- Category: Economic
- Published Wednesday, February 17, 2016
- CTV News
MONTREAL -- Bombardier announced Wednesday it will cut 7,000 positions over two years -- close to 10 per cent of its global workforce -- in the latest effort by Canada's largest aerospace company to turn itself around as it awaits word of federal aid.
The Montreal-based firm said the layoffs will include 2,000 contract jobs. Nearly half of all the cuts would be at Bombardier Transportation, its rail division, which will lose 3,200 jobs. The rest would come from aerostructures and engineering, aerospace product development and Bombardier's business aircraft division.
Most of the cuts will be in Canada and Europe, though they will be partly offset by hiring in certain areas, Bombardier 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 new CSeries jets, which Bombardier has had trouble selling.
But 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 turning Bombardier around to make this great company stronger and more competitive," CEO Alain Bellemare said in a statement.
"And today, with the signing of Air Canada for the leading-edge CS300 aircraft, we add a major international airline customer based in North America to complement our orders in both Europe and Asia."
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 $2 billion over budget.
Late last year, Bombardier asked Ottawa for financial assistance as it tries to sell the CSeries. The federal government issued a statement Wednesday saying it was 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.