Bombardier cutting 5,000 jobs, selling Q Series aircraft

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

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

Bellemare cited capital needs at the company's rail business for spoiling the cash-flow goal, which includes leeway of plus or minus US$150 million. "Investors won't like the big chop to cash flow guide, which raises questions (regarding) management credibility and ability to complete a successful turnaround", Cai von Rumohr, an analyst with Cowen Equity Research wrote in a note to clients. "We are losing money on the CRJ". The stock fell a steep 24.5 per cent, closing at $2.41 per share in Toronto, as the cash flow issue drove new concerns about Bellemare's mission to reshape the Montreal based firm. The drop threatened most of the stock gains since the deal with Airbus was announced past year.

Letendre said the job cuts will occur over the next 12 to 18 months.

Bombardier says that 2,500 workers will be cut in the Canadian province of Quebec and 500 workers from the province of Ontario.

Revenue in what was the company's third quarter totalled $3.64 billion, down from $3.84 billion a year ago.

"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.

Bombardier also announced that it will be selling its Q400 aircraft program and de Havilland trademark to a subsidiary of Longview Aviation Capital.

CAE president Marc Parent said in a statement its purchase of Bombardier's flight training wing "represents a win-win for both companies, resulting in enhanced core focus".

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Bellemare probably isn't done remaking Bombardier. Bellemare is pursuing an aggressive strategy in a bid to build Bombardier's future around trains and private planes. The asset sales announced yesterday will bring in about $900 million.

With the aerospace investment effort complete, key engineering team members will be redeployed.

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. Bombardier expects to deliver 15 to 20 of the planes next year, and twice as many in 2020, Di Bert said.

According to the press release, the changes comes 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 previous year.

The Montreal-based plane and train maker announced the cuts early Thursday, saying they're created to "lean out and simplify" the company's corporate structure.

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. Quarterly cash burn decelerated to US$370 million in the period.

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