Wednesday, February 17, 2016

Bombardier to Cut About 7,000 Jobs Over Next Two Years • Plane maker, hampered by the ramp-up of its struggling CSeries program, posts weak results and guidance

The Wall Street Journal
By Judy McKinnon
Feb. 17, 2016 7:44 a.m. ET

Bombardier Inc. on Wednesday posted weaker-than-expected fourth-quarter results and guidance and said it plans to cut around 7,000 jobs over the next two years in another blow to the plane maker, which has been hampered by the ramp-up of its struggling CSeries jet program.

The Canadian company, which has been slow to win orders for its new CSeries jets and has taken a number of measures in recent months to shore up its finances, said the jobs cuts will hit workers in Canada and Europe and will affect both its plane and train operations.

Bombardier said the job cuts, which will lead to restructuring charges of between $250 million and $300 million, will be offset partially by hiring in other areas, including to support its CSeries programs. It didn’t provide specific hiring numbers.

”Bombardier is in a better place today, and we are on the path to greater profitability. We are engaged in a rigorous process that will increase our earnings power and cash flow generation over the next five years,” Chief Executive Alain Bellemare said in a release.

The company, which hasn’t announced a new CSeries order since September 2014, on Wednesday said it received an order for up to 75 of its larger CSeries 300 model jets from Canadian airline Air Canada. It is the first North American carrier customer for the CSeries, Bombardier said, and the deal consists of an order for 45 of the aircraft plus options for another 30. Based on list prices, a firm order would be valued at about $3.8 billion, Bombardier said.

Bombardier also unveiled a plan to help bolster its sagging share price, something analysts were expecting the company to address. It said it would present shareholders with a proposal at its annual meeting later this year to consolidate its shares at an undetermined ratio in a bid to bring its share price up to a range of between 10 Canadian dollars ($7.20) and C$20 each. Shares have been trading below C$1 a share since late January.

Bombardier ended the fourth quarter with a loss of $677 million, or 31 cents a share, compared with a year-earlier loss of $1.59 billion, or 92 cents.

Adjusted to exclude items, the company earned $9 million, or breakeaven on a per-share basis. Analysts polled by Thomson Reuters expected a profit of 2 cents a share.

Revenue fell 16% to $5.02 billion, below the $5.48 billion analysts expected.

For 2016, Bombardier said it expects revenue of between $16.5 billion and $17.5 billion, which falls shy of the $18.1 billion analysts expect.

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