customer experience is nothing short of amazing. As a matter of fact, I'm speaking to you from the best designed business suite, the first in four zones of this incredible aircraft. This Global 7500 customers the immersive experience of this unparalleled product offering, and it can house a full filming crew. As Éric mentioned at the start, tremendous progress since 2020. Our company had been consuming cash and generating negative earnings for many years, and now Bombardier is structurally generating both positive net income and free cash flow. We've done this by significantly improving our credit metrics, reducing our net leverage to 4.6x, and achieving credit rating improvements.
Our business is very resilient, we have been able to reduce volatility by exiting the light aircraft market, diversifying our revenue streams through our aftermarket and defense offerings, and build a significant backlog of 18-24 months throughout our medium and large aircraft platforms. Looking ahead, what gives me the most confidence about the future is the significant debt reduction. We've reduced our gross debt by almost half in just the past two years. As you can see by the value creation drivers ahead, the future is very bright. Bombardier is poised to generate significant cash flows to the tune of more than $900 million per year starting in 2025, we expect our credit rating metrics to improve meaningfully, nearing investment grade levels by the end of our plan period.
We have significant earnings growth potential, not only through our aircraft sales and aftermarket, but also through our defense and certified pre-owned businesses. Both are poised to grow well into the future. All of this puts us in great shape to have the right balance sheet, diversified business, and cash flow generation to create meaningful capital allocation optionality. That optionality could include a combination of reinvesting in our existing operations and product lines, launching new clean sheet or derivative aircraft, growing our business through tuck-in M&A transactions, or continuing to evolve and improve our capital structure by further de-leveraging or through shareholder return. Of course, as we are actively planning the next phase of our capital allocation, our focus will remain on the work at hand to finish the repair of our balance sheet in the next few years.
In order to finish repairing the balance sheet, we need to keep driving towards our 2025 objectives, for which we have a clear path ahead. 2022 was a great year for us. We exceeded our guidance on all metrics and kept up the momentum as we continued to grow our earnings, cash flows, and improve leverage. Given the strong performance to date, we've updated our 2025 objectives to reflect the meaningful progress we have made. As we look to the future, we have a clear and defined roadmap to reach these updated objectives, and we are confident that we will deliver growth through 2025 and beyond. A quick word on our 2025 objectives. We are targeting more than $9 billion in revenues, which is more than 20% higher than our previous objective.
We expect to continue our impressive margin expansion, reaching more than 8x the EBITDA we generated in 2020. Our free cash flow is expected to be greater than $900 million, giving us ample flexibility to support our plans for the future. Finally, we are targeting net leverage to be in the range of 2x to 2.5x, which we view as approaching investment grade in terms of credit metrics. As you all know, we don't control credit ratings, but we do know that reaching these metrics will plan to reach these ambitious goals for 2025. Our revenue growth bridge from $6.9 billion to more than $9 billion is fairly straightforward. Aircraft deliveries are expected to reach approximately 150 units, which is a 30 aircraft increase in medium and large deliveries versus 2022.
This growth in volume will be further boosted by higher pricing, which we have seen increase over the course of the past two years. Our aftermarket business continues on its path to $2 billion by 2025 as we execute on the strategies that Paul mentioned earlier, representing a $500 million upside versus 2022. We are planning for our other growth businesses of Defense and certified pre-owned to provide modest increases by 2025, with most of their growth to come after that point. Moving on to our earnings, there is significant upside ahead of us. We expect to grow EBITDA at a 20% CAGR between 2022 and 2025, adding more than $690 million to our bottom line. The most meaningful earnings contributor over the next three years remains the Global 7500.
With target unit cost achieved in 2022 and the pricing secured in our backlog, we expect this program to continue ramping up its margin contribution through 2025. Our second growth pillar will be margin conversion on incremental volume. The approximately 30 more medium and large aircraft deliveries I mentioned between 2022 and 2025 will carry a good conversion into margin. Aftermarket has been a steady pillar of margin expansion and will continue to add to our bottom line as we grow our market share and forge our path to $2 billion of revenues by 2025. The last $70 million of cost reductions will also be fully achieved in 2023, capping off an impressive $400 million total cost reduction program, which we launched in 2021. We are also planning for some incremental costs to materialize by 2025, particularly in two areas.
First, cost inflation is starting to catch up to us, as we expected to see happen. Over the past two years, we have seen a pickup in pricing. The increase in the input cost of materials and labor has largely lagged due to the structure of our supply chain contracts, as well as the timing of how costs flow through our balance sheet before being recognized in the P&L. This resulted in a tailwind as part of our 2022 results. We expect this to reverse over the 2023-2024 timeframe. Overall, we still see the same outcome as we did a year ago, with pricing and inflation roughly offsetting each other over the next few years. This is slightly dilutive to our % margins. We are still expecting to have the same EBITDA contribution from each aircraft.
Second, we are continuing to strategically invest in our business to support our future growth, particularly in three areas. To continue pushing the boundaries of innovation, manufacturing practices, and business intelligence, we need to keep evolving our systems and digital solutions. Bombardier is currently driving a digital transformation, including investments in our ERP system, and this is a key strategic priority that we will be progressively deploying over the next five years. As Paul mentioned earlier, innovation is embedded in Bombardier's DNA, and we are committed to continue developing new technologies that will be deployed on the next generation of aircraft. To that end, we are planning to increase our R&D spend to continue maturing these.
As a matter of fact, we expect the vast majority of our research and technology investments to be made towards sustainable aviation that we expect will bring Bombardier's EBITDA to more than $1.625 billion by 2025. With depreciation and cash flow that this earnings growth is expected to provide. What we're illustrating on this chart is meaningful cash flow generation by 2025. We are planning for $200 million-$300 million in annual CapEx. With this envelope, we can ensure proper maintenance CapEx in support of our plants, property, and equipment. We can also make several investments in our existing aircraft platforms to keep our fleet refreshed and incorporate many of the latest technologies into our aircraft. When I look at our annual interest costs, we have made significant progress here.
The number was close to $800 million in 2020. We now expect it to be in the range of $300 million-$400 million as we continue to delever and look to reduce our overall interest costs. Interest expense on our bonds makes up the majority of the amount. We also expect to have some standby fees on working capital facilities as we continue to optimize our liquidity, as well as interest recognized here as part of our lease payments. Working capital is assumed to be neutral. Our management team is constantly looking to strike the balance between production rates, backlog length, customer demand, and pricing. We expect to continue diligently managing and balancing these items, as well as maintain discipline in our contractual terms to ensure that we are able to be working capital neutral at a book- to- bill of one.
The last element on our free cash flow bridge is a very significant tailwind. As we continue to grow our earnings, we expect to have minimal cash outlay for income taxes. This is because we have material deferred tax assets resulting from carry forward losses on our balance sheet, which will keep us from paying taxes well into at least the second half of this decade. Looking at our financial position as we reach 2025, we expect Bombardier will have significant capital allocation flexibility and many options at our disposal. These options include further deleveraging of the balance sheet, investment in a new aircraft platform, M&A growth opportunities, and shareholder reward. There are a few key principles that will be followed as we make those decisions. First, we are a business aviation-focused company, and this is a key strategic priority.
We have already made significant progress, and we have the plan to finish the job. One of our core focus areas has been reducing our leverage. The plan we set out two years ago was to be at a leverage of approximately 3x , and we are now revising that objective down to the range of 2x to 2.5x . This represents our new long-term leverage target. We believe that at these levels, our credit metrics will be approaching investment grade, which will unlock many benefits, including better cost of borrowing and improve access to liquidity. Optimizing liquidity is one of our key priorities. Our objective is simple: We are moving from minimum cash on hand to minimum liquidity. We will do this by growing our working capital facilities, allowing us to release cash on hand towards debt repayment.
We started this process in 2022 by establishing a 300. We brought that down to $1.5 billion last year, and we now see the right liquidity target to be in a range of $1 billion-$1.5 billion. What this means is that we are also closing the gap between our gross and net debt, which will greatly benefit our credit metrics and interest costs. As I look at our gross debt and maturities, I am also starting to see a profile that is much more in line with an investment-grade credit, particularly as we look beyond 2027. For now, we continue to focus on maintaining a comfortable maturity runway. We have about 24 months of runway today, and we will continue to be mindful of this as we finish repairing our balance sheet.
As you can see, we are also starting to build more manageable and more flexible maturity stacks. This will be something that is top of mind as we contemplate refinancing options. Interest expense reduction will continue to be one of our key focuses. I am really proud to say that since 2020, on top of the significant reduction in interest payments, we have also managed to slightly reduce the average cost of our debt while in a rising interest rate environment. Finally, we will continue to be opportunistic in the debt markets. We are constantly monitoring for opportunities. We will use all the tools at our disposal to capture any incremental value we can. When I look at Bombardier's prospects in the future, I am very excited about the significant value that we are poised to create for investors.
We are an established leader who has the capabilities, installed base, and global reach to win in a growing business aviation market with high barriers of entry. We have a diversified set of revenue streams, which include our Globals, Challengers, Aftermarket, and Defense businesses, all of which generate robust margins. We have designed our business to be resilient, whether through the diversification I just mentioned, or through the diligent management of our. Move to our Q&A, Ève Laurier and David Murray, our Executive Vice President of Manufacturing, Operational Excellence and Information Systems, will talk about Bombardier's commitment to operational excellence.
I'm here with David Murray. David Murray is the Executive Vice President of Manufacturing, Digital Transformation, and Operational Excellence at Bombardier. One of his tasks is to make sure that our systems are producing value, and he's passionate about that. Without further ado, hello, David.
Hello, Ève. How are you?
I'm great. David, you have a very long title with many, many, many responsibilities. Today, we're not gonna talk about producing the planes, but we're gonna talk about our systems and everything else. David, if I'm an employee working at Bombardier, and I hear operational excellence, what's the impact on my career? What does it mean to be in a culture that has that mindset?
Bring out your issues. Bring out the problems that you're facing. Our employees, they know they're facing, you know, the reality of operations on a day-to-day basis. Just bring these issues that you're facing so we could collectively work them out together. It's gonna be also very engaging. Removing all the roadblocks, at the end, the customer is gonna get the whole benefit of it. That's what we're focusing on, making sure that, you know, we're fixing the issues so the customer gets the best experience.
As an employee, I've been in marketing all my life and communication, first time in an engineering type of mindset, but really truly it's no more wasted time. If you're doing something that you think can be done in a more efficient way, speak up and be part of the solution. It sounds like Bombardier is allergic to wasted time.
Absolutely. Two things. As you know, we have thousands and thousands of parts on an airplane, there's, you know, all kinds of issues happening. The first step is, you know, remove roadblocks and fixing issues that you have. First thing is, you know, the biggest believer into operational excellence is our CEO, is Éric Martel. Éric Martel is gonna go up, you know, and challenge the whole team, the leadership team in finding the root cause of the issues and getting better every day.
We've had an amazing success over the past three years. I could say the turnaround story of Bombardier is fantastic, and people tend to focus, rightfully so, on how many airplanes we were able to put out there, sell, deliver. Really, it's also about people working together, collaborating, fixing problems, and making the process of producing the airplanes more predictable.
Yeah. Totally.
I get to speak to you about the future of Bombardier is your vision from a technology point of view. We're gonna do a huge transformation gonna look like when you're done with this transformation, you and your team?
Digital transformation is using the data in order to get ahead of the game, to know in advance what to do. Using algorithm that tells us in the morning, you know, tells the supervisors what to do. If I give you an example, in the morning, you know, the supervisors are coming in, and they have, you know, all their employees together. They have, you know, parts that are coming in. They have quality issues that are appearing, which is normal in our industry. With all these variables, I mean, the supervisor's gotta, you know, visualize what's the optimal route, you know, in the job to do in the morning. What we're trying to do is create a digital twin of our operations.
You know, where the machine learning is gonna take all these out these variables and show, you know, the supervisors what is the optimal route to build this morning. Digital twin is about building that sequence. In the morning, the supervisor is gonna come in, and the computers and the machine and the algorithm, you know, built by our engineers will tell them, "You know, this is, this morning, the optimal route. You have to do one, two, three, and four." That's gonna, you know, unleash a potential that we've never seen.
She comes into work, she looks at what she was gonna do and then wonders, "Wait a minute. Let me check with my digital twin. Maybe there's a better way of doing this.
Absolutely.
No more wasted time.
Absolutely. You know, our supervisors can, you know, challenge also the beauty of this is this algorithm is gonna change, you know, as the business evolves.
It's learning.
Yeah, that's right. We will, you know, perfect that model, through time and, you know, keep us ahead of the game. You will know ahead of the game what is gonna happen, so your optimal sequence today is gonna be based on information that's gonna come tomorrow. This is amazing. This is transforming.
When can I expect my Ève Laurier digital twin?
It depends what you wanna do in marketing. There's gonna be opportunities for everybody. We're talking about operations. Digital transformation has started, an example, in the aftermarket currently tracking live the airplanes, and we know ahead of the game, you know, what's going on. This has been started. What I wanna do is, you know, copy-paste this everywhere.
Fantastic. Thank you, David.
Thank you.
Thank you, Ève and David. We will now transition to the Q&A period of the event. Questions will be limited to sell side analysts and institutional investors. If you haven't already, please join the queue now. We'll take a few minutes to set up and get started shortly. 23 Investor Day. We are ready for the first question. Operator, over to you.
Thank you. First question is from Walter Spracklin at RBC Capital Markets.
Thanks very much. You, Éric, and the team, very, very great results here out to 2025. They were bold forecasts when you put them out there, and really quite an achievement. I guess I wanna start with, you know, what's the next level, right? I mean, in 2025, I don't think you're saying that growth is gonna end there, and you pointed us toward two pretty impressive new growth avenues, one being defense, which you indicated would grow to about $1 billion by the end of the decade. You also mentioned CP, Certified Pre-Owned, which is also looking pretty interesting as well. Can you tell us what level you're at right now in terms of Certified Pre-Owned, Certified Pre-Owned? I know you started only in 2021.
Giving us the $1 billion for Defense, could you give us a framework for what we could anticipate in Certified Pre-Owned perhaps by 2030 on the same vein? Would the margins on each, Defense and Certified Pre-Owned, be at or above your current manufacturing or average margins that you're currently deriving?
Well, thanks for your comments, also for your question, of course. Let me say by starting here, you know, when we started our journey about three years ago now already, we put our first strat plan together. You know, we came out with our 2025 objective. Last year, you know, in our strategic plan cycle, for the first time last fall, we really started to look at post 25. 25 to 30 is probably the range we've been focusing on the most. Clearly, you know, we are, you know, stating this morning that not only will we be look meticulously, you know, at the next five years also.
Clearly, you know, two of the growth path for that second part of the decade, now we're looking at scaling it up, you know, and it's gonna take a little bit of time. You know, we need to take care of, take into consideration the actual market. Clearly the targeted, you know, market we have, which is the Global and the Challenger. We're definitely planning to grow that business responsibly. To expect from us, you know, that's been our nature, I think, since we relaunched our company two years ago. We're clearly excited about the growth possibility for the second half of the decade. Of course, we will come back in the next year, you know, with probably more precise objective towards that business.
That's fantastic. Thank you for that, Éric. My second question here, I'll turn it over, is really on margins. This is for Bart. Bart, you know, all the emails I've gotten this morning have been around the movement from a 20% margin to an 18% margin. I think the clear one, given that your aftermarket of $2 billion is steady, the growth that we're seeing is really in some of the lower margin, albeit ac cretive delta in your revenue forecast. Is that the case? You know, and my question is, would we not see a little bit of a bigger offset by your faster ramp up, presumably higher pricing, you know, those kind of trends that should point to a higher margin?
Is that just not enough to offset the dilution? Am I looking at that the right way?
Good morning, Walter. Thanks for the question. When we're looking at margins and margin growth going forward, you know, the exciting part about our whole story is that we still have a long way to go. We've come a long way, but we have significant margin expansion that we do still expect to achieve. That said, as we're growing our revenues now to north of $9 billion by 2025, there is a mix question there, and I think you've pointed that out, that the mix is gonna be slightly different, given that we'll have our aftermarket business target still to be $2 billion of revenues. We're not changing that at this current point in time.
The other factor that's impacting the margins is really simply a case of math. We've been selling aircraft at higher pricing on a continuous basis over the last couple of years. Inflation on our balance of materials is starting to catch up, and we're forecasting that it'll be roughly balanced between now and 2025. Those incremental revenues are not bringing incremental margin. They're simply based on price, and as costs move along with it changes the math. That's really what the primary factor is.
If I may, Bart, maybe just to add one thing also. I think, you know, we have a much better clear path in terms of, you know, what we're gonna be doing. Acquire today some strategic investment. You know, we did talk about our research and development budget. We are investing some money. That of course affect the P&L in R&D. We also have the, you know, the digitalization. You know, David just talked about, you know, how some strategic investment and capital allocation have been made towards that. That's, you know, P&L money basically. Our business. If we wanna have a defense business that's going to, you know, grow our results in the next decade, there is strategic investment that are happening now, okay?
In terms of building the program team, building the sales team, you know, making sure we bid properly on these project. Clearly, those investment that we've made today, yes, have, you know, bring costs, but actually they are very strategic for the next period of the decade.
That's great. Appreciate your time and, congratulations again.
Thank you, Walter.
Next question will be from Benoit Poirier at Desjardins Capital Markets.
Good morning, everyone. Congratulations, Bart, Éric, Paul, and also the Bombardier team for your achievements and so far in what I would call a very articulated plan. First, could you maybe provide some color in terms of assumption for the market environment, kind of the book-to-bill ratio we should be looking on by 2025? With respect to growth deliveries, whether it should be more skewed toward the medium or large? Maybe if you could address the competitiveness of the Challenger 650 these days, that would be great.
Thanks, you know, for your, for your comment, Benoit, and for the question. Clearly, you know, right now I think it's an obvious there is some added volatility and uncertainty in the markets today. Nobody denies that. I think, you know, we built this company to exactly to be able to go through these turbulence, you know. We knew from the start that it was not always gonna be like a, you know, the same path that we've seen, and there would be turbulence at some point, and it's happening now.
This being said, you know, with the two amazing year backlog that we have today, as you know, you know, over $14 billion, plus, you know, the stability that this and predictability that this brings for the next couple of years ahead of us, including a big part of 2025, it's actually very helpful for us to be able to do that. We've always been conservative, you know. You know, we are planning conservatively and we are capable of taking those little bump on the road right now and bring the business to go on the road with our team. Clearly, you know, when you talk about our Global 7500 today, and the Global 8000 coming in a few years from now, clearly this is, you know, the recognition of this being the airplane is clearly unanimous.
I think we're proud of that. You know, the airplane has been performing, as we said in the video, extremely well. We're well on our way to deliver the 8,000. What's important is the portfolio is being solid. Clearly the demand remain, you know, and we still, you know. Of course, we're in a blackout period. I won't talk about specifically Q1, but still, you know, there is demand and you know, we're gonna manage according to what the market is. Also, I think what's important is the product portfolio is helping. On the Challenger, I think we got amazing demand. You remember we came out about a year and a half ago now with the Global, not the Global, but the Challenger 3500, which was extremely well received and successful.
Clearly today, the Challenger 650 continue to sell on a regular basis. You know, this is a proven platform, extremely reliable, probably one of the most reliable, if not the most reliable, of any business jet out there. And the cabin has always been, you know, usually what people buy it for also because of the amazing size of the cabin length and width. When I look at it today, yes, a bit of bump in the road, but clearly, you know, a solid foundation to be able as a company to get through this. Clearly, you know, we see still movement in the organization, you know, delivery being taken, you know, progress payment being paid, and still order coming in despite what's happening.
You know, we haven't seen also like we've seen in the past, you know, like cancellation and things like that. So far it's fairly quiet in that regards. Solid foundation and looking at the portfolio, I think we're in a very good place.
Okay. Just on the supply chain side, you've been quite good during the pandemic, meeting the delivery expectation. Could you discuss about the supply chain environment and whether we've seen improvement, especially given the search for talent and as Airbus is looking to add 800 people in Canada?
I think, you know, thanks for bringing that point. This is clearly one of our top monitoring item. When we think about supply chain today, I think it's out there. There's still issue. You're right to recognize. I think that we've done a great job. The team has done a great job last year to be able to deliver all the airplane, that's still the plan, you know. You know, we stand behind our guidance for this year, of course. You know, we've been very strategic also. I think I explained also to face some challenges. We have our presence at supplier. We are still confident, you know, today to be able, you know, to reach out 150 deliveries by 2025.
There is, I would say, probably less problem than we had a year ago. Some of them are still stubborn, I would say, and we're working them with our supplier. You know, our 2025 assume pricing and cost inflation to offset basically. This still holds true today, and we're very comfortable with that.
Thank you very much for the time and congrats again.
Merci beaucoup, Benoit.
Next question is from Konark Gupta at Scotiabank.
Good morning. Thanks for taking my questions. I echo my congratulations to Éric, Bart, and the team, for great work and upgrading guidance for 25. Thanks for all the presentations this morning. Really have a couple of questions. Some bucket, get incrementally negative, meaning it could become a bigger headwind for you as inflation continues to creep up. Then some of the identified cost headwinds, that you've mentioned, like inflation, digitization, EcoJet, G&A, et cetera. When you strip some of those out in a steady state, what would the margin profile look like on a normalized basis after 25?
Bart, you wanna go ahead or you want me to—
Oh, yeah. Good morning, Konark, and thank you for joining us and for the questions. I'll maybe take the second part of the question on the margins. As I said earlier, you know, there's a few factors that are impacting our revised margin outlook. Part of it is driven off of higher revenues due to higher pricing. We're forecasting that inflation on the aircraft, the bill of materials, is going to roughly offset the pricing increase that we've seen. We have a very high confidence in that. If we go back, and Paul's here and who is head of manufacturing, I'll maybe turn it over to him in just a moment to add some commentary on it.
He knows very well that his team, all the accomplishments they've had in the past to be able to, I'll say, basically offset inflation through continuous improvement activities in their business. We don't really see that being a headwind going forward. Second thing I would say is that other margins that, or other, higher revenues we're bringing on for the company, we do see those having a fairly traditional margin profile for us. The strategic investments that we're planning on making, those are going to be the enablers for us to continue to remain a high margin business, be profitable going forward, and to grow the other businesses. They're necessary. We need scalability, and we need those kinds of investments to be the leader and stay as the leader in business aviation.
We see them not as a cost headwind, but as something that's necessary to really realize our full potential. Paul, I don't know if you'd like to comment on the manufacturing and—
Yeah. Konark, thank you for your feedback on the supply chain. I think we've managed it extremely well. The only thing I can add to what Bart said is that you gotta keep in mind that we place our POs one to two years in advance, so we already know what our buy price is gonna be well into 2024. Like Bart was saying, in terms of the management of the sales price and the inflation on the BOM, I think we're in a pretty good place to understand where we're gonna be by the back end of 2024.
That's great color, guys. Thanks so much. If I can just follow up on Bart, to one of your points. Once you get to a normalized leverage ratio of 2-2.5, that kind of gets you near to about investment grade. What would be some of the options that would be on your plate in terms of rewarding shareholders, once you get to that kind of level? I mean, like, dividends had been part of the equation once historically with Bombardier. You know, a lot of companies have been focusing on buybacks. You mentioned M&A. How would you balance all those, you know, buckets once you get the leverage ratio targets?
Well, I don't think we've quite figured out the magic formula yet, Konark. I would say this, that all of those options you just outlined are on the table. Investment in the business, perhaps investment in new programs, repaying incremental debt, other strategic investments via M&A, and then obviously potentially returning capital to shareholders. As a matter of fact, today, if you do look at our financials, we do repurchase shares even today to offset any dilution that could occur through our long-term incentive programs. We are being very mindful of how we best allocate capital, and it will be a capital allocation question ultimately to drive the highest overall returns over the long term for our investors.
We'll definitely come back earnings session here, the annual session here again shortly. We'll be meeting with our board. Ultimately, they need to weigh in as well. The most exciting part of this.
Debating, discussing, and believe me, we're gonna have the same discipline. We're gonna put all the, you know, the options on the table. Could be investing into a project, could be, you know, doing M&A, could be, you know, returning. You know, we'll have the same discipline, and we'll do what's the right thing to do for the shareholder. There will be no bias. We're just gonna look at it from a pure financial point of view and return and also growth of the company.
That's great color, guys. Thanks so much, and I appreciate the time.
Next question will be from Fadi Chamoun at BMO.
Thank you. Yes, good morning, I wanna echo the congratulations comment so far. I, you know, think you've definitely put this company on solid ground going forward, and congrats to the entire team for that. I want to explore further on this capital allocation optionality. I mean, you haven't invested beyond kind of maintenance CapEx for quite some time now, and you've mentioned potential aircraft project. Is it something within the mid to large, I mean the Challenger 600 has, you know, definitely been, you know, talked about as a potential target for the project. Is there an opportunity to invest in growth projects, maybe help us visualize at this point?
It might be too early, but if you can help us visualize at this point and along there for Bombardier at this point, or is there still potential to reconsider reentering maybe, some parts of that market, going forward?
You know, Fadi, I will never say never, but today it's not in the option, if you think about, you know, us going back competing in the light market. You know, maybe in five years, 10 years, you know, things will change. I think when we look at our growth, you know, between now and 2025, and I think Paul was presenting, you know, the market expectation, you can definitely see the large market growing between 2023 and 2025. You see the medium market segment also growing, but you see the light marketing actually going lower. It's already a very crowded area. Pretty challenging for me today based on the data that I have in front of me to say we may go back into that market.
You know, the world change, we'll see in 10 years what it is, but that's not an option on the table today. If I go back to your first question about capital allocation, clearly, you know, we are looking today at, you know, what our competitors are doing, what the market and the customer are asking and seeing, and we're getting always our product being surveyed, you know, on any platform. We're taking that feedback. Again, it's a question of capital allocation. You know, where's gonna be for this dollar, the best return I can get? You know, is it gonna be launching a new medium segment, or is it gonna be upgrading a large airplane or launching a new large airplane? You know, that's how those decision will be made.
Other potential also, it's not just about launching program. Of course, we need to secure the long term of the company, you know, and program usually helps doing that. At the same time, you know, how do we have the best return for our shareholder? It could be acquisition, could be growing the company still, you know, in the market segment that we know today and the business environment that we know. We'll be, again, extremely disciplined, and we'll look at every dollar we have, and we'll have a lot of these dollar right now with $900 million available of free cash flow, starting in 2025. That's giving us all kind of optionality, and we'll definitely, with this, what I just said, having in mind how we deploy that capital.
My second question is on the debt level. You know, I think after the repayment of debt you've done this year, you're probably at net debt of $3.9 billion. The low end of your guidance range suggests $3.25 billion, I guess, by 2025, which suggests another maybe $700 million-$800 million of repayment of debt, you know, between now and 2025. You know, maybe even closer to $700 million. Is that the right kind of framework you're thinking about going into 2025 as far as managing the debt and the repayment?
You want me to take that? Go ahead. I'll let you go. Sure. Just, yeah, thanks, Fadi. Yeah, as we're looking at our long-term, I'll call it capital structure objectives going forward, we've naturally, I think, reached the conclusion that a lower overall targeted debt level is the healthiest place for us to be. We're very focused on credit metrics, in that we believe as we achieve those going along, and because we will be in a position we believe to be able to repay debt on an annual basis and go through refinancings, staying focused on those credit metrics is important because as we all know, credit ratings tend to be a lagging indicator of how the company is performing. We'll stay focused on those metrics.
The 2x to 2.5 x is in the range where we see ourselves getting very close, if not at, investment grade credit ratings. It puts us in a very, very meaningfully strong position relative to our competition in terms of their balance sheets and where their leverage levels are. Those are a couple things that we're very focused at, or on. Obviously, we talk about the $900 million+ of free cash flow. We have not made a determination yet where we'll allocate that, but one of the options open to us could be to continue to repay debt beyond 2025 as well. Between now and then, debt repayment will of course stay our top priority.
Your numbers are not too much different than ours in terms of how we would forecast things. Obviously, we do tend to forecast in a way that is quite conservative, and there could be upside to that.
Okay. That 2x to 2.5x is basically kind of your long term, how you're thinking about the capital structure and where you wanna be, not necessarily in 2025 target. I'm thinking based on your outlook for free cash flow, if you're taking that free cash flow towards debt repayment, you're gonna be below the low end of that range.
That's certainly possible. If we choose from a capital allocation point of view to put more of that cash flow towards debt repayment, certainly that could be the case. We're, we're working on that just now, though, in terms of where the best place to allocate the cash and the capital is. More, we'll have more to come on that in due course.
Okay, great. Appreciate it, and congrats again.
Thank you, Fadi.
Thanks, Fadi.
Next question will be from Myles Walton at Wolfe Research.
Thanks. Good morning. I was actually gonna follow up with clarification on Fadi's question, if I could. The 2—2x leverage target you have for 2025. Bart, is there something on operating leases that's growing your adjusted net debt between now and then? Is that perhaps part of the reason why it's not below the range?
Yeah, good morning, Myles. No, we're not seeing hardly anything incremental in terms of operating leases. We've completed most of our aftermarket expansion program. We do have one more facility that broke ground earlier this year, so we're excited about that. There could be other options when it comes to the aftermarket in terms of our overall footprint, but we're not seeing any material growth in operating leases as being part of the equation.
Okay. Just circle back with you on that. In terms of the discoveries of the last, I don't know, several years, there seems to be an elongation in certification cycles for all new aircraft, and I'm guessing that Bombardier is actually benefiting right now from that because you had built out, you know, a large and pretty comprehensive product line. Is that part of a benefit that you're directly seeing, or are customers being patient at other competitors? Secondly, Éric, I guess when you think about any new aircraft, do you believe certification timelines are now structurally longer, or is this a manifestation of the current circumstances in the post-MAX world?
I think again, in that regards, we're usually looking at it on a more conservative way. I think that clearly, you know, with some of the circumstances that happened in certifying airplane in the last needed for certification. The good news is we have certified a lot of our system, you know, in the Global 7500, so we can reuse it as an example on board. Clearly, you know, we're being conservative. We're looking at, you know, the kind of time we're gonna be needing. We always look and work very closely here with Transport Canada to make sure that we also understand, you know, how we're gonna be working together to get to certification of any future program we may launch.
Clearly, certification is always something, you know, that we are reconsidering, especially in this evolving world right now. To your first question, I think our Global 7500 has an established track record. We have more than 135 airplane in service. We created the ultra long range segment, and we are extremely confident in our leadership position of that space today. I was sharing with you earlier some comment I got from customer, and clearly, you know, they see our Global 7500 and 8000 as being, you know, the leading platform. Global 8000 is pushing the envelope even further, and again, the customer are just recognizing that exceptional aircraft.
Okay. All right, remind me the certification timeline currently for the 8000?
We're Q4 2025.
Okay. Thanks so much.
Thank you so much.
Next question will be from Chris Murray at ATB Capital Markets.
Thanks, folks. Good morning. you know, maybe thinking about the CapEx spend and potentially new development. Bart, I mean, you talked about a $300 million envelope for essentially it looks like maintenance capital, but in some other development. I'll say over the last couple of years, you've surprised us a few times, with new product developments and upgrades inside that initial envelope.
I guess thinking about a clean sheet or some new development, is there reason to believe that you feel you could maybe do a new, you know, a new aircraft at lower than what would normally cost you being able to leverage either existing technologies or just some other work that you may have already been doing through this so that it maybe doesn't start with a B, is the best way to think about it?
Yeah. I'm gonna turn this over to Éric and Paul. Just to comment on the CapEx, Chris, you make a good point, and it's an excellent point that the $200 million-$300 million of CapEx that we've built into our longer term plan does accommodate and is the right level of support for both our regular PP&E maintenance and our sustaining CapEx for existing platforms. You're right. We've been able to do refreshes, we've been able to make investments and that will be continue to be the case. We believe that $200 million-$300 million over the next few years will be able to accommodate that.
As when it comes to the new programs and how it's gonna go, I'll turn it over to Éric.
Thanks, Bart. But clearly part of the $200-$300 envelope that we have of capital, you know, there's like into this, you know, doing maintenance on our building, things like that, but there's also always some small product improvement. A lot of them are driven by new regulation, as an example. I'll take as an example ROAAS in, in Europe. Those are things we need to modify the airplane, test fly it, but it's usually captured into that envelope. To your next question in terms of, you know, is it possible to do a new program without starting with a B? I will separate it in two bucket.
If you think about a Global 8000, it definitely not start with a B because it's, you know, we're basically using the same envelope than we have the Global 7500 with today, so it's clearly an upgrade of the product, giving it more performance, more capability. That's manageable. If you think about a brand-new clean sheet, I don't see today how we can do it without $ billions. You know, clearly we're gonna start always to minimize these costs. You know, we're gonna look at reusing some technology, you know, some of the things we've already developed to come out with the right product, a perfect product, but also considering, you know, the investment that needs to be made.
Again, I think it's gonna be taken care of by also the capital allocation discipline that we're gonna have to make sure that, again, we know exactly how much it's going to cost. Yes, we may always have in a, in a new development program because this is high technology things that we need to take care of, but clearly we'll be very disciplined and learn from, you know, past history also and reuse technology.
Okay, that's helpful. Thank you. Maybe turning to the, to the military business and thinking about the strategic plan or review you may have done. I mean, for the most part, it looks like you're going to focus primarily on derivatives and extensions of existing product. Historically, though, you've been in other adjacent areas in the military business, be that into services or other adjacent markets. I guess two pieces of this. When you actually started thinking about the strategy, was there anything that you rejected out of hand in terms of places you wanted to be? I know you've divested in certain products over the years. The other question I think about this is this an area where M&A maybe becomes the most appropriate part of where to deploy capital in the future?
It could be, you know, an area where we wanna deploy capital via acquisition or other mean. Clearly, today what we're proposing is we have very capable platform. I have to say the Global 6500 and the Challenger 650 are extremely popular and can, you know, deliver a lot of mission. After we have the capability we have in Wichita, which we are leveraging our capability to test, our capability to modify an airplane. This is our center of excellence right now and our headquarter of defense located in Wichita in the United States, this is where we are, you know, maximizing, you know, the knowledge of our workforce to go even beyond, you know, just having a platform. We're modifying the shape of the airplane, as an example.
We're probably the best position to do that. On the PEGASUS project, we are installing equipment. We're not an equipment provider today. It's not in the plan. Strategic and mission ized type of capability, you know, we're working with many partners today, so it's not in the cards. Eventually, we may decide to be very strategic and say, you know, "This is a skill that we would like to acquire. What's the best way to acquire that skill, that skill set? Is it to grow this internally? Is it to make an acquisition?" All these question will be part of our decision and future investment. Today we are very well-positioned, you know, to go and seize some of the opportunity that actually the geopolitical environment today brings to the table.
All right. Thank you very much.
Thank you, Chris.
Next question will be from Noah Poponak at Goldman Sachs. Noah, please unmute.
Hi, good morning, guys. Hey. Good morning, everyone.
Good morning, Noah.
Can you hear me? Okay, great. Have you had any cancellations year to date or maybe anything above kind of a normal movement run rate? You know, should we be considering any risk to the cash flow guidance from, you know, in advances headwind, given I think you have the 1.0 book-to-bill placeholder in there, or are things proving more resilient than that in plus?
Of course, you realize, two weeks away from the end of the quarter, I'll be careful in making comment, a precise comment on Q1 as we will disclose our results. To echo what you said, we haven't seen anything abnormal right now, on the cancellation point, nothing to be reported there. We're still in a regular environment, if I may, I can say it this way. You know, in terms of our guidance, I think I said that earlier, we don't see, you know, reason to update our guidance. Today we'll provide, you know, more detail when we give you Q1. Yes, is this, you know, it's definitely a different environment than a year ago.
A year ago was totally different, this is not a, you know, as I said, we've been careful. Our guidance has been provided on a book to bill of one, you know, that's what we're still working with.
Okay. Bart, if I could circle back to the margin discussion. I guess, you know, you've obviously had a lot of operational success and achievement, and the margins have been really good. But I still just kind of mathematically struggle to get to the 18 even though it's been reduced. Just the amount of margin expansion and incremental margin implied in 2024, 2025 compared to what you're guiding to 2023. You know, that's working off a higher base, that's further down the Global 7500 learning curve, that's further into your aftermarket expansion, which is accretive to the margin. I just still struggle to see what drives more expansion, higher incremental margins in 2024 and 2025 compared to 2023.
Sure. Well, there's a few factors, Noah, that we just need to be mindful of. You did mention a couple of them. Yes, we're well along the path of the growth path for our aftermarket business, but we do still have $500 million of what we believe growth in front of us between now and 2025, and that is a very high margin business. We've been quite candid about it. It's north of 20% EBITDA margins, and it's been that way for many years. Under Paul's leadership, you know, he's an expert to operationalization of platforms and in bringing cost reductions to those platforms as well. That's in front of us, and that remains exciting.
We still do have about another $70 million of cost reduction to go on our $400 million target and objective. All of the actions that we need to take or needed to take to secure that additional $70 million have already been taken, so very confident we'll achieve that this year. You mentioned the learning curve on the Global 7500. That's only one part of the longer term margin expansion and upside for the Global 7500. What's not as visible for people is the incremental margin expansion that comes with each aircraft that we're delivering at higher pricing. As we exit launch pricing and early aircraft sales that were at lower prices than we've been seeing over the last couple of years, it will be a substantial.
It'll bring substantial upside to our margin profile as well. With all of that combined, with the, you know, I'll call it some headwinds based on the strategic investments that we plan to make, we do see a path to the 18% and are confident in it.
Okay. Yeah, your bridge, a large portion of the bridge you showed, which is helpful, is 7,500, despite, I think, relatively flat units. It sounds like that moving out of launch pricing into normal pricing piece is pretty, is maybe more substantial than I was appreciating.
Yeah. That's why I said it's probably not as visible, amongst, all of the benefits that we're seeing. We did provide a slide the 1st year, back in March, I guess, of, 2021, where we showed, what that margin contribution will look like. You'll see that it—w e're forecasting it to be quite significant.
Okay.
Okay.
Just last one. On the 25 free cash flow, you had the greater than $500 million. You then identified upside to it, but held it with a placeholder for possible capital deployment. That could have been debt reduction, could have been new aircraft development. You've now gone to the $900 million. Just should I definitely read that as sort of ruling out that any new product development expenditure is, would could be starting in earnest by 2025? Is that now off the table?
The timing of when we might consider.
Yeah. Maybe, Noah, I can take that. I think today, as I said, I feel no pressure, you know, from either the customer base or competitor to launch a new program now. Which gives us time right now to think about where will be the best capital allocation. Clearly, you know, we are working on, always working on some platform and new idea and what could be potential launch. We are part of our R&D budget and part of our spending have these. You know, nothing to hurry up right now. There's no reason when I look at the market and how successful we are selling our platform in today's environment, you know, to say I need absolutely to launch something new. Could there be derivative or things like that? Potentially.
In terms of a brand new, you know. While Jay will be working at it, of course, before and getting security in terms of what it is, but, I think your reading is, you know, okay. I don't see any rush between now and 2025, clearly.
Okay. Makes sense. Thanks so much.
Thanks for the question.
Thanks, Noah.
Next question will be from Stephen Trent at Citi.
Yes. Good morning, gentlemen, and thank you very much for the time. Very great presentation. I sort of had a longer-term question for you with respect to flight safety. I mean, not just you guys, I mean, the whole industry. You know, there's been sort of maybe more publicized episodes that we've seen from, at least here in the U.S., of near misses between planes, people severely injured with clear air turbulence coming out of nowhere. On a long-term basis, you know, any high-level thoughts with respect to, you know, hardware/software adjustments that you guys are thinking about, whether it's, you know, the next generation of fly-by-wire or some other kinds of initiatives, as, you know, we move to you know, greater aviation safety than we already have?
I know it's already good, but just love to hear how you're thinking about that. Thank you.
Thank you. I think, you know, it's been the history of the industry, Stephen. You know, the bar has always been raising in terms of making our products safer and safer. Bombardier has been leading. You know, we have event that we've been conducting for more than 25 years now like the safety stand-down, always taking back comment, you know, from the pilot, from any of our customer and always pushing the bar and the technology also to make sure that the airplane gets safer and safer. You know, clearly today, take the Global 7500, those are very, very capable airplane with, you know, fly-by-wire, but also all kind of other tools to make the airplane safer than any airplane that may have been developed before.
I think as we look at new technology, new R&D, this is always something that we're trying to achieve. You know, we're not just trying to put a new airplane out there with better performance, but also making the airplane safer and safer has always been part, I think, of our DNA at Bombardier, and, we'll continue to do so.
Oh, okay. Super helpful. Thank you very much.
Thanks, Stephen.
Next question will be from Tim James at TD Securities.
Thank you very much. Good morning, everyone. A great presentation today. My first question, maybe for Bart, I just wanna clarify and make sure I'm understanding this correctly. In the EBITDA bridge, the benefit from Global 7500 and moving away from launch pricing, that is in the that bucket which is labeled Global 7500 as opposed to being a component of pricing net of inflation. Is that correct?
Yes, you've got that right, Tim. Absolutely. good morning, by the way.
Great. Thank you. Good morning. My second question, I just wanna return to the topic of CapEx, and I'm thinking about your plans for $200 million-$300 million for 2025. If I wanna really stretch out and think very, very long term about this company, and I'm an investor, do I think over even, say, a 20-year period that that is a reasonable long-term level? Is that, again, you've mentioned that that includes some maintenance and some sustaining CapEx, but, you know, when you get into a clean sheet design and you need to layer in that investment, I assume that number, and if we think about an average CapEx over a full, you know, portfolio development cycle needs to go higher than that. Is that correct?
I mean, you know, could we even think of D&A as maybe a reasonable approximation for a very, very long-term average for CapEx?
I think clearly, you point out an important point here. We're a long-term business, and I think people need to think about us in terms of long term. I think today when we often talk about the backlog, but we also sit on the very significant install base of 5,000 airplane and growing. I think when you look at us, you know, whatever we're gonna be deploying our capital, we'll always have in mind to say, okay, yes, we have the short-term financial, but we'll always have in mind to say, how do we make sure that we do not just only replace? Airplanes are retiring, you know, and but also how do we grow, you know, this install base that we have worldwide today?
This is gonna be what's gonna carry the growth of our business in services. Also, you know, having more airplane new airplane coming into operation versus the number will be significant. We need to make sure we always have a competitive portfolio in front of us so that we can trigger the market to buy our airplane and more airplane. I think it's gonna always be a balance of making sure we achieve our short-term objective, but making sure also that we do the right capital allocation at the right place to ensure the long term of the company, which is basically protecting and growing the install base that we have today, but also, you know, making sure that, you know, we have a competitive portfolio and that we continue to deliver airplane in the long run.
We're gonna be looking at different possibility also, like, you know, we talked about CPO. Our CPO could have an impact in the next part of the decade. We also talk about defense, you know, leveraging existing platform that we have to do even more with these platform that are extremely capable. I think it's gonna be a mix of all of what I just said, but clearly we're thinking about, you know, long term when we deploy our capital. The $200 million-$300 million envelope is, like, a bit of a sustaining envelope that we feel we need to manage, you know, the day-to-day of the business, if I say it this way. Clearly the remaining of capital allocation will also have very significant path to growth for the company.
Okay. That's very helpful. Thank you, Éric.
Thank you, Tim.
Just following on that $200 million-$300 million for 2025, should we at this point take that as cast in stone? Or, you know, is it possible, you know, conditions might change and there could be reason to re-revise that? I just wanna make sure that, you know, we shouldn't be caught off guard if for some reason, you know, there may be an opportunity where that number actually moves higher in the end. Or do you feel at this point in early 2023 that there's, you know, no potential developments that could create a need for that number to go higher?
I think we feel pretty good today about the range that we've allocated, the 200-300. We should be definitely within that range. I think your question, if I understand this right, is if ever we would be launching a program, I think we're saying we're gonna be generating $900 million of cash flow. We'll decide what we do with that $900 million. Could be paying more debt, could be, you know, thinking of a new program if we're ready and if the market needs it. That $900 million will be allocated, you know, in the different option that I kind of mentioned.
The $200-$300 will secure what we need to do with our infrastructure today, will be to continually improve our product to meet, you know, new regulatory requirement as an example.
Okay, that's great. That's very helpful. Just one final question, if I could. Again, thinking out to 2025, you've talked about how the CPO business and the defense business, the growth there, kicks in, I guess, in a more significant way in the second half of the decade. Does that have any impacts on sort of working capital? You've got working, you know, neutral working capital in 2025 as the assumption. Maybe the way to ask the question is what are sort of the puts and takes we should be considering as influencing required investments in working capital in the middle of the decade around 2025?
The way I look at it today in 2025, you know, the two business we wanna grow, which is basically our CPO and the defense business, you know, don't require at this stage, you know, significant capital investment. I think the business of CPO as we operationalize it with, you know, within Paul's organization, we'll make sure cycle time are extremely, you know, short, so that we can turn airplane faster so that we don't grow inventory. We will be extremely disciplined and, you know, the guys know that we have a maximum capital allocation to that inventory, and we are always making sure that we work within that envelope. In regards to defense, usually, you know, first of all, the platform already exists.
Usually the way that it's structured, that the transactional structure, there's enough advances to, you know, to cover either the inventory we need to carry or also any of the development we may have to do in Wichita. Paul, if you wanna add something?
Yeah, yeah.
Go ahead.
If I can just add one thing. Going back to the CPO business, you were talking about return on invested capital. I think that's one of the beauties of this business, is that, you know, we're not chasing airplanes. We wanna target the right buys, bring them into our service centers, make sure we do the right modifications. The cycle time is extremely small. We you know, what it allows us to do is to have an extremely high return on invested capital. Within three months, we can have the aircraft entered, modded, and then delivered. Need for capital stays low.
Thank you very much.
Thanks, Tim.
Thank you.
We have time for one last question from Elizabeth Grenfell at the Bank of America.
Hi, good morning. Thank you for squeezing me in. I was hoping you could expand a little bit You hit on your presentation that there's potential for M&A focus, and I know you said there's potential in the defense arena. I was just wondering if you could give us some more color, please, around how you're thinking about potential M&A and where that might be, and when potentially. Thank you.
Wanna answer that, Paul?
Yeah. Thanks, Elizabeth, and good morning. We do view M&A as one of the options open to us more down the road than anything else once we're achieving the level of cash flow, free cash flow generation that we're targeting. Again, greater than $900 million by 2025. We do always look at the landscape out there in front of us and are looking at opportunities for more tuck-ins than anything I would say that we would materially change our business. We're always constantly working to drive new, I'll call it streams of revenues through our customers to provide them a better overall experience to give them, you know, more of what Bombardier can offer.
Paul being, you know, a big part of that now, I think, in the aftermarket is probably best equipped to speak about what those opportunities might look like long term. I wouldn't suggest that today is the time for us. We're gonna remain very, very focused on our debt repayment strategies over the next few years till we get our balance sheet to the place that we're happy with it. Paul, I don't know if you wanna talk about the tuck-ins.
I was gonna say the same thing, actually. I was gonna say, you know, we have a five-year strategic roadmap. We're entering into the strat plan process with Éric and team in the coming months, and then we'll be able to properly define what those strategies are gonna be and what opportunities lie ahead of us.
Thank you very much.
Okay. Thanks, Elizabeth.
At this point, I would like to turn it over to Monsieur Martel.
Okay. Thank you very much. I wanna thank you everyone this morning for attending this session. Thank you for being with us. To share our visions of Bombardier's future and to present our new objective for 2025. As I said earlier, Bombardier is in a stronger position today than it has ever been in many years, and this is thanks to the entire Bombardier team. Wishing you all good day.