Friday, October 21, 2016
Canada’s Bombardier to Cut 7,500 More Jobs: Latest cuts—on top of 7,000 layoffs unveiled in February—will result in restructuring charges of $225 million to $275 million
The Wall Street Journal
By DAVID GEORGE-COSH and JUDY MCKINNON
Updated October 21, 2016 1:53 p.m. ET
Bombardier Inc. plans to shed another 7,500 jobs, or just over 10% of its global workforce, as it focuses on turnaround efforts amid a soft business-jet market and hiccups with its CSeries jet program.
The Montreal-based plane and train maker said the cuts, affecting administrative and nonproduction positions across the company, are expected to save it about $300 million by the end of 2018.
The layoffs are on top of the 7,000 job cuts unveiled in February that targeted operations in both Canada and Europe and were largely split evenly between its plane and train operations. About 2,000 of the job cuts announced Friday are in Canada, a company spokesman said.
Bombardier said it expects the latest reduction to result in a restructuring charge of up to $275 million, starting in the fourth quarter and carrying through 2017. Some of the layoffs will be offset by “strategic hiring” in some of its growth segments, including its CSeries and Global 7000 aircraft lines, a company spokesman said.
Bombardier had nearly 71,000 employees at the end of 2015.
“The actions announced today will ensure we have the right cost structure, workforce and organization to compete and win in the future,” Chief Executive Alain Bellemare said in a release.
To help shore up its balance sheet, Bombardier has been in discussions with the Canadian government over possible funding. Those talks continue, both the company and the government said Friday.
“It’s not a matter of if, but how we are going to proceed with this,” Canada Innovation Minister Navdeep Bains told reporters in Ottawa. He said Bombardier’s restructuring plan is separate from the funding talks.
“Our discussion with respect to [Bombardier’s] billion-dollar request is about future growth opportunities,” Mr. Bains said, noting the focus has been on company growth, job creation and research and development opportunities. He also said the government wants to see Bombardier’s head office remain in Canada.
The turnaround effort has been bumpy for the transportation company, which has bet big on its flagship CSeries, its new single-aisle jet aimed at competing with giants Airbus Group SE and Boeing Co. The CSeries flew its first paying passengers in mid-July with launch partner Swiss International Air Lines, and has received significant orders from North American carriers Air Canada and Delta Air Lines Inc. Still, Bombardier hasn’t announced any recent contract wins and in September cut its 2016 delivery target for the new aircraft by more than half due to engine delays.
The company, which is also contending with a tough business-jet market, last year scaled back production of its biggest models and canceled development of a new version of its smaller Learjet because of weak demand.
To help face its challenges, Bombardier agreed a year ago to give up almost half its stake in the CSeries program to the Quebec government in exchange for a $1 billion investment. It also sold a stake in its train-making division late last year to Quebec pension fund Caisse de dépôt et placement du Québec for $1.5 billion.
Analysts say the layoffs will be positive for the company’s long-term outlook and are a sign the company’s management is pushing its turnaround efforts.
Friday’s announcement comes just weeks ahead of the company’s planned release of third-quarter earnings. In its most recent quarter, which ended in June, Bombardier swung to a net loss and posted a nearly 7% drop in revenue.
Original article can be found here: http://www.wsj.com
Posted by Kathryn on 10:25:00 PM