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Bombardier has announced measures that will result in the loss of 5,000 jobs over the next 18 months.
The Montreal-based company announced that it would sell its Q-Series turboprop aircraft program to Longview Aviation Capital for $ 300 million.
The carrier has entered into another agreement to sell its business jet training and technical training unit, based in Montreal, Quebec and Dallas, to another multinational in Montreal, CAE.
Bombardier said these measures would result in annual savings of $ 250 million.
Bombardier also sells training services to CAE for $ 645 million. Transactions with CAE will total $ 800 million in revenue for Bombardier and are expected to be completed by mid-2019.
Bombardier stated that the contracts with Longview and CAE would amount to net proceeds of $ 900 million.
The company's revenue for the third quarter reached US $ 3.6 billion, down about 5 percent from the same period last year. The company posted a profit of $ 149 million for the quarter, better than the loss of $ 100 million recorded in the same period last year.
Alain Bellemare, Bombardier's chief executive, said reductions and sales were needed and that the company would continue to "streamline" its operations.
Prior to the announcement of the sale of the turboprop division, analyst George Ferguson of Bloomberg Intelligence said that he thought the Q series would "generate little or no profit" for the company this year so it makes sense to sell it. Although Bombardier focuses primarily on the company's jet aircraft, few of them report significant amounts to the company.
This contrasts with the rail transportation sector, which continues to generate liquidity. "Transportation will generate almost all cash flow, because aerospace (…) will be at best stable in 2018," Ferguson said.
John Di Bert, chief financial officer of Bombardier, said during a conference call with investors Thursday morning that "the shares announced this morning reflect our focused efforts to increase earnings and cash flow."
"We continue to take concrete steps to reshape Bombardier's portfolio."
"Unhappy and scary": the union
Bombardier spokesman Simon Letendre confirmed 500 jobs will be cut in Ontario, where the company employs 6,500 people. It will eliminate 2,500 jobs in Quebec. The company has 70,000 employees worldwide.
The remainder of the approximately 2,000 job cuts will come from still anonymous operations outside of Canada.
David Chartrand, Quebec coordinator of the International Association of Machinists and Aerospace Workers, said that Thursday's announcement was "regrettable and painful", during a conversation with Alain Gravel, host of Radio-Canada's morning radio show.
"The biggest frustration is that Bombardier has again announced significant discounts just before the holidays," said Mr. Chartrand.
He stated that he wanted the company to provide more details about the employees who would be affected. About 20,000 people work for Bombardier in Quebec, he said.
"These are 20,000 employees with question marks in their minds."
Mr. Chartrand stated that the structure of Bombardier's transactions in recent years, including the divestment of its Airbus C-plane and the sale of the Q400 facilities, suggests that it may be abandoning its operations. Commercial aircraft to focus on its commercial fleet.
"This is certainly one of the questions we will ask society."
Mr. Chartrand stated that he hoped that the union could enter into an agreement with CAE similar to that with Airbus: allow CAE to hire Bombardier employees and retain their seniority.
Quebec's Minister of the Economy, Pierre Fitzgibbon, said the government would look into ways to help workers affected by the cuts, as well as, "if necessary", how it could support projects in the future. 39, other Québec companies likely to create jobs.
About a year ago, Bombardier sold Airbus a majority interest in its Series C business, and Bloomberg analyst Ferguson expects that, if this transaction is successful, Airbus eventually take full control.
"It is likely that if the C Series is successful, Airbus will buy the remaining balance at cost considering its options," he said on Thursday. "Bombardier seems ready to become a manufacturer of business jets and railroads."
With CBC files
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