Bombardier Inc. said Thursday it will reduce its overall workforce by about 1,600 jobs as it anticipates a yearslong recovery in the aviation industry.
In addition to the cuts, the company is consolidating its Global aircraft completion work in Montreal and reviewing options for underutilized hangar and industrial space at its Quebec facilities, in a bid to generate savings amid an uncertain time for aviation demand.
“We regret seeing talented and dedicated employees leave the company for any reason,” Bombardier chief executive Eric Martel said on a conference call with financial analysts Thursday.
“But these reductions are absolutely necessary for us to rebuild our company while we continue to navigate through the pandemic.”
Seven hundred people in Quebec will be affected by the layoffs, Martel said on a separate call with reporters, as well as 100 people in Ontario, 250 in Wichita, Kansas, and the remainder in the rest of the world. The cuts will be focused primarily on office workers, Martel said.
Bringing the Global aircraft work to Montreal will create an additional 100 jobs in the city, he added.
Martel said he expects 2021 to be a transition year, with business aircraft revenue better than 2020 based on a gradual economic recovery scenario. But he added that the timeline to any full market recovery was hard to predict, given that it depends on borders reopening and restrictions on international travel being lifted.
Bombardier is also exploring selling some of its real estate with an eye towards raising cash amid the pandemic.
The company is in talks to reduce the footprint of its facility in Montreal’s Saint-Laurent neighbourhood, but Martel declined to disclose how much cash such a sale could raise. Bombardier will use the proceeds to finance a portion of its new facility at Toronto Pearson International Airport, Martel said.
The company said the cuts will bring its global workforce to 13,000 by the end of the year.
Bombardier said it will end production of Learjet aircraft later this year, allowing it to focus on its more profitable Challenger and Global aircraft families.
“Passengers all over the world love to fly this exceptional aircraft and count on its unmatched performance and reliability. However, given the increasingly challenging market dynamics, we have made this difficult decision to end Learjet production,” Martel said in a statement.
Bombardier said it will continue to fully support the Learjet fleet and launched Thursday a remanufacturing program for Learjet 40 and Learjet 45 aircraft.
The moves came as Bombardier, which keeps its books in U.S. dollars, reported a net loss of US$337 million or 18 cents per diluted share for the quarter ended Dec. 31 compared with a net loss of US$1.72 billion or 74 cents per diluted share a year earlier. Revenue for the quarter totalled US$2.34 billion, down from US$2.41 billion.
On an adjusted basis, Bombardier says it lost 20 cents per share in its most recent quarter compared with a break even result on an adjusted basis in the fourth quarter of 2019.
Bombardier completed the sale of its rail business to Alstom last month, the culmination of a plan by the Montreal-based company to focus on business jets.
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Net proceeds from the sale were US$3.6 billion, down from the US$4 billion it had expected in September. Bombardier attributed the lower proceeds to a more difficult business environment in the fourth quarter of 2020.
In addition to its rail business, Bombardier in 2020 also sold its regional aircraft program to Mitsubishi Heavy Industries Ltd. and its aerostructure business to Spirit AeroSystems Holdings Inc.
Analysts for J.P. Morgan wrote on Thursday that the cost-cutting plans and additional cash from the sale of its rail business showed signs of progress, but said hurdles remain for the company, for which it had a neutral outlook.
“Bombardier clearly has work to do as it continues its transitioning to pure play business jet company,” the analysts wrote.
Benoit Poirier, an analyst for Desjardins, gave the company a hold rating and said he expected a slightly negative reaction to its latest earnings report, given the company’s strong stock performance since the start of this year.
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