Home > Ireland > Fears for jobs in N.Ireland as Bombardier to cut 5000 jobs

Fears for jobs in N.Ireland as Bombardier to cut 5000 jobs

Written by Business World, on 9th Nov 2018. Posted in Ireland

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Bombardier Inc said on Thursday it would sell two businesses for around $900 million and cut 5,000 jobs and as it expands its stronger corporate jet and rail divisions, but the company's shares fell as much as 26% on a disappointing free cash flow forecast.

The Canadian plane and train maker said it would only be able to meet its 2018 free cash flow estimate by using $635 million in proceeds from the sale of a Toronto plant earlier this year. Analysts had expected Montreal-based Bombardier to achieve its target of roughly breaking even on cash without relying on those proceeds.

"2018 free cash flow was lower than my expectations," said Morningstar analyst Chris Higgins.

Jamie Koutsoukis, a senior analyst at Moody's, said by email she believes Bombardier has "an uncertain ability to generate positive free cash flow in 2019."

Bombardier Chief Financial Officer John Di Bert attributed the free cash flow discrepancy to higher-than-expected working capital needs in its rail division.

Bombardier had to invest more than expected this year on inventory for rail contracts, but will receive the bulk of the payments only upon completion of those orders, a Bombardier spokesman confirmed by email.

The latest round of layoffs, which accounts for over 7% of its global workforce, will save Bombardier about $250 million by 2021, it said. About half the cuts, or 2,500 layoffs, were announced for the Canadian province of Quebec, the International Association of Machinists and Aerospace Workers said in a statement.

In 2016, Quebec's government invested a billion dollars in the company's former CSeries jetliner program, before control of the plane passed to Europe's Airbus this year.

In Northern Ireland unions vowed in a statement to fight to save jobs.

Canada's Innovation Minister Navdeep Bains said in Ottawa he was "disappointed" by the job losses. His government announced C$372.5 million in repayable loans for two Bombardier jet programs last year.

Chief Executive Alain Bellemare told analysts on a conference call the changes would allow the company to pursue "growth opportunities" in its stronger-performing rail, business jet and aerostructures divisions.

Bombardier, while slashing thousands of jobs in 2016, also hired workers to develop its Global 7500 business jet, a major revenue driver.

The company also said it was selling its Q400 turboprop program to a unit of Longview Aviation Capital for $300 million, confirming earlier reports, and its corporate aircraft training business to CAE Inc for $645 million.

In a statement, Longview said it would continue operating the Q400's Toronto assembly site until at least 2021, but could not give further details on the program's future.

The sale comes as Bombardier undertakes a five-year restructuring program through 2020.

Bombardier said it would try to turn its money-losing regional jet program around by slashing costs, and boosting volumes, but would also explore strategic options for the program.

Earlier on Thursday, Bombardier forecast 2019 revenue would grow by 10% to $18 billion or more, driven by a pickup in deliveries of Global 7500 jets. Adjusted earnings per share of 4 cents beat estimates of 2 cents a share according to IBES data from Refinitiv.

Bombardier shares closed down 24.45% at C$2.41 on Thursday, after hitting an intraday low of C$2.34. (Reuters)

Source: www.businessworld.ie

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