Bombardier has announced measures that will result in 5,000 job losses over the next year and a half.
The Montreal-based company announced it will sell its Q Series turboprop aircraft program to Longview Aviation Capital for $300 million.
The carrier reached another agreement to sell its business aircraft flight and technical training unit, which is run out of Montreal, Quebec City and Dallas, to another Montreal multinational, CAE.
Bombardier said the moves will result in $250 million in annual savings.
Bombardier is also selling training services to CAE for $645 million. The transactions with CAE will total $800 million in revenue for Bombardier and are expected to be finalized by mid-2019.
Bombardier said the deals with Longview and CAE will amount to $900 million in net proceeds.
The company’s third-quarter revenue reached $3.6 billion US, a decrease of about five per cent compared to the same period last year. The company did post a profit of $149 million for the quarter, better than the $100 million loss it saw in the same period a year earlier.
Bombardier CEO Alain Bellemare said the cuts and sales are necessary, and the company would continue to “streamline” its operations.
Prior to the news of the sale of the turboprop division, analyst George Ferguson with Bloomberg Intelligence said he thinks the Q Series “will generate little to no profit” for the company this year, so it makes sense to sell it. While most of the attention on Bombardier centres on the company’s jet planes, few of them make a significant amount of money for the company.
That’s in contrast to the rail transportation part of the business, which continues to generate cash. “Transportation will generate almost all of cash flow as aerospace … will be flat at best during 2018,” Ferguson said.
John Di Bert, Bombardier’s chief financial officer, said in a conference call with investors Thursday morning that “the actions announced this morning demonstrate our focused efforts to grow earnings and cashflows.”
“We continue taking concrete actions to reshape Bombardier’s portfolio.”
‘Unfortunate and distressing’: union
Bombardier spokesperson Simon Letendre confirmed 500 jobs will be cut in Ontario, where the company employs 6,500 people. It will cut 2,500 jobs in Quebec. The company has 70,000 employees worldwide.
The rest of the roughly 2,000 job cuts will come from as yet unnamed operations outside Canada.
David Chartrand, Quebec co-ordinator for the International Association of Machinists and Aerospace Workers, said Thursday’s announcement was “unfortunate and distressing,” speaking to Radio-Canada’s radio morning show host Alain Gravel on Thursday.
“The biggest frustration is that Bombardier has once again announced major cuts just before the holidays,” said Chartrand.
He said he wants the company to give more details about which employees will be affected. About 20,000 people work for Bombardier in Quebec, he said.
“That’s 20,000 employees with question marks in their mind.”
Chartrand said the pattern of deals Bombardier has made over the past few years, including handing over its C Series airliner to Airbus and selling the Q400 facilities, indicates it may be shedding its commercial aircraft operations to focus on its business fleet.
“That is definitely one of the questions we will be asking the company.”
Chartrand said he hopes the union can reach a deal with CAE that would be similar to the deal struck with Airbus: for the CAE to hire Bombardier employees and keep their seniority.
Quebec Economy Minister Pierre Fitzgibbon said the government will look into ways to help workers affected by the cuts, as well as, “if necessary,” how it could support projects from other Quebec companies that could create jobs.
About a year ago, Bombardier gave a controlling stake in its C Series business to Airbus, and Bloomberg analyst Ferguson expects that if that deal pays off Airbus will eventually take over the entire thing.
“It’s likely if C Series is a success, that Airbus will purchase the remaining at cost given their options,” he said Thursday. “Bombardier seems ready to slim down to a business-jet and rail manufacturer.”
With files from Radio-Canada
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