Bombardier is cutting 5,000 jobs
Mostly in Canada, part of a major restructuring push
MONTREAL — Bombardier Inc. announced Thursday it will shed 5,000 jobs companywide and sell off two units as part of chief executive Alain Bellemare’s five-year plan to rein in costs, focus on rail and business jets and reduce the net long-term debt of $9 billion.
About 2,500 Bombardier workers will be laid off in Quebec and 600 in Ontario, with the 2,000 other cuts occurring overseas, according to a spokesperson, who did not specify the units.
The company said it will sell its Q400 turboprop aircraft program to a subsidiary of Longview Aviation Capital Corp. for about US$300 million. The Montrealbased company also announced the sale of its flight training business to CAE Inc. for about US$645 million.
The restructuring, announced alongside Bombardier’s thirdquarter earnings, is slated for completion within 18 months and for savings of $250 million annually. The announcement comes after mass layoffs over the past three years, with about 14,500 positions cut around the world in the aerospace and railway divisions.
Dropping the Q400 will allow Bombardier to zero in on producing its Global series of long-range business jets, including the Global 7500, whose first aircraft is slated for delivery next month.
“With the measures announced, we are confident that we will be able to reach our goals in 2020,” Bellemare said during a conference call.
Bombardier shares tumbled by more than 20 per cent to $2.53 in mid-afternoon trading on the Toronto Stock Exchange due to concerns over cash flow.
Bombardier forecast 2019 revenue to increase by 10 per cent to at least $18 billion, powered by more deliveries of its Global 7500s.
Free cash flow came in “well below” expectations that Bombardier could break even on cash without falling back on its $635 million in proceeds from the sale of a Toronto plant earlier this year, said analyst Benoit Poirier of Desjardins Capital Markets.
“The new facility at Pearson (airport) will probably be producing only the Global business jet, and having a dedicated facility for one line gives them a chance to optimize the performance,” said Ernie Arvai, a partner at commercial aviation consultancy AirInsight.
“The next question for Bombardier is what happens with the CRJ line and what happens with the rest of the commercial business.”
The fate of the aging CRJ regional jets has been unclear since the company announced in October 2017 that Airbus SE would acquire a majority 50.01 per cent stake in the C Series, effective July 1 of this year. Bellemare said at the time the company was committed to the Q400 and CRJ. “We like these products, they give us critical mass.”
He offered similar sentiments Thursday. “On the CRJ, the focus is still on reducing cost and selling aircraft today. We are losing money on the CRJ.”
Karl Moore, an aviation expert at McGill University’s Desautels Faculty of Management, said the layoffs and sell-offs will allow Bombardier to shift away from regional jets and shrink its debt.
“The transportation side and business jets are clearly the central focus of Bombardier going forward,” Moore said.
Quebec Premier Francois Legault weighed in after speaking with company and union leaders.
“My government will make every effort to minimize the number of job losses and to help affected employees find a new job,” he said on Twitter in French.
The changes came as Bombardier reported a profit of US$149 million in its latest quarter.