Technical training business to be sold to CAE
Bombardier will also sell its business aircraft flight and technical training business, run out of Montreal, Quebec City, and Dallas Texas to another prominent Montreal-based multinational CAE. The sale price for the services is $640 million. In total sales to CAE are $800 million and are expected to be finalized by the middle of next year.
The deals with Longview and CAE should net $900 million in income.
Bombardier estimates the job cuts and sales will save about $250 million annually.
Bombardier Chief Executive Officer(CEO) says the company is on track to meet turnaround goals
Bombardier’s revenue for the third quarter was $3.6 billion US a drop of about five percent from the same period in 2017. However, the company did eke out a profit of $149 million US an improvement on a 100 million loss in the same quarter last year.
Alain Bellemare, Bombardier CEO claimed the cuts and sales were necessary and that the company would continue to streamline its business operations.
In a conference call with investors this morning, John Di Bert, the chief financial officer of Bombardier said that the announced actions were designed 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.”
Analyst judged that Bombardier’s Q series would provide little or no profit
Before, Bombardier announced the sale of the turboprop division analyst George Ferguson of Bloomberg Intelligence said that he thought that the Q Series would generate little or no profit for the company this year. He claimed it made good sense to sell it.
Although most of the attention on Bombardier is on its jet planes, most of the money for the company comes from its rail transportation division. Ferguson said: “Transportation will generate almost all of cash flow as aerospace … will be flat at best during 2018.”
The company had received 66 firm orders for the Q400 turboprop jets as of the end of this September. That is up from just 45 last December.
Bombardier union calls the moves unfortunate and distressing
Simon Letendre a spokesperson for Bombardier, confirmed 500 jobs will be cut in Ontario. The company employs 6,500 people in the province. It will also cut even more 2,500 jobs in Quebec. Globally the company has 70,000 workers. The remaining job cuts about 2,000 will be in operations outside Canada not year identified.
Quebec government support questioned
In 2016 when it looked as if the C Series project was doubtful, the Quebec provincial government gave Bombardier $1 billion to keep the project going. The federal Canadian government also later presented the company with a $372 million interest free loan. The appended video by the inimitable Rex Murphy has a caustic commentary on the loan.
At the time many questioned the provincial expenditure obviously made to save jobs. Anthony Scilipotti, founder of Veritas Investment Research in Toronto said: “Bombardier is desperate and it’s unfortunate that the unsuspecting taxpayer is shouldering the burden for management’s awful decision making. What’s the future? This aircraft isn’t selling.”
The future was that Bombardier virtually gave away the program to Airbus without charge about a year ago. With the company laying off thousands of workers again for the third time in three years, there will be even more questioning of the company’s operations.
Analyst Ferguson claims that the company is committed to streamlining its operations and expects even more asset sales that will turn the company into a shadow of its former self. The companies argues that its shift of the C series to Airbus will allow it to focus on regional planes. Ferguson noted: “It’s likely if C Series is a success, that Airbus will purchase the remaining at cost given their options. Bombardier seems ready to slim down to a business-jet and rail manufacturer.”
