Published: Sun, November 11, 2018
Markets | By Noel Gibbs

Concerns for Belfast as Bombardier prepares to axe 5,000 jobs

Concerns for Belfast as Bombardier prepares to axe 5,000 jobs

Union leaders are calling for reassurances after Bombardier announced the loss of 5,000 positions across its business.

Alain Bellemare, Bombardier CEO claimed the cuts and sales were necessary and that the company would continue to streamline its business operations.

While the job cuts will save Bombardier about $250 million at full run-rate, the various other changes are all aimed at "optimizing production and management processes, flattening management structures and further reducing indirect costs", the company said.

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"When we have more information, we can assess how to minimize the number of laid-off employees", Legault told reporters.

Bombardier's widely traded Class B shares plunged 13 per cent to $2.76 at 11:12 a.m. after sinking as much as 27 per cent for the biggest intraday decline since January 2015. It also announced it will sell its Q Series turboprop aircraft program to Longview Aviation Capital for $300 million. In a conference call with investors this morning, John Di Bert, the chief financial officer of Bombardier said that the announced actions were created to show that the company's focus was on efforts to grow earning and cashflows saying: "We continue taking concrete actions to reshape Bombardier's portfolio". Revenues are targeted to grow by approximately 10% to $18 billion or more, as deliveries of the Global 7500 business jet accelerate.

With the conclusion of those aircraft development programs, "we have to adjust and redeploy our engineering workforce, and this will have an impact on Wichita, of course", Letendre said.

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The Montreal-based company manufactures roughly 28 to 30 Q400 aircraft annually at its Downsview property in Toronto, land that the company sold earlier this year to the Public Sector Pension Investment Board.

The moves come at a time when the company is working through a five-year restructuring program through 2020 aimed at growing revenue and profit.

The cuts were disclosed along with its third-quarter earnings.

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Jamie Koutsoukis, a senior analyst at Moody's, said by email she believes Bombardier has "an uncertain ability to generate positive free cash flow in 2019". He says Longview intends to maintain existing supply chains for the Q400 and Dash 8 series that stretch from China to Ireland. According to Bombardier, the sale of these two assets will net the company $900 million.

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