By Eamon Quinn and Frederic Tomesco
New plans of Canadian jet maker Bombardier to cut about 5,000 jobs around the world has again put into doubt jobs at its facilities in Belfast.
Bombardier’s agreement just over a year ago to sell to European planemaker Airbus a stake of just over 50% in its troubled C-Series jet programme, now renamed the A220, had appeared to lift a huge cloud over 4,200 jobs at Bombardier facilities in the North.
And in May, Bombardier and Airbus said they had secured orders from Air Baltic and American Airlines for the A220 jet.
However, in a new round of asset sales and job cuts, Bombardier said it will lose 5,000 jobs, or 7% of its workforce, and plans net proceeds from the sales of about $900m (€785m). It is unclear whether the cuts would affect its operations in the North. Its shares shed as much as 14% at one stage, reflecting concerns about the company’s new plan.
Bombardier is working off $9.5bn in adjusted debt, which was largely incurred as the manufacturer poured money into two aircraft-development programmes that were plagued with delays and cost overruns.
The Global 7500 private jet is set to debut next month, marking the end of the company’s heavy investment cycle. Bombardier ceded control of the C Series, or the A220, passenger plane to Airbus.
Bombardier also stepped back from its 2018 cash-flow goal, citing an “intense delivery phase” in its rail business. Its target to break even on a cash-flow basis, plus or minus $150m, now includes the $635m Bombardier got from a land sale in Toronto. The previous target excluded those proceeds.
“Investors won’t like the big chop to cash flow guide, which raises questions regarding management credibility and ability to complete a successful turnaround,” said Cai von Rumohr, an analyst at Cowen & Co
Bombardier will sell its Q Series turboprop programme and de Havilland trademark to a subsidiary of Canada’s Longview Aviation Capital, parent company of Viking Air, which makes the Twin Otter propeller plane. CAE will buy Bombardier’s business-jet flight and technical training activities. The company said it will “explore strategic options” for its CRJ regional-jet programme.
The focus, for now, is on reducing cost and increasing volumes while optimising aftermarket revenue for about 1,500 CRJs in service.
The moves hasten a future in which growth will revolve around private jets and trains. Together, those two businesses accounted for about 88% of third-quarter sales.
- Irish Examiner and Bloomberg