Current Conditions

Mostly Cloudy
-7.9°C

Bombardier to eliminate 7,000 jobs, announces deal with Air Canada

Alain Bellemare, right, president and CEO of Bombardier Inc., and Calin Rovinescu, president and CEO of Air Canada, sit in the cockpit of a Bombardier CSeries Wednesday, February 17, 2016 in Montreal. Bombardier has a deal to sell Air Canada 45 CSeries jets, with an option to buy up to 30 more. Bombardier also announced Wednesday it will eliminate 7,000 positions over two years.
Image Credit: THE CANADIAN PRESS/Paul Chiasson
February 17, 2016 - 1:12 PM

MONTREAL - Bombardier announced Wednesday it will eliminate 7,000 positions over two years — more than a third in Canada — in the latest effort by the country's largest aerospace company to turn itself around as it awaits word of federal aid.

The Montreal-based firm said the layoffs will include 2,830 jobs in Canada, including 2,400 in Quebec. Nearly half of all the cuts would be at Bombardier Transportation, its rail division, which will lose 3,200 jobs.

The news resulted in an immediate call for federal assistance from the province's premier.

"I want to reiterate that there is no way — no way — that the federal government should not invest in Bombardier, in the CSeries," Philippe Couillard said in Quebec.

"If the auto industry has been supported by taxpayer money, which is fine, then the aeronautical industry of Montreal needs also to be supported."

Bombardier employs about 74,000 people around the world, according to its website.

The cuts will be partly offset by hiring in certain areas, particularly as Bombardier plans to ramp up production of the new CSeries jets, the company said. Layoff notices are expected to be issued in the coming weeks and completed by next year.

No job losses are anticipated at the company's commercial aircraft business segment, which supplies airlines with passenger planes including the CSeries, which Bombardier has had trouble selling.

Amid the bad news, there was a sign that Bombardier could be reviving its fortunes: a letter of intent that could see Air Canada buy 45 CSeries 300 planes, with an option to buy up to 30 more.

"We are delighted to announce this important agreement with Bombardier for the purchase of CS-300 aircraft as part of the ongoing modernization of Air Canada's narrow-body fleet," Calin Rovinescu, Air Canada president and CEO, said in a statement.

"With its high fuel efficiency performance and greater seating capacity, the next-generation technology of the C Series is very well-suited for our current and future network strategy and will be an extremely efficient addition to our fleet."

Bombardier CEO Alain Bellemare said the company is reviving its fortunes.

"We are turning Bombardier around," he said during a conference call. "We have a plan to make this great company stronger and more competitive."

The CSeries is Bombardier's new generation of aircraft for commercial airlines, in development for more than a decade as an alternative to smaller models of passenger jets built by rivals Boeing and Airbus. The aircraft is about two years behind schedule and at least US$2 billion over budget.

Bombardier said it hopes Ottawa will come through on its request for financial assistance for the CSeries, just as the Quebec government has done in providing US$1 billion in support.

The federal government issued a statement Wednesday saying it's still reviewing that request.

"Any action the government takes with respect to Bombardier will be first and foremost in the interest of Canadians," federal Innovation Minister Navdeep Bains said. "We have been clear that such an important decision will only be made after due diligence, careful consideration and a strong business case."

Transport Minister Marc Garneau said he was encouraged to hear of the agreement between Bombardier and Air Canada but concerned about those losing their jobs.

The announcement of job cuts and the letter of intent with Air Canada came as Bombardier released its financial report for 2015 and an outlook for 2016.

The company, which reports in U.S. currency, had a net loss of US$5.34 billion for 2015, including a US$677 million loss in the fourth quarter.

Those losses include a number of special items and, without them, Bombardier says it would have had US$326 million of adjusted income for the full year and US$9 million of adjusted net income for the fourth quarter.

Among other things, Bombardier reported its revenue in the fourth quarter ended Dec. 31 was $5 billion, down from just under $6 billion a year earlier.

Its 2015 revenue was $18.2 billion, down from $20.1 billion in 2014. It's estimating 2016 revenue will fall further and be in a range of between $16.5 billion and $17.5 billion.

Bombardier is also planning to reduce the number of shares it has outstanding. The company plans a special shareholder meeting to get approval for a reverse stock split that will aim to exchange outstanding shares for a smaller number of consolidated shares, with a price in the range of C$10 to $20 each.

Bombardier's publicly traded B shares closed Wednesday at 90 cents on the Toronto Stock Exchange. Last month, its stock fell below the $1 mark on the Toronto Stock Exchange for the first time in 25 years.

News from © The Canadian Press, 2016
The Canadian Press

  • Popular penticton News
  • Comments

View Site in: Desktop | Mobile