Bom­bardier is cut­ting 5,000 jobs

Mostly in Canada, part of a ma­jor re­struc­tur­ing push

The Niagara Falls Review - - Business - CHRISTO­PHER REYNOLDS

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.

AARON VIN­CENT ELKAIM THE CANA­DIAN PRESS

A Bom­bardier Q400 jet sits in a hangar at the Bom­bardier fa­cil­ity in Toronto. The com­pany said it will sell its Q400 tur­bo­prop air­craft pro­gram to a sub­sidiary of Longview Avi­a­tion Cap­i­tal Corp.

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