MONTREAL - Bombardier Inc. says it has the liquidity to operate through the COVID-19 pandemic after using less cash in the second quarter and securing a loan of up to US$1 billion.

The Montreal-based transportation company says it has used about US$500 million less cash in the quarter than expected and has obtained a commitment for a three-year senior secured term loan for use by its aviation segment.

As of June 30, it had about US$1.7 billion of cash on hand plus US$700 million in available financing. That will grow to about US$3.4 billion in the second quarter, reflecting the US$1 billion of free cash flow usage.

The additional liquidity expected to be in place in the third quarter comes as Bombardier moves to realign production rates with current market conditions.

At least US$750 million of the term loan must be used over three years and Bombardier must repay half of the outstanding balance with the sale of the railway operations of Bombardier Transportation to Alstom.

Bombardier will provide further details on its financial position when it reports second-quarter results on Aug. 6.