Bombardier cutting about 5,000 jobs as part of restructuring plan

Irving Hamilton
November 9, 2018

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. The drop threatened most of the stock gains since the deal with Airbus was announced a year ago.

Bombardier workers in Northern Ireland and the Midlands face uncertainty after the Canadian company announced 5,000 job cuts globally on Thursday.

The move is expected to save the company about $250 million a year by 2021. The company estimates the job cuts - about 7% of the global workforce - will save $250m (£190m).

Half the lost jobs will be in Bombardier's home province of Quebec.

Sales were down 5% to $3.6bn, but revenue is expected to jump 10% to at least $18bn next year. And in June 2016, the Quebec government closed a US$1-billion investment in Bombardier's then-wholly owned CSeries program.

"This is very bad news, it sends a worrisome message about the future of the industry", Renaud Gagne, head of the Unifor labour union's Quebec branch, said in a statement.

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The firm will also sell its Q Series aircraft for $900m (£687m) and the de Havilland trademark for $300m. CAE Inc. will buy Bombardier's business-jet flight and technical training activities.

Bellemare probably isn't done remaking Bombardier. The company still holds its CRJ regional jet program, where it will focus on reducing costs while exploring "strategic options" for the future, the company said. Bellemare is pursuing an aggressive strategy in a bid to build Bombardier's future around trains and private planes.

With the aerospace investment effort complete, key engineering team members will be redeployed. "Bombardier has had problems historically and the problem is often that their balance sheet gets into trouble because they chew up a lot of cash", he said. Bombardier is carrying $9.5 billion in adjusted debt, much of it built up through cost overruns and delays tied to the development of its Global 7500 private jet and the C-Series narrow-body airliner.

The changes came as Bombardier reported a profit of US$149 million or four cents per share in its latest quarter, compared with a loss of US$100 million or four cents per share in the same quarter past year.

Montreal-based Bombardier made the restructuring announcement Thursday morning as part of its earnings for the quarter ended September 30, which showed a 5 percent drop in revenue but a profit of $149 million compared with a loss in the year-ago quarter.

On an adjusted basis, Bombardier said it earned four cents per share in the quarter compared with a break-even result in the third quarter of 2017, beating analyst expectations.

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